FERC issues a surprising order regarding responsibility for LNG-related retrofit costs.
James Goddard is counsel at Locke Liddell & Sapp LLP in Houston, Texas. Contact him at or firstname.lastname@example.org.
“The Federal Energy Regulatory Commission (FERC) will not accept requests from interstate natural-gas pipelines to compensate customers or other downstream entities for any costs they may incur in using gas supplies that include revaporized liquefied natural gas (LNG) that meets approved standards for gas quality and interchangeability.”
This is the lead paragraph from an April 19, 2007, FERC press release announcing FERC’s order in AES Ocean Express LLC v. Florida Gas Transmission Co., which was issued one day later. FERC’s order, which many believed would answer some important questions regarding the introduction of LNG into the U.S. pipeline grid, thus left open the most important question on the topic: Who ultimately will be responsible for cost-mitigation measures to accommodate the introduction of large quantities of LNG into the U.S. pipeline grid?