In the wake of the price spikes in heating oil, CommissionerCurt Hebert Jr. yesterday called on his FERC colleagues tocertificate the Northeast-bound gas pipeline projects that havebeen stalled at the Commission to reduce the region’s historicdependence on the higher priced heating fuel.

He said several of the measures taken by the Clintonadministration last week to address the high heating oil priceswere “consistent with my own [views], and [I] suggest that mycolleagues step forward in the same manner.”

President Clinton announced that approximately $130 million infederal aid would be provided to qualified homeowners in theNortheast to meet their winter heating bills, and he proposed thatCongress provide $600 million in aid as well, according to Hebert.Clinton also recommended a “split” from heating oil to natural gasdependence in the Northeast, as well as an improvement in energytransportation.

“…..[T]he cost of this aid, $730 million, almost equals thecost of building the ANR SupplyLink project and the IndependencePipeline project at $803 million,” he said during the Commission’sregular meeting Wednesday. FERC has conditionally approved the twoNortheast pipeline projects, but is withholding their certificatesuntil greater demand can be demonstrated.

While the Commission struggles with the issue of the need formore pipeline deliverability to the Northeast, Hebert said theregion’s heating oil customers are paying the price. “…..[S]houldthis Commission continue to…..[hold] captive the consumers of theNortheast and force them to pay excessive prices to heat theirhomes and businesses? Or, should this Commission foster and enhancethe alternatives available to the consumers? We all know theanswer.”

Even gas customers paid the price to some extent when New Yorkcity-gate prices soared to around $20/MMBtu in mid to late January,while prices at the Henry Hub languished around $2.50. Many pinnedthe reason for the higher gas prices to the severe cold weather inthe Northeast, which they believe put a strain on existing pipelinedeliverability.

For Hebert, the issue of additional Northeast pipeline capacity”will continue to raise its ugly head repeatedly unless difficultdecisions are made to allow the market to decide whether aparticular project is ultimately built.”

Commissioner Linda Breathitt quickly responded, saying “it’shard for me to make the leap that a price spike translates to animmediate demand for natural gas” in the Northeast. “There’s aconversion process that would have to take place over a period oftime,” she noted. “I do not believe that the demand for gas in theNortheast requires the Commission to issue carte blanche authorityto construct pipelines facilities.”

That being said, she emphasized that the Commission “has notdenied the existence of a growing demand for natural gas in theNortheast.” In fact, it has certificated “significant new capacityto that region” over the past couple of years — includingMaritimes & Northeast and the Portland Natural Gas TransmissionSystem.

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