PUC denies pipeline reversal

In a unanimous vote, the Pennsylvania Public Utility Commission on Thursday turned down a request to reverse part of a pipeline carrying gas across the state from Philadelphia to Pittsburgh.

The decision by the PUC’s five commissioners caps a nearly two-year-old effort to reverse a western segment of the pipeline, known as the Laurel Pipe Line and operated by Texas-based Buckeye Partners LP.

The line currently carries gas from Philadelphia refineries to points across central and western Pennsylvania, including terminals around Harrisburg.

Buckeye has claimed a partial reversal would allow more cheap midwestern fuel to reach central portions of Pennsylvania. But opponents – a group of western Pennsylvania retailers and Philadelphia-area refiners – have argued that a reversal would drive up prices in and around Pittsburgh.

In a statement, PUC Chair Gladys M. Brown sided with the opponents, as did an administrative law judge for the PUC in March.

“The Pittsburgh and western Pennsylvania market will be detrimentally affected by the loss of the competition that the Philadelphia refineries provide to discipline midwestern market forces,” Brown wrote.

Among other issues in the case was whether the state or federal government had jurisdiction over Buckeye’s request. In its 167-page decision, the PUC said it had jurisdiction because Buckeye was planning to partially abandon intrastate service under PUC domain.

Buckeye, meanwhile, has asked the Federal Energy Regulatory Commission for permission to move gasoline in two directions on the western portion of the Laurel pipeline, which is between Pittsburgh and Eldorado, a point near Altoona.

Buckeye issued the following statement in response to the PUC decision: “While we are waiting to review the commission’s formal order, we respectfully disagree with the decision regarding our market-driven proposal aimed at providing Pennsylvania consumers with expanded access to more affordable fuels, but we will abide by the decision and continue to move forward with our current plans to provide bi-directional service on Laurel Pipe Line. Bi-directional service will enhance competition and provide shippers and suppliers with more options while still increasing access to lower-cost North American-produced fuels for Pennsylvania consumers.”

The opposition coalition, called Deny Buckeye, praised the PUC decision. Its members include convenience-store chain Sheetz, grocery company Giant-Eagle and a number of Philadelphia refiners.

The coalition also urged the PUC to block Buckeye from temporarily shutting down a portion of the pipeline before beginning to pipe gasoline in two directions.

“After over a year of telling the PUC, legislators, media and the public that a reversal is best for Pennsylvania, Buckeye is now trying to take unilateral action that appears to be circumventing the Pennsylvania Public Utility Commission process,” the coalition said in its statement. “Truly embracing bi-directional flow that meets the needs of Laurel/Buckeye’s current customers — and being open to competition — are contrary to their position for well over a year.”

In a separate statement, Buckeye said it planned to shut down the affected portion of pipeline on Aug. 20 for testing and scheduled maintenance.

“The required testing, which involves moving pressurized water through a portion of the refined petroleum products line, is not uncommon and will be done safely, via a highly controlled engineering procedure meeting or exceeding state and federal requirements,” the Buckeye statement said. “This procedure is to ensure that, when we add west-to-east service to our current east-to-west service, it is done safely and efficiently and represents another important step forward in our plans to enhance market competition by providing Pennsylvania consumers with more access to lower-cost American-produced fuels.”

Editor’s note: This story has been updated from its original version to include comments from Buckeye Partners and from the Deny Buckeye coalition.

CPBJ Staff

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