Bay Gas Storage Company, LLC; Notice of Staff Protest

Bay Gas Storage Company, LLC; Notice of Staff Protest

1. Commission staff hereby protests, pursuant to section 284.123(g)(4)(i) of the Commission's regulations, ⁽¹⁾ the rate petition made by Bay Gas Storage Company, LLC (Bay Gas) on July 30, 2026, in the above referenced docket. Pursuant to sections 284.123(b)(2) and 284.123(g) of the Commission's regulations, Bay Gas filed a rate petition to revise rates for firm and interruptible interstate transportation services provided under section 311 of the Natural Gas Policy Act of 1978. Bay Gas states that the instant rate petition complies with its commitment to file a petition for rate approval on or before July 30, 2026, as stipulated in an amendment filing in Docket No. PR21-58-000. Bay Gas also states that in compliance with an agreement with Commission staff in Docket No. PR21-58-000, it has incorporated Original Cost of plant into the cost of service for its proposed rates. Bay Gas argues that it qualifies for an exemption to the Commission's straight-fixed variable (SFV) rate design policy due to its long-standing rate design that was the result of a settlement in March 1999 which has been carried forward since without change.

2. Commission staff is concerned that Bay Gas has not adequately demonstrated that the proposed firm and interruptible transportation rates are fair and equitable and comply with the underlying principles of SFV rate design. For instance, Bay Gas' proposed rate design does not properly account for variable costs. Bay Gas utilizes a 3400 horsepower Salco compressor station situated between its Whistler Spur Facilities and Mainline Facilities and has various measuring and regulating station equipment throughout its system. Operating these types of plant usually incurs variable costs. However, Bay Gas' proposed transportation rates do not have a usage or commodity charge, and propose a minimum rate of zero. In particular, Commission staff questions the allocation of Total Transmission plant costs for Compressor Station Equipment in Schedule 5 and the lack of compressor station expenses under Transmission Expenses in Schedule 8. Without properly understanding the impact of variable costs on its transmission system, we are unable to determine whether the proposed section 311 transportation rates are fair and equitable.

(Authority: 18 CFR 2.1)

⁽¹⁾  18 CFR 284.123(g)(4)(i) (2025).