Seeking convergence in its certificate policy, the FederalEnergy Regulatory Commission proposed phasing out its 15-year oldoptional expedited certificate, saying “expedited” is now amisnomer and all pipeline certificates should be required to passunder the “public convenience and necessity” bar.

FERC proposed the phase-out in a Notice of Proposed Rulemakingat its regular meeting last Wednesday, saying that while the rulechange is under consideration it will continue to consider optionalcertificates but will look at them in a slightly different light.The optional certificate was made available under the initialderegulation Order 436 in October 1985 as a way for pipelinesponsors who bore all the risk of a project to get speedycertification.

The certificates, however, always were subject to environmentalreview, which takes up the most time in the certification process.In the meantime, “general Section 7 policy has caught up to theoptionals,” Chairman James Hoecker said.

Commissioner Linda Breathitt said the commissioners wereconcerned the optional certificate offered “a loophole for pipelineprojects to avoid the public interest balancing factors set forthin the policy statement” ratified by FERC last fall (see NGI, Sept.16). When it issued that statement, which called for incrementalrates unless the sponsors could prove commensurate benefits toexisting customers, it did not include optional certificates. Theearlier statement also added into the review process considerationof nearby landowners, existing customers and existing competinglines.

The Commission said that while it considered the new NOPR toeliminate optionals, projects could continue to be filed under theexisting rules. Any new optional filings would carry thepresumption they are in the public interest, but that presumptioncould be undermined by examination under the same standards set outin the policy statement.

On another issue FERC clarified the provision in lastSeptember’s policy statement relating to new construction expenseswhich could be rolled into a pipeline’s rates if there was a clearbenefit to existing customers. In that case an existing customerwhose contract has expired and who has the right of first refusalto match the bid of a new customer “in certain limitedcircumstances” could be faced with a rate higher than hishistorical rate, the Commission said. The pipeline, however, couldnot unilaterally require matching of a higher rate, but would haveto make Section 4 filings to implement ROFR procedures that staywithin its existing rate structure.

Ellen Beswick

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