Waiting for the Hammer to Drop: FERC Considers Unneeded Pipeline Expansion
The Federal Energy Regulatory Commission (FERC) is considering a request right now to let a gas pipeline begin construction, against evidence that it is not needed. This case will likely end up in court, with FERC yet again facing the music. In January, FERC approved Transco’s Regional Energy Access Expansion (Regional Access) project that would build another interstate gas pipeline to serve customers in New Jersey and nearby states.
New Jersey’s Board of Public Utilities (BPU), which oversees gas utilities in the state, and its Rate Counsel, which stewards ratepayers and the public interest, has told FERC that New Jersey does not need Regional Access because it has sufficient gas capacity to meet current and future demands. New Jersey and other advocates filed data, analyses, and comments questioning Transco’s vague assertions of need for Regional Access. In particular among these submissions was a BPU-commissioned independent expert study that looked at this precise question of need for any additional interstate gas capacity and determined that no such need exists. Citing the BPU study and an additional report, the New Jersey Conservation Foundation requested that FERC hold an evidentiary hearing, which would allow FERC and all the parties involved to properly evaluate the conflicting evidence regarding project need.
FERC denied an evidentiary hearing and rubber-stamped Regional Access, according the state regulator’s study no greater weight than the pipeline developer’s assertions to the contrary. There are three rehearing requests pending challenging FERC’s approval of the project now that allege that FERC failed to consider substantial record evidence on the probative value of the need for and benefits of the project. They also assert that FERC failed to weigh significant climate impacts from Regional Access.
While FERC considers these substantive challenges, Transco wants to create project momentum, seeking permission to destroy over 280 acres of trees. If FERC permitted this, it would be waiving its own regulations promulgated to protect against just this: irreparably damaging the environment and affected parties in a sprint to build unneeded and damaging infrastructure before challenges to project need are appropriately adjudicated (a “Kafkaesque regime” that the courts have specifically warned FERC about).
FERC’s approval of Regional Access is a win for Transco and its shippers and a significant loss for ratepayers, the environment, and affected landowners and communities shouldering the burden for an unneeded pipeline. Pipeline developers like Transco and its project shippers have a lot to gain from building a pipeline, whether or not it is actually needed; developers can make up to a 14 percent return on equity and regulated-utility shippers can just sell the excess capacity from the proposed pipeline to other markets – while their ratepayers shoulder expensive pipeline costs for capacity unneeded to serve them. If FERC fails to reconsider its decision, courts will be left to once again adjudicate whether FERC is complying with the Natural Gas Act’s mandate that it only approve projects that serve the public interest.