Joint Comments of Interested Gas Pipeline Partnerships under PL05-5.

UNITEDSTATESOFAMERICA BEFORETHE FEDERALENERGYREGULATORYCOMMISSION IntheMatterof ) ) DocketNo.PL055000 InquiryRegardingIncomeTaxAllowances ) JOINTCOMMENTSOFINTERESTED GASPIPELINEPARTNERSHIPS PursuanttotheRequestForCommentsissuedDecember2,2004bytheFederal EnergyRegulatoryCommission(CommissionorFERC),TransCanadaCorporation (TransCanada),IroquoisGasTransmissionSystem(Iroquois),PortlandNaturalGas TransmissionSystem(Portland),GreatLakesGasTransmissionLimitedPartnership (GreatLakes),andTuscaroraGasTransmissionCompany(Tuscarora)(collectively, GasPipelinePartnerships)herebysubmitthesecomments.1 INTRODUCTION AsoutlinedinthesubjectDecember2RequestForComments,theimpetusfor thisinquiryistheDistrictofColumbiaCircuitsdecisionin BPWestCoastProducts, LLC v. FERC, 374 F.3d 1263 (D.C. Cir. 2004) (BP West), reviewing rate orders concerninganoilpipeline,SFPP,L.P.(SFPP).TheCourtheldthattheCommission had not adequately justified its Lakehead2 policy applied in that case, whereby 1 Inadditiontothesejointcomments,GasPipelinePartnershipssupportthe commentsoftheInterstateNaturalGasAssociationofAmerica. 2 Lakehead Pipe Line Co., L.P., Opinion No. 397, 71 FERC 61,338 (1995), rehg denied, Opinion No. 397A, 75 FERC 61,181 (1996) (Lakehead). partnershipsareaffordedaratemakingincometaxallowancelimitedtothatproportionof thepartnershipinterestsownedbycorporatepartners. Gas Pipeline Partnerships have used the partnership structure as the primary investmentvehicleforinfrastructuredevelopmentforanumberofreasons.Infrastructure investment is capital intensive. Large infrastructure projects often require the participationofmultiplepartiesduetothesizeoftheinvestment,theneedtospreadrisk, and the opportunity to create alignment joining developer and shipper interests in a project. Thepartnershipstructurealsohassignificantadvantages tothedeveloperin raisingdebtfinancing. Thecombinationofsignificanttaxadvantagesandabusiness structurethatallowsforspreadingriskamongmultipleinvestorshasmadepartnership passthrough entities the optimum vehicle to advance needed pipeline infrastructure projects.GasPipelinePartnerships,instructuringtheirconsiderablenaturalgaspipeline investments,havereliedonlongstandingCommissionpolicythatensuredthatapipeline organizedasapartnershipcouldcollectratescomparabletothatofapipelineorganized asasubchapterCcorporation.Disallowanceofincometaxcostsincostofservicerates forpartnershipswillhaveasignificantimpactontheentirepipelineindustryandwill chillinvestmentinadditionalinfrastructure. TransCanadaisaleadingNorthAmericanenergycompanywithanaturalgas transmissionnetworkinCanadaandtheU.S.comprisingover25,000milesofpipeline. TransCanada, through subsidiaries, owns interests in Great Lakes, Iroquois,Portland, Tuscarora,NorthernBorderPipelineCompany,3GasTransmissionNorthwestandNorth 3 TransCanadasinterestsinTuscaroraandNorthernBorderareheldinpart through TC PipeLines, L.P., a publicly held limited partnership of which a 2 Baja.Exceptforthelattertwosystems,whicharewhollyownedbyTransCanada,each o