Rolling the Dice Without Rolled-in Rates — The GTN Xpress Rehearing

Rolling the Dice Without Rolled-in Rates — The GTN Xpress Rehearing
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Originally published for customers April 19, 2024.

FERC recently issued a (very long) rehearing order on the GTN Xpress project. In this article, we summarized and analyzed the most consequential arguments — related to project need and rolled-in rates treatment. 


 

What’s the issue?

At long last, FERC issued its rehearing on the GTN Xpress Project despite Commissioner Clements’s (full) dissent, followed closely by a notice to proceed with construction. The majority dismissed petitioners’ claims of error, affirming FERC’s approval of Gas Transmission Northwest LLC’s (GTN) compressor unit replacements, denial of predetermination for rolled-in rates, finding of project need, and adequacy of National Environmental Policy Act (NEPA) analysis.

Why does it matter?

The Commission’s approach to determining if rates for additive capacity are rolled in or incremental is impactful to pipeline companies and shippers alike. Similarly, the evolving discourse on how the Commission determines “need” for projects in light of state climate laws and how it approaches NEPA analysis holds substantial implications for industry stakeholders.

What’s our view?

The pivotal aspects of this 104-page order focus on GTN's demonstration of project need and the Commission’s refusal to grant pre-approval of rolled-in rates. Regarding need, the majority contends that climate laws are too speculative to accurately forecast natural gas demand. Commissioner Clements disagrees. Recent D.C. Circuit rulings favor the Commission’s discretion, but ongoing appeals underscore the importance of facts. For this case, appeals have already been filed in both the D.C. and the Fifth Circuits. Regarding rolled-in rates, the Commission insists on addressing them in GTN’s general rate case, which presents potential risk for GTN in commencing construction before incremental exposure is determined.

 

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