FERC Decides Gas Interchangeability Issue to Permit LNG Imports

FERC today largely affirmed the Administrative Law Judge’s decision in AES Ocean Express v. Florida Gas Transmission (AES v. FGT) regarding gas interchangeability. In doing so, the Commission announced a new policy whereby pipeline companies will not be allowed to seek compensation for costs incurred as a result of shipping regasified LNG of varying compositions on their transmission lines, as long as the gas meets the tariff specifications. According to the Commission’s press release, FGT’s proposal “will permit the safe operation of electric generation turbines receiving gas from FGT’s system without violating environmental standards and at the same time will permit the importation of a substantial amount of LNG.” FERC Chairman Kelliher explained that greater regulatory certainty is critical “if the U.S. is going to be successful in its competition with Europe and Asia for LNG imports.”

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