The US Federal Energy Regulatory Commission’s order approving a novel certified gas pooling service proposal pitched by Tennessee Gas Pipeline underscored the commission’s approach of steering clear of sanctioning terms for the emerging market for gas that meets methane emissions targets.
While that hands-off approach disappointed environmentalists who wanted FERC to play more of an oversight role, EDF Senior Attorney Ted Kelly said in an interview July 7 that he was pleased FERC’s order included a statement clarifying that the commission was not making any particular endorsement of the gas quality through its approval of the proposal.
“To the extent that some shippers attempt to use the PCG Criteria to represent that the gas pooled under Tennessee’s [Producer Certified Gas] Pooling Service Option is ‘environmentally friendly’ or meets certain state standards, as argued by EDF, we clarify that our approval of Tennessee’s filing here makes no such determination as to the quality of such gas,” the commission said in the order (RP22-921).
The commission accepted the revised tariff records to implement the new service option on June 30, stating FERC has regularly accepted pipeline proposals to improve their pooling services.
The service option “will provide additional transparency and liquidity for certified gas on Tennessee’s system without degrading firm service and the rights of existing shippers,” the order said.
In giving its approval, FERC’s majority found that the criteria for certified gas did not need to be included in the tariff because it would have no effect on jurisdictional rates and service. It reasoned that the option would “add to an existing pooling service an informational feature that does not affect the transportation service itself …or the rates or charges for such service (which is free to shippers).”
Danly dissent
Commissioner James Danly dissented on that key point, finding the criteria should be included in the tariff. He argued the commission “ignores the fact that the PCG Pooling Service Option is itself a jurisdictional service,” and therefore “the classifications, regulations, and practices that significantly affect that option’” should be included in the tariff.
“And what classification, regulation or practice could be more ‘significant’ than the criteria to be eligible to participate in that service?” he said in his dissent.
The commission in a previous order had rejected Tennessee’s proposal to include the criteria in the tariff. In doing so, the agency said there were neither industry nor government-established standards that could guide the commission’s review. It also favored allowing market-driven initiatives to allow the emerging fuel product to develop organically.
With that guidance, the pipeline company then modified its proposal to exclude the criteria, instead proposing to post them on its interactive website.
EDF and two producer shippers subsequently protested, worrying that this would give the pipeline company too much discretion over the nascent market area and would go against FERC’s requirements to ensure just and reasonable rates.
With FERC’s approval, as of July 1, a shipper’s gas can qualify for Tennessee ‘s pooling locations if it has been certified as meeting low methane emissions standards from Project Canary or MiQ. Gas that has been registered with Xpansiv’s Digital Fuels Program can also qualify, depending on qualifications.
In countering arguments that the new service would allow one pipeline to set the rules of the road for the industry, Tennessee has argued it was instead responding to the demands of the marketplace and proposing a free, voluntary option that provides information about environmental attributes of the gas transported.
FERC’s majority, appeared to agree, emphasizing the option “will not affect Tennessee’s existing pooling service or any other services, but rather, is a voluntary indicator that provides additional information on certain gas pooled under Tennessee’s existing pooling service.”
Regulatory options
According to Kelly, EDF is still determining next steps at FERC. He said the group’s primary concern was not over the 0.2% methane emissions intensity threshold that had been proposed but rather the notion that the pipeline company could change the criteria at any time without regulatory oversight.
If FERC does not play an oversight role, he suggested other potential avenues for regulatory scrutiny of similar certified proposals or marketing claims could arise at the state level, through the Federal Trade Commission, which has regulated claims associated with renewable energy credits, or the Securities and Exchange Commission.
Source: Spglobal.com