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
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
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