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FERC to Eliminate Optional Certificates

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 certification.

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 lines.

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.

Ellen Beswick

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