A policy change directed at construction funding on newlyformed, project-financed pipelines, which showed up for the firsttime in FERC’s certificate order for Gulfstream Natural Gas System,”constitutes flawed policy and lacks reasoned decision-making,” thepipeline said (see Daily GPI, Feb. 22).

In a petition for rehearing filed Monday, Gulfstream said themove to require it to use its post-construction, overall rate ofreturn as its rate for the allowance for funds used duringconstruction (AFUDC) failed to recognize the additional risks in anew construction project that are not borne by an operatingpipeline.

The Interstate Natural Gas Association of America (INGAA) filedits own rehearing request, agreeing that FERC’s “decision to changeits policy from requiring newly formed, project-financed pipelinesto use the project financing approach for calculating AFUDC infavor of a post in-service analysis constitutes flawed policy.”

Further, the order (CP00-6-000) authorizing the $1.7 billion,744-mile pipeline running from Alabama through the Gulf of Mexicoto Florida “sends a signal that discourages, rather thanencourages, major new pipeline projects.” INGAA said FERC gave noreason for the policy change, which directly contradicts recentstatements regarding “the critical need for new pipeline capacity,including orders issued to streamline the certificate applicationprocess and to implement other policies and practices thatencourage and facilitate new pipeline construction.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.