Kern River Gas Transmission Company; Notice of Application

On November 15, 2000, Kern River Gas Transmission Company, (Kern River), 295 Chipeta Way, Salt Lake City, Utah 84158, filed in Docket No. CP01-31-000 an application pursuant to Section 7 of the Natural Gas Act (NGA) and the Commission's Rules and Regulations for a certificate of public convenience and necessity authorizing Kern River to construct and operate facilities required to expand its transportation capacity from Wyoming to California to serve 124,500 Mcf of new firm, long-term capacity, commencing May 1, 2002. Kern River requests an up-front determination that the project qualifies for rolled-in rate treatment, and for approval of a pro forma tariff provision establishing an electric compressor fuel surcharge and approval of its proposed accounting treatment for certain expansion costs, all as more fully set forth in the application which is on file with the Commission and open to public inspection. The filing may be viewed at http://www.ferc.fed.us/online/rims.htm (call 202-208-2222 for assistance).

Kern River proposes to install the following facilities: (1) Three new compressor stations, the Elberta Compressor Station, in Utah County, Utah, the Veyo Compressor Station in Washington County, Utah and the Daggett Compressor Station in San Bernardino County, California; (2) an additional compressor unit at the existing Muddy Creek Compressor Station in Lincoln County, Wyoming; (3) restaging of the compressor at the existing Fillmore Compressor in Millard County, Utah; and (4) upgrades of the existing Opal Meter Station in Lincoln County, Wyoming and the Wheeler Ridge Meter Station in Kern County, California. It is indicated that the proposed compression facilities will add a total of 49,500 horsepower to the Kern River system at a cost of approximately $80 million.

Kern River states that the proposed expansion facilities are designed to accommodate the 124,500 dt per day of commitments for new firm service from Wyoming to California under four long-term (10 and 15-year) agreements resulting from a recent open season. It is stated that Kern River in the open season solicited requests for capacity turnback, but received no offers to release capacity. Kern River also states that the expansion transportation agreements are subject to the applicable extended term (ET) rates under the ET rate program recently approved for future implementation on the Kern River system. Kern River estimates that the rolled-in effect of the proposed expansion will be an approximately 4 to 6 percent reduction in otherwise applicable rates for existing shippers, partially offset by an increase in fuel reimbursement obligations as a result of the added compression. It is indicated that, pursuant to a rate settlement obligation, Kern River will submit a timely compliance filing to adjust its rates effective with the in-service date of the expansion to reflect the beneficial impact of the expansion project.

It is also stated that the proposed California compressor station will have an electric motor-driven compression unit. To ensure recovery of the associated actual electric fuel costs from its shippers flowing gas through that point, Kern River proposes an electric compressor fuel surcharge under its tariff. It is indicated that, based on the stated assumptions for electricity costs, the initial surcharge is $0.0051 per dt of service flowing through that station.

Kern River also states that the $800,000 estimated cost to restage the existing compressor unit at the Fillmore Compressor Station will be expensed consistent with the FERC's Gas Plant Instructions in Part 201 of the Commission's Regulations. Kern River requests approval to amortize the restaging expense over 15 years, consistent with the contract terms applicable to most of the expansion capacity. It is also indicated that use of the approved ET rate levelization methodology for the proposed roll-in results in the new regulatory depreciation rates shown in Exhibit O of the application. Kern River requests that, since the total debt-related depreciation expenses still will be recovered over the primary terms of the service agreements, it should be permitted to continue accounting for the differences between its book depreciation and its regulatory depreciation as a regulatory asset or liability, with amortization over the primary terms of the underlying service agreements.

Kern River avers that the expansion shippers require service by May 1, 2002, in order to serve the fuel requirements of new and existing electric power generation facilities in California, and that the new facilities will require seven months to construct.

Questions regarding the details of this proposed project should be directed to Gary Kotter, Manager, Certificates, at (801)-584-7117, or in writing to his attention at Kern River Gas Transmission Company, P.O. Box 58900, Salt Lake City, Utah 84158.

There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before December 13, 2000, file with the Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 14 copies of filings made with the Commission and must mail a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.

However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.

Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will received copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.

The Commission may issue a preliminary determination on non-environmental issues prior to the completion of its review of the environmental aspects of the project. This preliminary determination typically considers such issues as the need for the project and its economic effect on existing customers of the applicant, on other pipelines in the area, and on landowners and communities. For example, the Commission considers the extent to which the applicant may need to exercise eminent domain to obtain rights-of-way for the proposed project and balances that against the non-environmental benefits to be provided by the project. Therefore, if a person has comments on community and landowner impacts from this proposal, it is important either to file comments or to intervene as early in the process as possible.

Comments and protests may be filed electronically via the internet in lieu of paper. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's web site at http://www.ferc.fed.us/efi/doorbell.htm.

If the Commission decides to set the application for a formal hearing before an Administrative Law Judge, the Commission will issue another notice describing that process. At the end of the Commission's review process, a final Commission order approving or denying a certificate will be issued.