FERC to Eliminate Optional Certificates
Seeking convergence in its certificate policy, the Federal
Energy Regulatory Commission proposed phasing out its 15-year old
optional expedited certificate, saying "expedited" is now a
misnomer and all pipeline certificates should be required to pass
under the "public convenience and necessity" bar.
FERC proposed the phase-out in a Notice of Proposed Rulemaking
at its regular meeting last Wednesday, saying that while the rule
change is under consideration it will continue to consider optional
certificates but will look at them in a slightly different light.
The optional certificate was made available under the initial
deregulation Order 436 in October 1985 as a way for pipeline
sponsors who bore all the risk of a project to get speedy
The certificates, however, always were subject to environmental
review, which takes up the most time in the certification process.
In the meantime, "general Section 7 policy has caught up to the
optionals," Chairman James Hoecker said.
Commissioner Linda Breathitt said the commissioners were
concerned the optional certificate offered "a loophole for pipeline
projects to avoid the public interest balancing factors set forth
in the policy statement" ratified by FERC last fall (see NGI, Sept.
16). When it issued that statement, which called for incremental
rates unless the sponsors could prove commensurate benefits to
existing customers, it did not include optional certificates. The
earlier statement also added into the review process consideration
of nearby landowners, existing customers and existing competing
The Commission said that while it considered the new NOPR to
eliminate optionals, projects could continue to be filed under the
existing rules. Any new optional filings would carry the
presumption they are in the public interest, but that presumption
could be undermined by examination under the same standards set out
in the policy statement.
On another issue FERC clarified the provision in last
September's policy statement relating to new construction expenses
which could be rolled into a pipeline's rates if there was a clear
benefit to existing customers. In that case an existing customer
whose contract has expired and who has the right of first refusal
to match the bid of a new customer "in certain limited
circumstances" could be faced with a rate higher than his
historical rate, the Commission said. The pipeline, however, could
not unilaterally require matching of a higher rate, but would have
to make Section 4 filings to implement ROFR procedures that stay
within its existing rate structure.
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