Faced with an onslaught of new pipeline projects, FERC this weekis expected to propose a policy statement that seeks to establish a”framework” by which it can pick the winner when two or moreprojects are destined for the same market [PL99-3]. The Commissionhas listed discussion of a policy statement on pipelineconstruction certificates on the docket for its regular openmeeting 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 tostart to make decisions amongst competing projects” in theNortheast, Midwest and Florida markets, said one Commissionobserver. “I think previously…the Commission was hoping, forinstance with respect to the Independence and Millennium pipelineprojects, that at some point there would appear to be a clearwinner based on contract demand…But that hasn’t happened. Itlooks like FERC is going to eventually have to make a decision onthese 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 morecompeting pipeline projects headed for the same market. “Probablywhat I suspect they’re going to be doing is asking parties how doyou make the selection. Do you do it on least cost?”

That approach would almost always favor incumbent pipelines overnew entrants to the market, thus “excluding any possibility ofcompetition,” he said. The policy statement will be “veryimportant” for pipelines because “it will determine the degree towhich new entrants will have an opportunity to build new grassrootsprojects.”

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