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Opposition Turns to FTC to Stall Atlantic Coast Pipeline, Claims Antitrust

Opposition forces trying to stop the Atlantic Coast Pipeline (ACP), having already filled FERC’s docket with comments, are now petitioning the Federal Trade Commission (FTC) with claims that the project violates antitrust laws.

The Virginia Chapter of the Sierra Club, in a letter addressed to the FTC and also filed with the Federal Energy Regulatory Commission’s ACP docket [CP15-554], wrote Friday that the 600-mile, 1.5 Bcf/d Marcellus-to-Southeast (see Daily GPI, March 23) project would unduly incentivize its regulated utility backers to invest in natural gas-fired generation.

Explaining their reasoning, the Sierra Club wrote that they “anticipate harmful, anti-competitive consumer impacts of having one corporation [ACP 45% interest holder Dominion], which enjoys state-sanctioned monopoly status for electricity service in much of Virginia, involved in the ownership of a natural gas pipeline that is not needed and that would, if built, saddle Dominion Virginia Power customers with unnecessary additional costs for decades, while excluding competition from other sellers of electricity and developers of renewable energy projects.”

The Sierra Club argued that ownership interest in ACP would mean backers Dominion and Duke Energy would be less likely to invest in solar and wind generation, calling the investment structure of the pipeline “apparent self-dealing and [a] conflict of interest.” The risks of rising natural gas prices would fall to ratepayers, the group wrote.

The Sierra Club provided numerous attachments to its letter, including a recent report from renewal advocacy group Institute for Energy Economics and Financial Analysis that concluded the Marcellus and Utica shales are on course for a pipeline overbuild (see Daily GPI, April 27).

Friday’s letter was written in support of a protest written to the FTC (and filed in the FERC docket) last month by Michael J. Hirrel, a retired attorney with the Department of Justice.

“If Dominion, Duke and Piedmont [another ACP joint venture partner] were to acquire their gas and its transportation, plus electricity generation, in competitive markets, they would, the Commission must suppose, engage in a very different decision making process,” Hirrel wrote.

“But that process will be rendered moot when they acquire and transport their own natural gas, and generate their own electricity. They will distribute the electricity and gas to their own monopoly retail customers, who have no alternative. Those customers must pay the costs...whether the costs were efficiently assumed or not.”

ACP and Dominion Energy spokesman Aaron Ruby told NGI via email Friday that the antitrust complaint is without merit.

“It doesn’t demonstrate any anti-competitive behavior, and it doesn’t point to any relevant market that will be monopolized as a result of construction of the Atlantic Coast Pipeline. In fact, the opposite is the case,” Ruby wrote. “The ACP will actually introduce more competition into the market. As an example, North Carolina is currently served by a single natural gas transmission pipeline. Gas and electric utilities in the state have no other option. By introducing a second transmission pipeline into the market, utilities will have more choices, more competitive pricing, more reliability.

“...Investments to increase natural gas capacity are traditionally considered as having the effect of lowering prices, and are recognized as pro-competitive activities that would not support an antitrust claim.”

Ruby noted that, even assuming the ACP did hypothetically have the effect of increasing customer rates, such an increase would only be approved through state regulation and would be “presumed to be reasonable for purposes of antitrust laws and cannot be the subject of a private antitrust action for damages.

“Finally, the complaint ignores the fact that the parties involved in the project undertook two competitive [request for proposal] processes prior to selecting ACP as the preferred project to meet the needs of public utilities in Virginia and North Carolina,” Ruby wrote. “The complaint also ignores the fact that both state and federal agencies have jurisdiction over approval of the project and pricing.”

The ACP, like many high-profile pipeline projects in recent years, has encountered vocal and organized pushback from environmental groups, some landowners and even government officials along its route (see Daily GPI, June 22; May 17).

Matthew Hoza, an analyst with BTU Analytics, told NGI Friday that “while chances are low that the FTC will launch an investigation,” the antitrust complaint could still bolster anti-pipeline efforts by increasing “public awareness of the project while putting it in a negative light.”

Any increase in public opposition to the project could create more scrutiny at the state level, he said.

“While extra scrutiny might not scrap [the project] entirely it could add additional delays, which is one objective opposition groups have on their path to their larger goal of getting projects cancelled,” Hoza said.

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