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Conference Planned on Northeast Quadrant Gas Demand

Conference Planned on Northeast Quadrant Gas Demand

The Federal Energy Regulatory Commission yesterday approved an initiative calling for it to conduct an inquiry into projected demand for natural gas in the Northeast quadrant of the United States and the corresponding need for new pipeline capacity in the region.

The Commission has selected a public conference as the forum to conduct its inquiry, which will focus on anticipated gas demand and capacity needs in the region east of the Mississippi River and north of Tennessee and North Carolina. It has scheduled the conference for June 7th, and is seeking input from the entire energy industry.

FERC indicated it was undertaking the effort in an attempt to make some sense out of the conflicting and disparate projections for gas consumption and new capacity requirements in the targeted region. This would provide "valuable insight into the development of a rational certificate's policy," Commissioner Linda Breathitt said.

"I view this as fundamentally a data-collection exercise," noted Chairman James Hoecker. "Although we have lots of gas policy issues on the table, I don't view this necessarily as a broad exploration of policy."

FERC's focus will be on "ascertaining what is probable and what is unlikely in terms of demand growth in the Northeast quadrant," which encompasses the Northeast, Midwest and part of the Mid-Atlantic, he said. Although "this is not the whole enchilada, I think it will supply a useful [snapshot]" of the projected demand outlook.

Breathitt said she supported the inquiry, but would have preferred the scope to have been expanded beyond the Northeast quadrant. She believes it should have included all markets east of the Mississippi River, according to her staff.

"For us to restrict this conference to the Northeast does not recognize the fact that...changes in capacity serving one region may affect pipeline operations in another region of the country," possibly reducing the utilization of those facilities and affecting the value and use of capacity release, Breathitt said.

Furthermore, limiting the scope to the Northeast quadrant "fails to recognize the fact that other regions of the country are also expected to experience substantial growth in demand for natural gas," she noted. The certificate filings pending before FERC "indicate to me that projected demand for natural gas in the Mid-Atlantic and Southeast [warrant] an equal examination by the Commission."

She also questioned the "timing and the forum" that FERC selected to conduct the inquiry. "I don't believe the Commission has reached a consensus concerning the ultimate goals of the conference." Nor does it have "a unified sense of how this conference fits in with the other generic and case-specific proceedings currently before us," Breathitt said. Despite her misgivings, she joined the FERC majority in approving the conference, saying that it would provide "at least a piece of the puzzle" with respect to gas demand.

"I think it is appropriate for the Commission to take a deep breath and avail itself of the opportunity to examine any available credible data that will enable [it] to formulate policies that: 1) approve the construction of necessary facilities; and 2) factor in the full use of existing capacity," remarked Commissioner William Massey.

In the order approving the conference, he noted FERC posed a number of "thoughtful" questions to the energy industry, such as how much existing capacity is available to satisfy gas growth in the market; can the utilization of existing capacity be increased and, if so, how; and which new projects will be needed to meet growing gas demand. Industry has been asked to file written responses at FERC within 15 days after the conference. Requests to speak at the conference should be submitted by May 10th.

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