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FERC Eyes Inquiry of Projected Gas Demand in East

FERC Eyes Inquiry of Projected Gas Demand in East

The Federal Energy Regulatory Commission has scheduled on its meeting agenda for next week a policy statement initiative aimed at taking a realistic assessment of the future demand outlook for natural gas in the eastern half of the United States.

Although placed on the agenda, Chairman James Hoecker said he wasn't certain whether the Commission would act on the policy statement at the April 14th meeting. "We have to decide that internally. We got a place-holder there [on the agenda for the item], and we're going to try and figure...out between now and the meeting" whether to vote on it, he said Thursday following his speech to the Natural Gas Roundtable in Washington D.C.

"I think what we're going to do is end up with fundamentally a data-collection exercise" to evaluate future gas demand, using the expertise of the Energy Information Administration, the electric industry and other gas customers, Hoecker noted. "But we haven't really figured out what the scope of it's going to be, and how we're going to run it."

He said he didn't "really want to say too much [about it] because it could go in a variety of different directions." Personally, "I'm interested in finding out pretty much what's happening east of the Mississippi. I don't know if that's possible."

Hoecker noted that the Commission also was "talking about" holding a conference to get a better handle on future gas demand. Both the Interstate Natural Gas Association of America and the Edison Electric Institute have asked FERC to hold a conference to judge the future level of gas demand in the Northeast, and the amount of new capacity needed.

The Commission's decision to take a closer look at projected gas consumption comes after it bypassed preliminary determinations (PDs) for four pipeline projects to the Northeast last month due to questions about the "need' for them. FERC was very divided on the PD issue, with Commissioners Vicky Bailey and Curt Hebert Jr. dissenting.

"But I think all of us [on the Commission] are very interested in ascertaining the nature of growing natural gas demand not just in the Northeast, but in other growing markets-Florida, the Atlantic area, Wisconsin [and] other areas in the Midwest-to help us inform ourselves about the need for capacity," Hoecker said. Data culled from the policy statement initiative would be "complemented" by the gas industry's comments on the notice of proposed rulemaking, which also raised the 'need' issue. Industry comments are due later this month at FERC.

"I think we're going to have a lively internal discussion about it [gas demand], and hopefully [will] arrive at a consensus approach to making these kinds of decisions in the future" with respect to the need for new capacity, he told gas industry executives and trade group representatives.

On a related issue, an official of Columbia Energy, sponsor of the Millennium project, asked Hoecker whether he thought pipeline affiliate contracts and third-party contracts should be viewed similarly or differently when judging the 'need' for a project.

"Whether we ought to make a distinction is a fair question. Frankly, I think a contract's a contract," Hoecker said, but he added it also "depends on the circumstances surrounding it and the terms of the contract." He conceded that FERC Commissioners "have not put our heads together and come to a common understanding [on] exactly how to interpret" the issue.

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