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Sierra Club challenges Atlantic Coast contracts between Dominion affiliates

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Sierra Club challenges Atlantic Coast contracts between Dominion affiliates

In another attempt to challenge the 1.5-Bcf/d Atlantic Coast pipeline project, the Sierra Club and Appalachian Mountain Advocates asked the Virginia Supreme Court to review natural gas transportation contracts between Dominion Energy Inc. affiliates for conflicts of interest.

Attorneys for the environmental groups filed an appeal Oct. 12, saying the pipeline "presents a major conflict of interest because the companies that own the pipeline, including Dominion Energy, also own the utilities that have purchased shipping capacity on the pipeline," according to a statement. The Sierra Club said the court filing was an attempt to have the state high court force the Virginia State Corporation Commission to review the agreement between affiliates to see if it is in the public interest.

Besides the pipeline, a joint venture with other companies, the Dominion affiliates in the case are Virginia Electric and Power Co. and Virginia Power Services Energy Corp.

The Sierra Club and other groups released a report in September that described an overbuild of gas pipelines driven by "self-dealing" pipeline companies. The pipeline industry strongly objected to the report.

Observers connected with the Federal Energy Regulatory Commission, which reviews interstate pipeline projects and their transportation agreements, and the project said the court was unlikely to find a conflict in the arrangement between affiliates. Former FERC Commissioner Tony Clark, now a senior adviser with Wilkinson Barker Knauer LLP, said that between FERC's jurisdiction over rates and state utilities commissions' oversight of specific shipping contracts, there is virtually no room for pipeline companies and affiliated utilities to self-deal in a way that would skew the market.

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A hydrologist walks up a mountain near the route of the proposed Atlantic Coast pipeline in Bolar, Va.

Source: AP

Dominion spokesman Aaron Ruby said the company agreed with the State Corporation Commission's decision to dismiss the Sierra Club's case in September. The commission said it already has a process in place to protect the interests of Virginia ratepayers and it will review all fuel costs associated with the pipeline each year to make sure they are reasonable.

Ruby also pointed out that the Atlantic Coast project was initiated by public utility customers in a request for proposals that drew competitive bids, and not by the pipeline companies that eventually came together to develop the project. "The public need for the project was established long before any of the parent companies made the investment decision to form a partnership for the project," he said in an interview.

The pipeline is a joint venture of Dominion, Duke Energy Corp., Southern Co. Gas and Piedmont Natural Gas Co. Inc. The 42-inch-diameter pipeline would run over 560 miles through West Virginia, Virginia and North Carolina, delivering Appalachian gas supplies to the mid-Atlantic and Southeast. The developers expect the project to be ready for service in the second half of 2019.

The Sierra Club has been at the forefront of opposition to the Atlantic Coast project. In September, the group asked FERC for a rehearing of the agency's environmental review of the project based on a federal appeals court decision requiring more greenhouse gas emissions analysis on another pipeline. (FERC docket CP15-554)