FERC suspends Colonial Pipeline’s proposed gasoline shipment changes

By Nicole Jao and Shariq Khan

NEW YORK (Reuters) -The Federal Energy Regulatory Commission (FERC) on Wednesday suspended Colonial Pipeline’s proposal to overhaul its gasoline shipments for seven months to hear additional arguments from the company and shippers that have protested the changes.

Colonial Pipeline last month filed a revised tariff record for FERC approval, seeking to end overlapping shipments of different gasoline grades, while also ending shipments of so-called "Grade 5" gasoline sold in some Northeastern states during the winter. The company also wants to modify delivery specifications.

FERC said its review of the filing failed to show the changes were just and reasonable, and that they may be unduly discriminatory to shippers or otherwise unlawful. The regulator suspended the revised tariff record till November 4, and gave Colonial and its shippers 30 days to file additional written comments on the matter.

Colonial said it respects the FERC’s request for additional information.

"We look forward to further supporting how our proposed changes will safely increase capacity, benefit consumers in the markets we serve, reduce operational stress on our system, and otherwise enhance our integrity efforts," the company said in a statement.

Oil majors including Exxon Mobil (NYSE:XOM), Chevron Corp (NYSE:CVX) and BP (NYSE:BP) Plc had filed protest notices with the regulator, citing potential harm to shippers and consumers in order to boost Colonial profits.

Colonial rejected the arguments, saying they were driven by the protesting shippers’ focus on their own economics. It said the proposed changes will allow it to ship up to 10,000 barrels per day (bpd) more gasoline on its main gasoline pipeline, which almost always runs full, benefiting both shippers and consumers.

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In a separate ruling earlier this week, FERC allowed Colonial to proceed with changes to its handling of two niche gasoline grades traded in the Midwest, which the company has said will boost pipeline capacity by 5,000 to 10,000 bpd.

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