Upload
carolyn-elefant
View
635
Download
1
Embed Size (px)
Citation preview
WARNING! DoesaDangerofOverbuildof
NaturalGasInterstatePipelinesLieAhead?
CarolynElefant,LawOfficesofCarolynElefantPLLCMarch2016
IsthereanydoubtthatFERCpipelineproject
developmentissharplyacceleraDng?
SourceforAllTables:h;p://ferc.gov/industries/gas/indus-act/pipelines.asp
FERC State of the Markets Presentation, March 2015
e"
WHAT EXPLAINS THE UPWARD TREND?
LNG Export
MARCELLUS EXTRACTION
Clean power plan & gas /
electric connection
State PRE-APPROVAL OF COST RECOVERY FOR
CONTRACTS – EXAMPLES:
• InvesGgaGonofMas.sDPU(Oct.2,2015)(findingelectriccompaniescanenterintolongtermcontractsforgas)
• FloridaPower&Light,December18,2013(findingSabalTrailprojectisprudentbecauseitisneededandistheleastcostalternaGve)
You can’t always get what you want...but if you try sometime, you just might get what you NEED.!
The FERC certificate process has shifted from this.......
FERC, give me my pipeline!! And some eminent domain with
that too.
...to this.
3 PROBLEMS WITH PIPELINE
OVERBUILD
FERC’S TOOLS FOR GUARDING AGAINST
OVERBUILD G
Tools: NaturalGasAct CerDficatePolicyStatement RatemakingAuthority
What SecGon7(e)publicnecessity&conveniencestandardrequiresshowingofneed.Showingof“public”needheightenedbySec.7(h)eminentdomainauthority
NoratepayersubsidizaGonBalanceneed&impacts:Needshownby:Subscribedw/precedentKsMarketstudiesorEIAdataProofoflowerelectricrates(notjustspeculaGon)StateCommissionfindings?
ReturnonEquityBillingdeterminantsbasedonfullcapacityNoratepayersubsidizaGon
Pros Minimizesoverbuildifonly“necessary”infrastructureisbuiltAllowsconsideraGonofotheracGviGesthatinformneed(CityofPi)sburghv.FPC)
RoadmapforprojectcriGcsAllowsforbroadconsideraGonoffactorsthatinformneed
FERCcouldmanipulateROEstobalanceneed(reduceROEforunsubscribedprojects)Billingdeterminantsensurespipelinepaysforoverbuild
Cons LacksproporGonality–can(anddo)buildforpeakLimitedprotecGonforcompressorstaGonsw/landacquiredbyK
PrecedentKs=CEIIIfnoratepayersubsidies,FERCinclinedtopresumethatpipelinespend=need.FERCunlikelytogranthearingstoadjudicatecontestedissueofneed.Casespecific–nobigpictureview
NoprotecGonforretailcustomerslockedintostate-PUCapprovedKsFERCnotinclinedtocutpipelinerequestedROE(e.g.,SabalCP15-17ExcepGonsforreliability(rolledinratesallowed)arelargeenoughtoswallowtheruleagainstsubsidizaGon
STOP
SUGGESTIONS TO
PIPELINEOVERBUILD
I. Adjudicative Proceedings for Need at FERC Usediscovery&cross-Xtoprobepipeline’sclaimedneed&explorealternaGveNecessarydueprocessprotecGonforlandowners
II. Electric-Gas Coordination and Operational Changes Be;ergas-electriccoordinaGoncanmiGgatecostincreases OperaGonalchangesarepreferabletodealingwithpeakdemandthannewinfrastructure
III. Proper Alignment of Rate Incentives -ROEstoohigh,capitalstructurestooequity-thick
IV. Enforce Non-Discrimination Tariff Policies
-MayaddresssomestatePUClong-termKapprovalsthatallowpreferenGaltreatmentV. Programmatic Approaches:
AshbackerDoctrine–Singlehearingtocompare2mutuallyexclusivepipelines
ProgrammaGc/RegionalEISANDCerGficateProceeding Basis: (1)FERC’sreliabilityplanningobligaGonsunderCleanPowerPlan (2)RecognizeddiscreGonforregionwidesoluGonsper PermianAreaBasin,(USSup.Ct.1968).
SUGGESTIONS TO ADDRESS OVERBUILD
CONTACT INFORMATION: CAROLYNELEFANT
LawOfficesofCarolynElefantPLLCWashingtonDC&BethesdaMD