July 14, 2014
Landrieu Calls on FERC to Continue Pressing ArcLight on Plans to Abandon Midla Pipeline Documents reveal ArcLight's 'blatant regulatory gamesmanship at the expense of its customers.'
ArcLight sharply reduced maintenance budget in years leading up to abandonment proposal.
Company attempted to push pipeline safety oversight agency to take its side in FERC inquiry.
WASHINGTON - In a letter to Federal Energy Regulatory Commission (FERC) Acting Chairman Cheryl A. LaFleur, U.S. Senator Mary L. Landrieu, D-La., the chair of the Senate Energy and Natural Resources Committee, today called on the commission to continue pressing ArcLight Capital Partners LLC hedge fund (ArcLight) for specific answers regarding its plan to abandon and replace portions of the Midla natural gas pipeline that serves many cities throughout nine parishes in Louisiana, including Franklin, Catahoula, Ouachita, Richland, Tensas, Concordia, West Feliciana, East Feliciana and East Baton Rouge.
Read the full letter Sen. Landrieu sent to FERC at: http://www.landrieu.senate.gov/files/documents/20140714Midla.pdf
"If ArcLight, American Midstream, and Midla are allowed to go forward with their plan to abandon the Midla pipeline, the result will be a termination of affordable natural gas service to tens of thousands of customers in 9 parishes in Louisiana: Franklin, Catahoula, Ouachita, Richard, Tensas, Concordia, West Feliciana, East Feliciana and East Baton Rouge. This would be absolutely devastating to the well-being and economy of these parishes," Sen. Landrieu wrote. "I respectfully request that you direct the appropriate FERC staff to continue to ask the right questions and insist on answers from Midla that tell the whole story. The outcome is so important to so many people in Louisiana that it is absolutely essential that FERC leave no stone unturned to assure that its decision regarding the future of the Midla pipeline is made based on the true facts of the situation, not regulatory gamesmanship by Midla."
FERC sent Midla pipeline two sets of detailed data requests concerning the abandonment proposal, one on June 11, 2014, which Midla responded to on July 2, 2014, and one dated June 30, 2014, which a response to is due on July 28, 2014.
"After reviewing the information submitted to FERC by Midla in response to its data requests, it is apparent that the company is engaging in blatant regulatory gamesmanship at the expense of its customers," Sen. Landrieu continued.
Under ArcLight's proposal, homeowners' monthly utility bills could double. In order for ArcLight to move forward with its plans to abandon the Midla pipeline, the proposal must be approved by FERC.
In their June 11th data request FERC asked Midla to explain why pipeline maintenance expenditures have declined in recent years. The June 11th data request includes Appendix A that indicates a precipitous drop in maintenance spending reported by Midla to FERC:
Sen. Landrieu wrote: "These numbers are indicative of a strategy by Midla since 2009 to reduce maintenance and allowing the pipeline to deteriorate."
In its response to FERC, Midla attempts to sidestep the issue by claiming "the decline in total maintenance as disclosed in our Annual Form No. 2-A during 2010 through 2013 as compared to 2009 and prior is a difference in classification in certain operation and maintenance expense by the previous owner."
Sen. Landrieu responded: "I strongly urge the FERC staff to reject Midla's non-answer of the critical maintenance questions and insist on a complete and full response. Midla needs to quit stonewalling and start cooperating so the key facts are known to all stakeholders."
Midla's responses to FERC's data requests also reveal an attempt by Midla to convince PHMSA to send a letter to FERC supporting Midla's safety claims. Fortunately, PHMSA ultimately decided not to send such a letter to FERC.
A series of Midla emails indicate that Midla had numerous contacts with PHMSA staff trying to convince them to send a letter expressing safety concerns in support of abandonment but not take any safety regulatory action against Midla.
"These emails speak for themselves and reveal a cynical effort by Midla to use the safety issue as a tool to force the abandonment of the Midla pipeline," Sen. Landrieu wrote.
On Feb. 25, 2014, Sen. Landrieu met with Louisiana Public Service Commissioner Scott Angelle, State Senator Robert Adley and Vidalia Mayor Hyram Copeland to hear their concerns about ArcLight's plans to abandon the pipeline.
In April, Sen. Landrieu sent an initial letter to FERC raising concerns about the proposal. Read the letter: http://www.landrieu.senate.gov/files/documents/20140226LaFleur.pdfSen. Landrieu also raised concerns about ArcLight's request for a shortened 10-day window for parties who want to intervene in FERC's proceedings.
Later that month, during an Energy Committee hearing at which Commissioner LaFleur was testifying, Sen. Landrieu held up the letter, making her concerns about the abandonment proposal clear. (http://www.landrieu.senate.gov/?p=pressrelease&id=4364)
The following day, FERC announced that it would not grant the shortened, 10-day review timeline (http://www.landrieu.senate.gov/?p=pressrelease&id=4365) requested by ArcLight.
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