After two years of hearings and oral arguments, FERC yesterdayfinally gave Granite State Gas Transmission the go-ahead to buildits controversial liquefied natural gas (LNG) project in the townof Wells, ME.

The Commission said it took this action primarily because itbelieved the proposed facility would offer the flexibility to meetthe hourly swings in demand that other sources, such as pipelines,couldn’t provide, and would be built in time to meet the expectedload growth in Maine. It found that neither Portland Natural GasTransmission System (PNGTS) nor Maritimes & Northeast couldprovide the needed storage capacity and flexibility, saidCommissioner Linda Breathitt.

“In the final analysis, what made the difference for me…wasthe recommendation from the Maine commission,” which approved theLNG project, said Chairman James Hoecker. “I took very seriouslytheir recommendation and continue to.”The order also requiresGranite State to mitigate the project’s impact on the environmentin Wells.

In an almost apologetic tone to the residents of Wells,Breathitt called it a “very emotional decision” that came onlyafter an “unprecedented review” by the Commission and industry. The”record says to me [that] there is a clear need” for this type ofpeak-shaving service for Northern Utilities (NU), a Graniteaffiliate, and in Maine, she said.

NU has contracted the full capacity of the 2 Bcf LNG plant,which would provide vaporization and peak-shaving storage services.Breathitt also believes the $50 million LNG storage facility couldbecome a “valuable supply backstop” for PNGTS and Maritimes, andother area pipelines.

This case is “highly reflective of some of the dilemmas” theCommission will face in the certificate area in the years to come,Hoecker said. Because of the deep controversy surrounding the LNGproject, he noted FERC felt it was important to “look beyond thecontracts” at other issues to decide whether to certificate it ornot.

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