Producers and Pipelines Team Up to Urge Changes in Natural Gas Infrastructure Development

Strange bedfellows, the Interstate Natural Gas Association of America ("INGAA") and the Natural Gas Supply Association ("NGSA"), together petitioned FERC to initiate a rulemaking to re-examine the parameters of blanket certificate authority and to make clear to the marketplace that shippers who make projects financially possible may enjoy preferential rates.  The petitioners explained that to ensure the adequacy of pipeline infrastructure in the future, FERC must act to make it easier for the industry to build capacity.

Specifically, the INGAA and NGSA suggested that FERC permit blanket authorization for mainline expansions where the expansion meets the dollar limits imposed by FERC's regulations.  The Parties stated that there should be little concern regarding the rate impact of this proposal because the dollar limits would cap the size of the projects that could be completed under the blanket authority provision.  Additionally, according to the petition, because FERC's rules require the posting of available capacity, this guarantees non-discriminatory treatment of new capacity.  Regarding the dollar limits, the Parties proposed that the limits be adjusted to reflect not only inflation, but also specific factors that can have a big impact on pipeline construction costs, such as complex permitting processes and environmental requirements.

INGAA and NGSA also urged that the blanket authorization provision be amended to allow blanket certificate eligibility for certain underground storage enhancements and takeaway facilities for LNG, and that FERC establish a policy that allows for predictable preferential treatment for shippers who underwrite the cost of a new facility through timely commitments.  According to the petitioners, this would allow sponsors and shippers the ability to negotiate without fear that their agreement containing a rate bargain for the foundation shippers will be undone, and would provide a strong incentive for shippers to become foundation shippers.