U.S. Energy Agency to Take on $50 Billion Backlog as Senate Acts

(Bloomberg) -- The main U.S. energy regulator can get back to the business of approving multibillion-dollar natural gas pipelines after the Senate moved to fill two of four vacancies at the long-crippled agency.

Senators on Thursday confirmed the nominations to the Federal Energy Regulatory Commission of Robert Powelson, former chairman of the Pennsylvania Public Utility Commission, and Neil Chatterjee, a senior aide to Senate Majority Leader Mitch McConnell.

With their appointments, the five-seat panel regains the quorum it needs to approve liquefied natural gas export terminals, clear natural gas pipelines and issue rules governing wholesale power markets. FERC was without a quorum for six months, a stalemate that potentially slowed $50 billion of energy ventures under consideration by the agency. 

“We aren't counting our chickens yet, but the approvals would certainly be a net positive for midstream industry growth, and, ultimately, for producers and consumers of natural gas,” said Ethan Bellamy, a managing director at Robert W. Baird & Co. in Denver.

The most pressing matter facing the new commissioners is the approval of the $2 billion Nexus pipeline that was expected to start moving natural gas by November from Ohio to Ontario. The slow pace of filling FERC vacancies has forced Nexus developers DTE Energy Co. and Enbridge Inc.'s Spectra Energy to push their in-service date to sometime in 2018, DTE Chief Executive Officer Gerry Anderson said on a July earnings call. The project still awaits FERC's permission to start construction, which could take up to 10 months to complete.

Pipelines Pile Up

At least five other natural gas pipelines worth at least $10 billion are also awaiting FERC permits while facing increasingly narrow construction windows.

Projects such as Dominion Energy Inc.'s $4.5 billion Atlantic Coast pipeline and the $3.5 billion Mountain Valley pipeline to be operated by EQT Corp. are aiming to start construction this year, before environmental rules protecting bird migration and animal roosting kick in during the spring. Together, the two lines would deliver enough gas to heat 62,000 homes through the winter, according to estimates from the Energy Information Administration.

Other pressing projects in FERC's pipeline include TransCanada Corp.'s $2 billion Mountaineer Xpress and Gulf Xpress pipelines, which received their final environmental reviews in July, and the $1 billion PennEast pipeline. PennEast Pipeline Co. developers including AGL Resources Service Co., Public Service Enterprise Group and Spectra Energy Partners hoped to receive federal approval this year to start construction in 2018.

The appointment of new commissioners doesn't necessarily mean those projects' permits will move quickly, however. On average, it takes 30 days for new commissioners to issue a project permit after being confirmed, and about 12 days after taking office, according to a note by FBR Capital Markets & Co.

Back to Work

Powelson and Chatterjee will join acting Chairman Cheryl LaFleur, the lone commissioner on the five-seat panel, and will begin working through a massive backlog.

For the past six months, FERC has been unable to approve new hydropower plants, rule on contested utility mergers, or finalize settlement agreements in market-manipulation cases. A proposed rule on commercial-battery storage has been on hold, as is a decision on adjusting FERC's disputed income tax allowance policy for master limited partnership pipelines.

Click here to read more about Powelson and Chatterjee.

The commission also is waiting for the appointment of two additional members. 

President Donald Trump has nominated Kevin McIntyre as the new Republican chairman, replacing Lafleur, a Democrat. Senior Senate staffer Richard Glick has been nominated to fill the last remaining Democratic seat on the panel.

Both nominees are scheduled to testify Sept. 7 before the the Senate Energy and Natural Resources Committee, which would bring them a step closer to being confirmed.

To contact the reporter on this story: Catherine Traywick in Washington at ctraywick@bloomberg.net.

To contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Margot Habiby