5. Protest by EOTT Energy

EOTT Energy Operating Limited (EOTT), a Long Beach limited partnership involved in crude oil gathering, transportation and trading, has protested Pacific Pipeline's application, arguing that the proposed tariff increase is unjust and unreasonable.

EOTT states that it currently ships approximately 37,000 barrels per day of crude oil on the Line 63 System. It states that the proposed increase is unreasonable because (1) Pacific Pipeline has owned the Line 63 System for less than two years and, therefore, the $27 million in capital additions should have been taken into account when the system was purchased; and (2) Pacific Pipeline has not provided sufficient justification for its alleged returns on capital and equity.

EOTT states that one reason Line 63 volume is decreasing is that Pacific Pipeline has diverted volume away from Line 63 and onto its newly built Pacific System. EOTT also argues that Pacific Pipeline has failed to submit any cost data supporting its proposed rates of return on capital and equity.

Pacific Pipeline responds that, regardless of what entity made the $27 million in capital additions, this amount is not now included in ratebase and reflected in current rates. Pacific Pipeline states that it does not make the decision on whether shippers use Line 63 or the new Pacific System. That decision is up to individual shippers and is directed by nominations which shippers make separately for each system on a monthly basis. As to cost justification, Pacific Pipeline argues that its application fully supports a requested return on equity of 7.1%, and that this return is considerably less than the return authorized in D.97-05-031 (10.16%) and in the rate case before that, D.94-10-053 (10.96%).