LANSING – A Texas-based gas company wants to convert from transporting natural gas to the more lucrative business of transporting crude oil, but Consumers Energy, the Public Service Commission and Governor Rick Snyder are appealing to the federal government to block the request, saying it will increase costs for residents and businesses across the state.

The company, Trunkline Gas Company, filed a request on July 26 with the Federal Energy Regulatory Commission seeking to abandon a 770-mile piece of its pipeline that includes a section in Texas and another that stretches from Louisiana to Illinois.

In its application, the company says there is no market for the capacity and closing one of the pipelines would not adversely affect customers.

One of its largest customers, Consumers Energy, strongly disagrees with those points and many others outlined in its 33-page filing.

“They serve an important role in bringing natural gas to Michigan from the gulf coast,” Consumers spokesperson Dan Bishop said. “Trunkline’s proposal is simply a bad idea.”

A Trunkline spokesperson did not return a message seeking comment.

More than 60 percent of the natural gas the Jackson-based utility supplies to its 1.7 million customers comes through Trunkline’s transmission pipelines. If approved, only one pipeline would be left and if that ever experienced operational problems, service could be affected, Bishop said.

“Our customers depend on this fuel source to keep their homes warm and their factories heated,” he said.

Bishop said the utility is cutting its heating costs by $240 million over next few years due to the reduced cost of natural gas, but those savings would not be realized, and costs could go up, if this pipeline is allowed to be abandoned, he said.

“Trunkline’s proposal, if approved, will significantly reduce existing natural gas service flexibility and necessary reliability to Consumers Energy customers and will result in higher costs,” said John Russell, president and CEO of Consumers Energy.

While not stated in its release, but part of its filing with FERC, Consumers Energy wrote that more than 2,500 megawatts of coal-fired electric plants will be mothballed or retired in the Lower Peninsula before federal mercury and air pollution regulations kick in on April 16, 2015.

It expects that natural gas-fueled power plants will be the only reasonable way to replace that amount of power in a short amount of time.

Rod Williamson, energy development manager at Dow Corning and chair of The Association of Businesses Advocating Tariff Equity, agreed and said new natural gas plants are likely to begin being built in the next few years.

“This is certainly not the time to be limiting the transportation capacity,” he said.

In 2000, the company reduced its capacity by 14 percent through abandonment. This request would reduce capacity by 38 percent. The 2000 abandonment also left two pipelines still serving the state, while this latest request would leave just one pipeline.

Snyder also weighed in on the pipeline issue, along with the PSC, in separate filings with FERC.

This infrastructure is “vital to the energy supply and reliability in Michigan, with major ramifications for the ability to heat Michigan’s homes at an affordable price,” Snyder wrote.

He also noted his concerns that the move would negatively affect Michigan’s economic development and energy policy.

“Michigan, and the nation, needs more natural gas infrastructure, not less,” Snyder wrote.

In its filing, the PSC requested the convening of a technical conference to further analyze issues it said that Trunkline has failed to address so far.

The company, in its filing, noted that no customers requested long-term service contracts, and earlier this year, it received two requests to turn back existing capacity, showing there is no market for this capacity.

Consumers Energy countered in its filing that customers at that time were unaware of the possible abandonment and unwilling then to take on the long-term risk of signing a long-term firm service contract. The utility said the company did that in anticipation of filing its abandonment request to engineer an argument for doing so.

“There is no evidence that such a conversion would benefit anyone but Trunkline’s shareholders,” Consumers Energy attorney Deborah Moss wrote.

Consumers Energy and Trunkline have been in contract negotiations for more than a year and a half without resolution, according to the document.

In its filing, the utility also said Trunkline attempted to wrap its request “in the flag” by stating that abandoning the pipeline would advance the energy security of the country. But, Consumers said, what it would do is shift U.S. energy security issues from the oil to the gas sector.

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