Feature: US FERC urged to avoid setting national RNG standard amid sparring over tariff

As the Federal Energy Regulatory Commission weighs the next steps on the contentious question of whether to approve Florida Gas Transmission's renewable gas tariff, gas utilities have cautioned the regulator against using the proceeding to set a generic national standard for the emerging fuel source.

In a case with the potential to set a precedent for the growing gas industry segment, the commission May 23 held a technical conference on Florida Gas' proposed tariff including a new set of standards for receiving RNG on its system.

In a March 29 order (RP23-466), FERC accepted the Florida Gas tariff and suspended the effective date to Aug. 27, but it made that acceptance subject to the outcome of the technical conference, as well as an administrative law judge hearing that was held in abeyance.

The conference—and recent comments—manifested ongoing divisions over the pipeline's proposed RNG quality standards and testing protocols, despite Florida Gas' efforts to strike a balance among diverging stakeholder interests. Initial comments on the conference were filed in mid-June with replies due June 30.

The American Gas Association cautioned FERC that it is "not appropriate for the commission to use this proceeding to try to effectuate an industry or national RNG standard." The trade group said it strongly supports expanding access to renewable gas given that gas utilities see the fuel source playing a role in reducing their carbon footprint.

But in comments June 12, AGA said that establishing some form of industry-standard through the case would conflict with notice and comment requirements for significant shifts in policy.

"[T]he commission does not have a specific industry or national standard for geologic natural gas, and a national standard would be equally inappropriate for RNG," AGA added in the comments. Instead, it said stakeholders should be able to evaluate quality issues in a local and regional context.

"Renewable gas can be produced from various feedstocks and different production technologies," it said. "Production factors, gas system operations, and customer needs should be taken into account to ascertain the appropriate quality specifications."

Further, it worried about creating a conflict between a generic FERC quality standard and existing state-level initiatives and tariffs.

Manufacturers' voice

Debate also recently ensued over whether to allow additional manufacturers represented by the American Forest & Paper Association and Process Gas Consumers Group to intervene in the case out of time so that they can comment on potential impacts on their facilities, workers, and products. The trade groups pointed to concerns that caught their attention, raised by Seminole Electric Cooperative witnesses, regarding the risk of harm to generating turbines if certain levels RNG were allowed, or potential harm to workers if the gas is combusted.

While Florida Gas opposed that intervention, arguing it came 12 months after the deadline and could disrupt existing dynamics, a FERC administrative law judge ruled from the bench to allow it, after a June 27 oral argument.

Testing differences

The case has featured objections from RNG producers that the proposed testing requirements were excessive and could be cost-prohibitive. Florida Gas proposed protocols that included pre-injection testing, followed by monthly, quarterly, and ultimately annual testing.

Shell Energy North America and BP Energy, in comments June 12, questioned the need for two tests at the pre-injection phase, saying RNG facilities are designed so that gas flowing out meets quality specifications. Among costs added to an RNG operator are "the inability to receive certification for a renewable identification number from the US Environmental Protection Agency for the produced RNG," they said, noting most of the monetary value of RNG arises from the ability to sell the associated environmental attributes.

"Without RIN certification, RNG is priced the same as conventionally produced natural gas, which does not reflect the significant additional costs necessary to produce RNG compared to conventional production methods for geologically extracted natural gas," they added.

Florida Gas has asked FERC to accept the tariff, arguing the standards are reasonable and supported by evidence.

"Florida Gas' highly experienced technical team determined that the proposed RNG quality standards are reasonable based on its review of extensive data, studies, and test results from government and natural gas industry entities and its own testing," it argued. A group of Florida municipalities also welcomed Florida Gas' effort to find a "sweet spot" meeting various interests of its customers.

Parties on both poles of the debate urged FERC to reject the tariff, however.

In its June 12 comments, Seminole Electric said the proposal cannot be accepted because there is wide-ranging disagreement over standards for receipt of RNG. In its view, legitimate concerns about downstream effects on generating equipment, human health, and the environment have not been evaluated by the pipeline and therefore FERC cannot find that Florida Gas met the burden of proof to show the proposal is just and reasonable.

The long-running tariff debate began as part of a Florida Gas rate case in which the pipeline submitted an offer of settlement on RNG issues. The settlement was contested, however, and Florida Gas agreed to file the RNG tariff in a separate docket.

During the technical conference, FERC staff suggested parties return to settlement talks, noting the complex array of issues to resolve prior to the Aug. 27 effective date FERC created in the order.