Despite already having held a series of hearings on the project,FERC yesterday set for hearing the issue of whether the market needfor a controversial liquefied natural gas (LNG) facility plannedfor a Maine community could be better met by alternative pipelineprojects.
By a 3-2 decision, the Commission majority agreed the case sofar lacked “persuasive evidence” to show the 2 Bcf Wells, ME, LNGfacility alone would be uniquely suited to meet the peak-shavingneeds of Northern Utilities (NU), an LDC affiliate of projectsponsor Granite State Gas Transmission. It ordered anadministrative law judge to explore the issue and return a decisionby May 1. FERC noted it would vote on the merits of the LNGfacility, which already has been the subject of five settlementconferences and one oral argument, by June 1.
At the crux of the debate is whether two proposed pipelineprojects, Portland Natural Gas Transmission System (PNGTS) andMaritimes & Northeast, would provide as reliable a supplyoption as Granite State’s LNG project, which is hotly contested byresidents of Wells, ME. The Commission majority, in calling for ahearing, thinks the issue “could sustain a little more sunshine,”said Chairman James Hoecker.
However, the new Commissioners, Donna Breathitt and Curt HebertJr., disagreed. “The Commission has already taken extraordinarymeasures to ensure the development of a complete record in thisproceeding. Now…[it] determines that yet more fact finding isrequired,” Breathitt said, adding the record could “not be morecomplete” in her opinion. “It is clear to me that Granite State’sprecedent agreement with Northern Utilities fully satisfies theCommission’s policy on a demonstration of market need.” NU hascontracted for half of the capacity of the 2 Bcf LNG plant over a20-year term, while Gaz Metropolitain, an LDC in Montreal, willlease the remaining LNG capacity.
Breathitt said she seriously doubts PNGTS or Maritimes could actas alternatives to the LNG project, particularly because neitherwould offer no-notice service.
Hebert believes the Commission’s decision to hold anotherhearing signals a departure in its policy to approve or rejectprojects based on market demand (precedent agreements andcontracts). With this ruling, the Commission seems to be sayingthat contracts alone may no longer be sufficient to establish aneed for a project, a pipeline source noted.
“Yes, it’s been the policy of this Commission to look primarilyto contracts and to demand [when deciding whether to certificate]facilities. But we have other obligations as well,” said Hoecker.This case “presents rather obliquely, I think, a preview offorthcoming dilemma for this Commission as companies propose newand expanded transportation systems that potentially serve the samemarket,” pitting the issues of excess capacity and unnecessaryenvironmental disturbances against the need for additional pipelinecapacity in some regions. “We will have to balance those kinds ofconsiderations.”
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