The Economic Regulatory Administration and the Federal Energy Regulatory Commission yesterday temporarily turned down a request by a gas supply company for permission to pass through to its customers higher costs incurred for shipments of Algerian liquefied natural gas.
The two agencies, each of which has some responsibility for authorizing such shipments, also said that they will review a 1977 authorization that permits the import of 165 billion cubic feet of the high-cost gas over 20 years.
The agencies noted that opponents of the shipments have argued that circumstances have changed sufficiently to warrant revoking the 1977 license and said they will review those issues in a combined hearing.
Questions about the contract arose because of recent shipments of LNG from Algeria by Trunkline Gas and Trunkline LNG Co., subsidiaries of Panhandle Eastern Corp. The shipments began after Trunkline amended its contract with Algeria's state-owned gas company, Sonatrach, to allow prices to rise faster than they would have under the original contract.
Although Panhandle has had a contract with Sonatrach, signed in 1975 and approved by the United States and Algeria in 1977, no deliveries had been made under the contract in the intervening years. The Algerians had sought higher prices than those provided for in the contract.
Utility companies, industrial users, state agencies and members of Congress from Michigan, Missouri, Illinois, Indiana and Ohio filed protests against the imports, arguing that customers should not be required to pay for the high cost gas when lower cost domestic gas is available.
Panhandle has said that the LNG contracts will provide a valuable natural gas supply over 20 years and that the costs may appear more reasonable as the years pass.