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INGAA, EEI Back Conference on Northeast Gas Demand

INGAA, EEI Back Conference on Northeast Gas Demand

The leaders of the a major pipeline association and a key electric utility group jointly have expressed their support for FERC to convene a conference "in the near future" to assess post-2000 natural gas demand in the Northeast and the need for new pipeline capacity to serve customers, particularly power generators, in that market.

The request comes in the wake of the Commission majority's action last week to forego preliminary determinations (PDs) for four controversial pipeline projects intended to carry western Canadian gas from the U.S. Midwest market to the Northeast. FERC indicated that a key factor in its decision centered on the question of "need" and lack of firm contracts with potential end users for the proposed projects, which include Independence, Millennium, MarketLink and SupplyLink. Pipeline sources privately criticized FERC's move, saying that it would seriously jeopardize the construction of new capacity to a market that's widely expected to experience high growth in gas demand in the post-2000 period.

Given that gas consumption by electric generators in New England is expected to more than double by 2005, "we believe it is imperative that the Commission assess whether there is adequate pipeline capacity in place to meet this rapidly growing demand," wrote Jerald V. Halvorsen, president of the Interstate Natural Gas Association of America (INGAA), and Thomas R. Kuhn, president of the Edison Electric Institute (EEI), in a March 15th letter to FERC Chairman James Hoecker. Halvorsen said Hoecker indicated following the last Commission meeting that he was considering calling a conference to explore these issues.

"What this hearing will do, I think, is paint a picture that you really have a demand there [in the Northeast] that's growing pretty quickly, and almost all of the projects that are projected to go in there are going to be able to find a market," he said in an interview with Daily GPI. "We're not necessarily alarmed [by FERC's PD action], but we're just saying the whole concept of stepping back and taking a look at the big picture is something we ought to do."

Halvorsen said he and Kuhn support a "generic-type" hearing where FERC would "call in the electrics and the industrials, some of the political leaders and some of the ISO people to try to get an updated picture on what the demand really is [in the Northeast]. Then I think the Commission will be better able to say we're weighing all these landowner concerns on one hand, but we also have these demand considerations on the other hand. So if anything, it should help to kind of balance everything out" in the end.

"We think it is important for them [FERC] to look at the total situation with respect to the gas needs in the Northeast, from the standpoint of the power plant needs...in the future and the pipeline capacity to bring the needed gas to that area of the world," Kuhn told Daily GPI. He believes a conference examining these issues should be held in the "next couple of months."

"We think at this point in time probably additional pipeline capacity is going to be needed" to supply generators in the Northeast region, Kuhn said. But "I think that we need to get people on the same page with respect to the timeframe and amounts" of capacity that will be required. He refused to "prejudge" the level of capacity that will be needed. "I think that's exactly why we need a conference to discuss those issues, to get all the views on the table."

The Energy Information Administration has projected that gas consumption by electric generators on the East Coast (New England and Mid-Atlantic) will jump from 0.535 quadrillion Btus per year in 2000 to 1.26 quads in 2005. But Kuhn declined to speculate on how much he thought gas demand by generators would rise post-2000. "We don't have any particular studies or predictions out there. But what we really want to do is get the people in the Northeast, the buyers, together at this conference so they can get out their predictions."

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