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Legislation and Regulations.
The Hackberry Decision
In December 2002, the FERC terminated open access
requirements for new onshore LNG terminals in the United States,
placing them on an equal footing with offshore terminals regulated
under provisions of the Maritime Security Act of 2002. The FERC
ruling, which granted preliminary approval to the proposed Dynergy/Sempra
LNG terminal in Hackberry, Louisiana, is referred to as the Hackberry
Decision. It authorized Hackberry LNG (now Cameron LNG) to provide
services to its affiliates under rates and terms mutually agreed
upon (i.e., market-based), rather than under regulated cost-of-service
rates, and exempted the company from having to provide open access
service. In essence, from a regulatory perspective, LNG import facilities
will be treated as supply sources rather than as part of the transportation
chain.
The LNG industry had been lobbying strongly for a
relaxation of regulatory requirements, arguing that the FERC should
focus on doing whatever it can to ensure that the United States
has adequate natural gas supplies. Industry participants at a public
conference hosted by the FERC in October 2002 on issues facing the
natural gas industry maintained that the Commission’s open
season [6] and open access requirements were a deterrent
to the construction of new LNG terminals in the United States. They
stressed that investors needed assurance that they would have access
to terminal capacity, and that such assurance could not be given
under the FERC’s existing open season bidding requirements.
The FERC has specifically stated that it hopes the
new policy will encourage the construction of new LNG facilities
by removing some of the economic and regulatory barriers to investment.
Existing terminals will continue to operate under open access and
regulated rates, but FERC has indicated a willingness to allow them
to modify their regulatory status as long as their existing customers
are in agreement. AEO2004 incorporates the Hackberry Decision through
reduced permitting costs and delays associated with LNG projects
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Notes and Sources
Released: January 2004
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