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Attorney Calls for Expanded Certification Process

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 &amp 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.

Susan Parker

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