of antitrust law.

In an essential facilities case, the

defendant is entitled to raise any bona fide business

justification for withholding access, including the availability of competitive alternatives. while the plaintiff's cost of duplicating the essential facilities is relevant, the defendants cost of providing service is not. similarly, in adjudicating an access impasse, the

considered, but the at-risk pipeline's cost of service

may not.

Although the at-risk pipeline's cost of service would not

be at issue, a range of other facts might be introduced. The filed transportation contracts could be relevant. the other

hand,

direct comparisons might be inappropriate for a number of legitimate reasons. For

On

example, the subscribing customers may have been willing

to share a greater portion of project risks, or the

In resolving an impasse case, the mediator must find a

rate that the parties would have agreed to in the absence

of

the

at-risk

pipeline's inappropriate behavior.

а

Obviously, this standard carries wide degree of latitude, it must to accommodate the variety of impasse cases that might arise. But the emphasis rests

as

pipeline's cost of service (or, similarly, the pipeline's projected units of service).

One final word on impasse remedies is important. An impasse dispute is conflict between the at-risk

a

Therefore, legislation should provide that no remedy in impasse

may

divest any existing shippers

an

case

contractual rights as embodied in an executed service

agreement with the at-risk pipeline.

b.

Sections 4 and 5 of the Natural Gas Act would provide the

primary safeguard against cross-subsidization.

c.

Shippers may seek remedies by filing impasse complaints

as described above in response to Question 7(a).

Thank you for providing the opportunity for me to testify at the recent Energy and Natural Resources Committee hearing on the National Energy Security Act of 1991.

Brooklyn Union endorses the purposes of the Act and is pleased with its balanced approach to reducing our dependence on imported oil and facilitating the continuation of reliable natural gas supplies over the long-run. It is rewarding to see the important role that natural gas can play both in contributing to energy security as well as in improving the environment.

My written answers to the follow up questions you sent to me on March 11, 1991 are attached. We are also preparing written testimony on Title XI TRANSPORTATION AND ALTERNATIVE FUELS of S. 341 and will forward it to you shortly.

Thank you, again, for this opportunity to participate in this important process. Do not hesitate to contact me if you require any further information.

Sincerely,

Arbeiß Cetele

CC:

Don Santa, Esq.

ANSWERS TO POST-HEARING QUESTIONS

Ву

ROBERT B. CATELL
President & Chief Operating Officer

THE BROOKLYN UNION GAS COMPANY

On

TITLE X OF S. 341

THE NATIONAL ENERGY SECURITY ACT OF 1991

April 1, 1991

QUESTIONS OF SENATOR PETE V. DOMENICI

1.

Do you support the Commission's open access transportation

program?

access

Yes, Brooklyn Union supports the Commission's open transportation program.

were

of the first local distribution companies to take advantage of open pipeline access

We

one

and the growing spot natural gas market to purchase lower cost gas

supplies.

Open access transportation has produced fundamental changes in the way Brooklyn Union purchases its gas supplies to the benefit of its customers. Traditionally, purchased all

of

gas

we

our

requirements from pipeline suppliers under a bundled sales service.

Today, with the unbundling of pipeline services into separate sales

and transportation functions,

we

can buy

gas directly

from

producers under either spot or long-term purchase agreements, which

reflect our market profile. This allows us to better stabilize the

price and control the reliability of our gas supplies. Open access transportation has allowed us to diversify our supply sources. We have already converted substantial amounts of pipeline sales service to firm transportation, which has resulted in lower retail gas prices.

One final necessary step is to deal with the issue of