The leaders of the a major pipeline association and a keyelectric utility group jointly have expressed their support forFERC to convene a conference “in the near future” to assesspost-2000 natural gas demand in the Northeast and the need for newpipeline capacity to serve customers, particularly powergenerators, in that market.

The request comes in the wake of the Commission majority’saction last week to forego preliminary determinations (PDs) forfour controversial pipeline projects intended to carry westernCanadian gas from the U.S. Midwest market to the Northeast. FERCindicated that a key factor in its decision centered on thequestion of “need” and lack of firm contracts with potential endusers for the proposed projects, which include Independence,Millennium, MarketLink and SupplyLink. Pipeline sources privatelycriticized FERC’s move, saying that it would seriously jeopardizethe construction of new capacity to a market that’s widely expectedto experience high growth in gas demand in the post-2000 period.

Given that gas consumption by electric generators in New Englandis expected to more than double by 2005, “we believe it isimperative that the Commission assess whether there is adequatepipeline capacity in place to meet this rapidly growing demand,”wrote Jerald V. Halvorsen, president of the Interstate Natural GasAssociation of America (INGAA), and Thomas R. Kuhn, president ofthe Edison Electric Institute (EEI), in a March 15th letter to FERCChairman James Hoecker. Halvorsen said Hoecker indicated followingthe last Commission meeting that he was considering calling aconference to explore these issues.

“What this hearing will do, I think, is paint a picture that youreally have a demand there [in the Northeast] that’s growing prettyquickly, and almost all of the projects that are projected to go inthere are going to be able to find a market,” he said in aninterview with Daily GPI. “We’re not necessarily alarmed [by FERC’sPD action], but we’re just saying the whole concept of steppingback and taking a look at the big picture is something we ought todo.”

Halvorsen said he and Kuhn support a “generic-type” hearingwhere FERC would “call in the electrics and the industrials, someof the political leaders and some of the ISO people to try to getan updated picture on what the demand really is [in the Northeast].Then I think the Commission will be better able to say we’reweighing all these landowner concerns on one hand, but we also havethese demand considerations on the other hand. So if anything, itshould help to kind of balance everything out” in the end.

“We think it is important for them [FERC] to look at the totalsituation with respect to the gas needs in the Northeast, from thestandpoint of the power plant needs…in the future and thepipeline capacity to bring the needed gas to that area of theworld,” Kuhn told Daily GPI. He believes a conference examiningthese issues should be held in the “next couple of months.”

“We think at this point in time probably additional pipelinecapacity is going to be needed” to supply generators in theNortheast region, Kuhn said. But “I think that we need to getpeople on the same page with respect to the timeframe and amounts”of capacity that will be required. He refused to “prejudge” thelevel of capacity that will be needed. “I think that’s exactly whywe need a conference to discuss those issues, to get all the viewson the table.”

The Energy Information Administration has projected that gasconsumption by electric generators on the East Coast (New Englandand Mid-Atlantic) will jump from 0.535 quadrillion Btus per year in2000 to 1.26 quads in 2005. But Kuhn declined to speculate on howmuch he thought gas demand by generators would rise post-2000.”Wedon’t have any particular studies or predictions out there. Butwhat we really want to do is get the people in the Northeast, thebuyers, together at this conference so they can get out theirpredictions.”

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