Attorney Calls for Expanded Certification Process
FERC's let-the-market-decide approach for certificating new
pipeline projects isn't well suited for all cases, said a leading
energy attorney last week. With some projects, it hasn't been "good
enough so additional analysis [by FERC] might be required" before a
pipeline can win a certificate.
The market-decide approach shouldn't be applied generically,
according to Barbara K. Heffernan, a partner in the Washington DC
law firm of Schiff, Hardin & Waite. FERC sought comments on the
subject in its July NOPR on short-term transportation capacity.
A "very necessary corollary" of the market-decide approach is
the at-risk provisions. Here, the Commission has to "make sure it
really puts them [the pipelines] at risk for any underutilized
capacity. Otherwise, you're really not letting the market decide,"
she said at the seventh annual DOE-NARUC conference.
The at-risk provisions work "quite well" for new stand-alone
projects serving new markets, but "the situation gets a lot more
complicated" when either an existing pipeline seeks to expand or a
new pipeline wants to enter a market that's already being served by
other pipelines. "You've got existing customers on the expansion
pipeline who might be asked to subsidize...the costs of this new
project." The at-risk conditions fall far short of protecting
existing shippers especially where a project wants to enter a
market already being served, said Heffernan, who represents mostly
New England LDCs. "In this situation, I think the Commission has to
[exert] a little more scrutiny," meaning that it should look behind
the precedent agreements supporting the project.
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