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MVP Needs FERC Quorum Soon to Avoid Delays, Says NextEra

The Senate will need to approve the Trump administration's FERC nominees soon, or else it could put the Mountain Valley Pipeline (MVP) natural gas project schedule at risk, management for NextEra Energy Inc. said Wednesday.

The Juno Beach, FL-based company has been reaching out to the Senate to stress the importance of restoring the Federal Energy Regulatory Commission's quorum as soon as possible, management said during a conference call to discuss 2Q2017 results.

NextEra plans to invest about $1.1 billion in MVP through a joint venture with EQT Midstream Partners LP, Con Edison Transmission Inc., WGL Midstream and RGC Midstream LLC. The Appalachian Basin-to-Southeast pipeline is scheduled to start construction later this year and be in service by December 2018.

"As far as Mountain Valley timing is concerned, it's pretty important that we get that FERC certificate by the end of September in order to continue on the timeline that we have, and so we're watching" the situation in the Senate closely, NextEra CEO Jim Robo said.

Robo said the company has been in contact "with senators on both sides of the aisle, pressing upon them how important it is for infrastructure, continued growth in infrastructure projects in the country, to get a vote." Senate Majority Leader Mitch McConnell (R-KY) "has extended by a couple of weeks the time that the Senate plans to be in session in August. That was the positive in terms of being able to get a vote on the nominees prior to the August recess.

"...Obviously there are some larger dynamics going on. I wish getting a FERC quorum was number one on the hit parade in terms of what Congress is focused on right now, but they're focused on some other things, obviously."

The 304-mile, 42-inch diameter MVP received afinal environmental impact statement from FERC last month, paving the way for a certificate decision. But FERC has been without a quorum since February and is currently unable to decide on project applications.

The Trump administration has named replacements for the four open spots on the five-seat Commission, and two of those nominees -- Robert Powelson and Neil Chatterjee -- have passed through committee. But despite pressure from industry groups, FERC's vacant seats remain empty for now, leaving projects like MVP hanging in the balance.

While MVP could soon see its timeline impacted by the inaction in Washington, DC, management for DTE Energy Co. said Wednesday the company has already had to push back the schedule for its Nexus Gas Transmission pipeline because of FERC.

Meanwhile, the lack of quorum did not prevent NextEra from placing its Sabal Trail and Florida Southeast Connection pipelines into service during the quarter. Both projects -- designed to transport additional natural gas from Transcontinental Gas Pipe Line (Transco) to serve power generation operated by NextEra subsidiary Florida Power & Light Co. (FPL) -- came in on-time and on-budget, management said.

CFO John Ketchum said NextEra, which has a diversified portfolio of energy assets, including wind and solar investments, expects to identify a greenfield pipeline project to pursue within the next few years.

"The reason we say that is all the things that make us a successful renewables developer translate equally over to natural gas pipelines,” Ketchum said. “We're great at the state regulatory side, on the land acquisition side. We've got an equipment procurement advantage. We have a cost of capital advantage and access to capital advantage. All those things, particularly when you look at where our cost of capital is compared to the yield of other" master limited partnerships "should give us a real advantage to be able to be successful in that business.

"That being said, the greenfield pipeline business is very, very competitive, and while we will continue to look for gas basis dislocations that can support the economics for a new pipeline project, and be able to execute and move forward on one, they're tough to find. So that's something we'll continue to try to identify through our development efforts."

Net income totaled $793 million ($1.68/share) in 2Q2017, compared with $540 million ($1.16) in the year-ago quarter. Revenue in 2Q2017 totaled $4.4 billion, up from $3.8 billion.

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