N.Y. utilities: FERC delays could jeopardize gas system

By Miranda Willson | 01/31/2022 07:31 AM EST

A gas project is stoking a debate about FERC’s reviews.

FERC headquarters.

Federal Energy Regulatory Commission headquarters in Washington, D.C., as photographed Sept. 8, 2021. Francis Chung/E&E News

Two New York utility giants last week urged the Federal Energy Regulatory Commission to “promptly” approve a natural gas project proposed nearly two years ago, fueling a debate over the consideration of greenhouse gas emissions against other factors.

The National Grid gas delivery companies and Consolidated Edison Co. of New York called on FERC to allow the proposed “Enhancement by Compression” project to move forward, claiming that further delays could jeopardize the companies’ abilities to meet heating demand in New York.

Both National Grid and Con Edison have signed up to receive natural gas from Enhancement by Compression, a proposal from Iroquois Gas Transmission System LP that would increase the flow of gas into New York state. Specifically, Iroquois Gas proposes adding new turbines and other infrastructure to two natural gas compressor stations in New York and two others in Connecticut.


In separate, similar comments filed last week, National Grid and Con Edison rebuffed a recent suggestion from EPA advising FERC to “postpone” its decision on the project until the commission develops a new policy for assessing gas facilities’ greenhouse gas emissions. Going along with EPA’s recommendation would “diverge from the commission’s traditional approach” of considering proposals based on FERC policies that are currently in place, the companies wrote.

“Granting the EPA’s request in this proceeding would not only delay a needed project but subject it to an unnecessary and open-ended period of uncertainty,” counsel for National Grid wrote in the company’s comment.

As a bipartisan, independent commission, FERC is tasked with reviewing major new energy projects, including interstate gas pipelines and related structures such as compressor stations. The back-and-forth between utilities and EPA over the Iroquois Gas project highlights a broader discussion among industry groups, environmental advocates and the commissioners themselves about FERC’s review of gas projects.

Last year, FERC reopened a 2018 inquiry into the agency’s so-called certificate policy statement, which is meant to guide how the commission reviews applications for new natural gas pipelines. Last updated in 1999, the current policy statement does not factor in projects’ greenhouse gas emissions, even though federal appeals courts and others have said the commission must consider climate change effects before approving new pipelines.

“[The] Commission has a clear obligation to properly quantify the reasonably foreseeable upstream greenhouse gas emissions associated with production of the natural gas ConEd and National Grid are buying,” Sarah Ladin, an attorney at the Institute for Policy Integrity at the New York University School of Law, said in an email.

Although changes to the policy statement have not been finalized, the gas industry and Republican members of the commission have accused the agency of delaying project approvals since the inquiry was reopened last February. At a virtual event earlier this month hosted by the U.S. Energy Association, for example, Amy Andryszak, president and CEO of the Interstate Natural Gas Association of America, charged that FERC’s gas reviews had “slowed significantly.”

“All of these send signals to the market that discourage domestic production of natural gas and domestic infrastructure investments,” Andryszak said during the event.

In the case of Enhancement by Compression, further “delays” by FERC could jeopardize the reliability of the New York gas system, the utility companies each said in comments.

“[This] Commission should recognize National Grid’s need to provide safe and adequate service. Given the particular facts of this proceeding — i.e., a limited compression project that is needed to reliably serve customer demand — the Commission should reject any attempt to delay issuance of the certificate,” National Grid wrote.

The company pointed to an independent analysis last year from PA Consulting Group, which identified a potential gap in gas supply that could occur if the project were canceled. Specifically, the report concluded that if Enhancement by Compression and another gas expansion project were canceled, gas supply “may be sufficient” to meet customer demand through 2023, “but not thereafter.”

A FERC spokesperson declined to comment on when Enhancement by Compression might be approved and brushed off accusations of delayed decisions.

“The Commission votes on orders when they are ready to go,” the spokesperson said in an email.

‘Stranded’ infrastructure?

FERC Chair Richard Glick has defended the agency’s reviews of gas projects over the past year, noting that courts have ordered the commission to conduct more rigorous assessments.

For its part, EPA has said FERC is obligated under federal law to estimate how much new projects would contribute to climate change before they are approved. In its review of Enhancement by Compression, the commission failed to adequately disclose the climate damages associated with the project, and FERC therefore should not approve the proposal at this time, EPA said last month (Energywire, Dec. 21, 2021).

One tool FERC could use to meet its legal obligations for environmental reviews is the social cost of carbon, which seeks to quantify the economic costs of climate-warming emissions, said Ladin of the NYU law school. EPA has also suggested use of the tool.

FERC hasn’t quantified the climate damages of proposed natural gas projects because the commissioners haven’t been able to agree on a methodology for doing so, according to Glick, a Democrat. Still, analysts say the five-person commission could reach a consensus on the issue this year now that the body has three Democrats.

Although National Grid and Con Edison aim to use the gas from Enhancement by Compression for heating homes in New York, their letters come as state lawmakers have backed support for banning natural gas from new buildings. This month, Gov. Kathy Hochul (D) released a policy blueprint that called for enacting legislation to require new buildings to use zero-emissions sources of heat by 2027 (Energywire, Jan. 6).

National Grid and Con Edison could not be reached for comment on whether expanding their natural gas supply could conflict with such a policy. But New York’s consideration of a potential gas ban highlights how federal processes do not currently account for “transition risk or the very real potential that natural gas assets will become stranded,” Ladin said.

“By ignoring this risk now, regulators could set up a fight over how to pay for stranded infrastructure later,” she said.

Reporters Carlos Anchondo and David Iaconangelo contributed.