FERC’s let-the-market-decide approach for certificating newpipeline projects isn’t well suited for all cases, said a leadingenergy attorney last week. With some projects, it hasn’t been “goodenough so additional analysis [by FERC] might be required” before apipeline can win a certificate.

The market-decide approach shouldn’t be applied generically,according to Barbara K. Heffernan, a partner in the Washington DClaw firm of Schiff, Hardin &amp Waite. FERC sought comments on thesubject in its July NOPR on short-term transportation capacity.

A “very necessary corollary” of the market-decide approach isthe at-risk provisions. Here, the Commission has to “make sure itreally puts them [the pipelines] at risk for any underutilizedcapacity. Otherwise, you’re really not letting the market decide,”she said at the seventh annual DOE-NARUC conference.

The at-risk provisions work “quite well” for new stand-aloneprojects serving new markets, but “the situation gets a lot morecomplicated” when either an existing pipeline seeks to expand or anew pipeline wants to enter a market that’s already being served byother pipelines. “You’ve got existing customers on the expansionpipeline who might be asked to subsidize…the costs of this newproject.” The at-risk conditions fall far short of protectingexisting shippers especially where a project wants to enter amarket already being served, said Heffernan, who represents mostlyNew England LDCs. “In this situation, I think the Commission has to[exert] a little more scrutiny,” meaning that it should look behindthe precedent agreements supporting the project.

Susan Parker

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