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FERC to Address Competing Pipeline Projects

FERC to Address Competing Pipeline Projects

Faced with an onslaught of new pipeline projects, FERC this week is expected to propose a policy statement that seeks to establish a "framework" by which it can pick the winner when two or more projects are destined for the same market [PL99-3]. The Commission has listed discussion of a policy statement on pipeline construction certificates on the docket for its regular open meeting Wednesday. It will be FERC's last meeting until September.

"It's clear the Commission is in a box so to speak. It's got to start to make decisions amongst competing projects" in the Northeast, Midwest and Florida markets, said one Commission observer. "I think previously...the Commission was hoping, for instance with respect to the Independence and Millennium pipeline projects, that at some point there would appear to be a clear winner based on contract demand...But that hasn't happened. It looks like FERC is going to eventually have to make a decision on these competing projects," he noted.

The observer expects FERC to revisit the Ashbacker Doctrine, which requires a winner to be selected when there are two or more competing pipeline projects headed for the same market. "Probably what I suspect they're going to be doing is asking parties how do you make the selection. Do you do it on least cost?"

That approach would almost always favor incumbent pipelines over new entrants to the market, thus "excluding any possibility of competition," he said. The policy statement will be "very important" for pipelines because "it will determine the degree to which new entrants will have an opportunity to build new grassroots projects."

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