Colonial Pipeline Revises Tariff

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By Reuters 2015-10-28 09:19:17

Colonial Pipeline has crafted a revised tariff intended to soothe shipper concerns about access to the critical gasoline and diesel artery that links the U.S. Gulf Coast to the Northeast.

Last March Colonial withdrew a previous revision after some shippers complained to the Federal Energy Regulatory Commission that it would limit competition by squeezing entry to the largest refined product pipeline system in the United States.

The disputed tariff, and the latest revision which Colonial aims to file with FERC next month, would change how space is allocated on the system, which has been full for more than three years.

After a series of meetings with shippers, Colonial further tweaked the tariff, the company said on Tuesday.

The central issue is shipper history. Colonial moves more than 3 million barrels per day of gasoline and distillates from the Gulf Coast to the Northeast. The system allocates space based on shipper history, or how many barrels shippers regularly move in 72 cycles throughout each year.

Under the current tariff, regular shippers move an average of 18,750 barrels per cycle. Shippers that do not always move that much routinely transfer their shipper histories back and forth to maintain the consistent status of a regular shipper. Otherwise, they have to settle for what they can get of the 10 percent or less space left available.

The newer tweaked tariff would still stop that practice unless a regular shipper buys another regular shipper's business.

However, Colonial will reduce the average barrels per cycle to qualify as a regular shipper to 11,250 from 18,750. Also, shippers seeking part of that limited open space can try with a minimum of 15,000 barrels, down from the current required minimum of 25,000 barrels, the company said.

Several smaller shippers, including Nova Energy and Concept Petroleum Marketing LLC, had told FERC that inability to transfer histories back and forth would relegate them to jockeying for open space, limiting competition.

York River Fuels LLC, a New York Harbor marketer affiliated with Western Refining Inc, also had said it wanted to maintain a longtime deal with another company to swap histories as needed.

Those shippers either declined comment or did not respond to requests for comment on Tuesday.