Peevey Asks FERC to Cooperate on Long Beach LNG

The demarcation between state and federal authority over permitting onshore liquefied natural gas terminals is far from clear. However, California Public Utilities Commission president Michael Peevey urged the Federal Energy Regulatory Commission this week to work with the state agency on siting Mitsubishi?s Long Beach regasification project. ?[T]here is precedent, as well as sound policy reasons, for the FERC and CPUC to attempt to cooperate with each other in exploring the issues involving [Sound Energy Solutions?] proposed LNG facility at the Port of Long Beach, California,? Peevey wrote March 1. California and federal regulators worked together in the 1970s on the proposed Point Conception LNG project to address seismic concerns but left unresolved the jurisdictional border between state and federal authority. FERC chair Pat Wood and Peevey have generally discussed the need to work cooperatively on a range of issues, but there had been no specific response to the LNG siting overture as of press time, according to Peevey adviser Pete Arth. The two agency heads are scheduled to meet next week in Washington, D.C. A week before Peevey?s letter, the CPUC protested Sound Energy Solutions? (SES) late-January FERC filing in which SES stated it met all state laws. The CPUC insisted it has authority over the LNG project because it would be sited on land, instead of offshore, in California and involves only intrastate gas transport. In addition, the CPUC declared state jurisdiction is necessary to ensure the safe siting of the facility and protect ratepayers from gas shortages and potential abuse of market power. The CPUC contends that SES is in essence a pubic utility and a gas corporation under the Public Utilities Code and, therefore, must apply for a certificate of public convenience and necessity. Calls to FERC had not been returned as of press time, but commission spokesperson Kevin Cadden told the Los Angeles Times, ?The siting of the facility is ours.? ?We have not questioned that FERC has jurisdiction over imports and never suggested we would regulate the price of gas,? which is deregulated, said Harvey Morris, CPUC attorney. Prior to SES?s permit filing at FERC, the CPUC met with company officials and notified them in writing that the agency has jurisdiction over the project and a certification of necessity was required. ?All of a sudden, SES attorneys forced the issue, filing at FERC that the project met all state laws,? Morris said. FERC?s authority over imported gas and interstate transport is contained in Section 7 of the Natural Gas Act, a sister of the Federal Power Act, both enacted during the New Deal era. The law does not explicitly give federal regulators siting authority over the permitting of coastal LNG terminals. The line between FERC and CPUC jurisdiction reared its head three decades ago but was sidestepped.

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Peevey Asks FERC to Cooperate on Long Beach LNG

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