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FERC faces pressure after its split on Atlantic Coast, Mountain Valley projects

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Essential Energy Insights - October 2021


FERC faces pressure after its split on Atlantic Coast, Mountain Valley projects

The Federal Energy Regulatory Commission will hear calls for change in its review process for interstate natural gas pipelines after Commissioner Cheryl LaFleur expressed reservations about the way the commission determines the need for such projects, analysts said.

FERC on Oct. 13 issued certificates to the $5.1 billion Dominion Energy Inc.-led Atlantic Coast pipeline and the $3.7 billion EQT Midstream Partners LP-led Mountain Valley pipeline, with Republican members Chairman Neil Chatterjee and Commissioner Robert Powelson comprising the two-thirds majority. Democratic member LaFleur dissented from the two approval orders based on her determination that the public need for two similar pipelines moving natural gas from the Appalachian production zone to mid-Atlantic and Southeast markets did not outweigh their environmental impacts.

ClearView Energy Partners LLC managing director Christi Tezak said the decisions showed that FERC under Chatterjee will hear calls for the commission to integrate its reviews of economic need for the projects with its study of environmental impacts.

"What you're seeing, I think, is a lot more political pressure for FERC to have those concurrently instead of sequentially," Tezak said in an interview. "It's been some time since we've seen dissent on a pipeline."

Analysts at Height Securities LLC expected LaFleur's comments on public need to feature prominently in future petitions to the U.S. Court of Appeals for the D.C. Circuit opposing FERC approvals of gas pipeline projects.

"Supply-led projects may find themselves faced with a higher bar to clear demonstrating demand and projects designed to serve similar markets may consider co-location as a way to reduce cumulative environmental harms," the analysts wrote in an Oct. 16 note to clients.

The analysts' view contrasted with the position of Chatterjee, who told reporters on the morning of Oct. 13, just before FERC issued the pipeline approval orders, that the commission had no plans to adjust its pipeline review process.

Washington Analysis LLC's Rob Rains said he believed FERC would maintain its reputation for lack of interparty strife even after the dissents. "I think for the time being we can still reasonably anticipate a fairly unipartisan commission," Rains said in an interview. "There are some early signs that maybe FERC is plagued a little more by politicization than in the past, but I think near term we can view this as more of a wrinkle as it pertains to the process of reviewing and determining need for new natural gas pipelines."

Dominion Vice President Leslie Hartz said the FERC majority correctly found there was enough public need for the 1.5-Bcf/d Atlantic Coast pipeline put together by Dominion, Duke Energy Corp., Southern Co. Gas and Piedmont Natural Gas Co. Inc. In an Oct. 13 statement, she said the project will be crucial to serving customers in North Carolina and Virginia.

"The end use of this gas is well-established on the public record and is a matter of urgent public necessity," she said. "Our public utility customers are depending on this infrastructure to generate cleaner electricity, heat homes and power local businesses." (FERC dockets CP15-554, CP15-555, CP15-556)

Chatterjee and Powelson disagreed with LaFleur's preference for colocating large parts of the Atlantic Coast and Mountain Valley pipelines. In their approval of the 2-Bcf/d Mountain Valley pipeline, a joint venture of EQT and affiliates of NextEra Energy Inc., RGC Resources Inc., WGL Holdings Inc. and Consolidated Edison Inc., the Republican commissioners said a "two-pipe, one right-of-way" system would not have greatly reduced the projects' environmental impacts. (FERC dockets CP16-10, CP16-13)

Environmentalists and other pipeline opponents expressed gratitude toward LaFleur and called on states to deny necessary permits for the two projects.

"We applaud Commissioner LaFleur [for] noting that FERC has not properly balanced the environmental issues 'including the downstream impacts' of the projects with the need," said Lara Mack, a Virginia field organizer for environmental advocacy group Appalachian Voices. "We call on the water board members to fulfill their duty to protect Virginians and deny the energy companies their needless pipelines, which would harm Virginia businesses, communities and resident across the state."