Seeking convergence in its certificate policy, the FederalEnergy Regulatory Commission has proposed phasing out its 15-yearold optional 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 Wednesday, saying that while the rule changeis 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 always were subject to environmental review,however, and the process takes up the most time in thecertification process. In the meantime, “general Section 7 policyhas caught up to the optionals,” Chairman James Hoecker said.

Commissioner Linda Breathitt said the commissioners were concernedthe optional certificate offered “a loophole for pipeline projects toavoid the public interest balancing factors set forth in the policystatement” ratified by FERC last fall. (see Daily GPI, Sept. 16) When it issued that statement,which called for incremental rates unless the sponsors could provecommensurate benefits to existing customers, it did not includeoptional certificates. The earlier statement also added into thereview process consideration of nearby landowners, existing customersand existing competing lines.

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 the matching of a higher rate, but wouldhave to make Section 4 filings to implement ROFR procedures thatstay within its existing rate structure.

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