Western Pa. pipeline battle over fuel delivery continues with regulators

The Texas-based owner of a petroleum pipeline that serves Western Pennsylvania is not taking “no” for an answer.

Houston-based Buckeye Partners LP and its subsidiary, Laurel Pipe Line Co., which operates an east-to-west pipeline through Pennsylvania, want the option to deliver fuel from west-to-east, but can’t get the necessary regulatory approval.

The latest rejection came from the Federal Energy Regulatory Commission, which in June denied Buckeye’s request for tariffs and rates connected with bi-directional service between Pittsburgh and Altoona.

FERC said it was unclear whether Buckeye would be able to provide bi-directional service without impairing existing intrastate east-to-west service out of Philadelphia. Bi-directional service would allow a westward or eastward flow on the Laurel Pipeline, depending on demand and the time of year.

“Buckeye/Laurel have not shown that the proposed terms (for bi-directional service) are just, reasonable and non-discriminatory,” the FERC ruling said.

This week, Buckeye and Laurel filed a joint request for a rehearing before FERC, calling the June decision “arbitrary and capricious.” The pipeline operators said FERC had ceded its authority over interstate transportation to the Pennsylvania Public Utility Commission in violation of the Interstate Commerce Act.

“The (FERC) order accepts at face value vague and unsupported factual claims made by the intervenors and the PaPUC, while entirely ignoring the detailed information explaining the proposal and demonstrating how the services would be performed,” Buckeye/Laurel said. “When there are conflicting facts, the answer is to have a hearing, not to reject the filing.”

Buckeye/Laurel declined further comment.

The “intervenors” are gasoline retailers and energy companies that rely on the east-to-west service out of Philadelphia and, therefore, oppose Buckeye’s attempts to reverse the flow or get bi-directional service.

Buckeye’s effort has several moving parts, both at the state and federal level.

Buckeye Partners first petitioned the state PUC for flow reversal in the fall of 2016. Buckeye said it was seeking to change direction between Pittsburgh and Altoona so that it could bring refined product eastward from Midwest refineries. The company said such a change would capitalize on America’s increasing energy independence and would benefit consumers.

A coalition of gasoline retailers, including Giant Eagle and Sheetz, fought the change, using similar arguments about lack of choice driving up prices at the pump.

In the short term, the retailers won. The PUC, affirming a decision by an administrative law judge, denied Laurel Pipe Line’s application in July 2018.

Buckeye Partners appealed the PUC’s denial to the Commonwealth Court of Pennsylvania, while at the same time shifting tactics. Instead of asking for flow reversal, Buckeye took its case to FERC in the form of a request for bi-directional service.

Opponents said it was an end-run around the state PUC, but Buckeye said the petition fell within the parameters set by the state.

Giant Eagle, Sheetz and several energy companies fought the new effort by intervening in the FERC case and filing a complaint with the state PUC. The complaint asserts that Buckeye’s plans to institute bi-directional service would constitute a partial abandonment of public utility service in violation of state law.

The objectors currently are in settlement talks with Buckeye and plan to give a status report to the PUC by Aug. 1.

Meanwhile, Buckeye is awaiting regulatory approval for its merger with IFM Investors, which was announced in May for a cash value of $10.3 billion.

In response to the latest developments, Giant Eagle released the following statement:

“We are thankful that the Federal Energy Regulatory Commission rejected Buckeye’s proposed tariff filing in early June and reinforced the Pennsylvania Public Utility Commission’s oversight of any requested changes to the Laurel Pipeline. We are aware of Buckeye’s request for a rehearing, and are hopeful that the FERC will deny Buckeye’s request while the PaPUC decides whether Buckeye’s proposal is in the best interests of Pennsylvania consumers and businesses.”

Stephen Huba is a Tribune-Review staff writer. You can contact Stephen at 724-850-1280, [email protected] or via Twitter .

Published at Thu, 11 Jul 2019 21:34:43 +0000

Source: Western Pa. pipeline battle over fuel delivery continues with regulators.

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