A law group's hearing request claims the pipeline company is exercising a new form of market abuse.
TRENTON -- The Federal Energy Regulatory Commission said Wednesday that it will consider having an evidentiary hearing over PennEast's justification for building the pipeline.
The Eastern Environmental Law Center (EELC) filed a motion last month asking that regulators hold a hearing to verify PennEast's data regarding public need for the project and examine the projects' claims to evaluate their credibility.
"(PennEast's) application glosses over the facts and weaves a tale that is not based on substantial evidence," EELC senior staff attorney Jennifer Danis said.
"We are pleased that The Federal Energy Regulatory Commision (FERC) has agreed to consider our request, and that it has ignored PennEast's latest attempt to quash any hearings." Danis said. "We look forward to demonstrating that PennEast's existing record fails to prove that its project would provide a significant public benefit."
PennEast had asked that FERC deny the hearing request, calling it "duplicative" and "nothing more than an extremely late protest."
The law group's motion for a hearing claims that PennEast is exercising a new form of market abuse.
Market experts explain that FERC normally relies on the existence of contacts between customers and utilities as proof there is both adequate supply and demand for new pipeline infrastructure.
In the case of PennEast, the project's six owners have contracted their subsidiary companies for 74 percent of the total gas capacity -- essentially using their own desire to buy cheap gas for themselves as proof of public demand, critics say.
PennEast says those concerns are unfounded as the subsidiaries are going to use the gas for their own local customers.
An independent study from energy market expert Skipping Stone concludes that FERC can't rely on PennEast's style of contract arrangements to demonstrate public need.
The study also said that pipeline infrastructure already provides 50 percent more capacity than needed in the entire North East -- even in the harsh "Polar Vortex" winter of 2013.
The original complaint to regulators was filed by the EELC on behalf of the New Jersey Conservation Foundation (NJCF) and Stony Brook - Millstone Watershed Association (SBMWA) -- both of whom celebrated Wednesday's decision.
"At every step FERC can dismiss this and that's what PennEast is trying to do," Tom Gilbert, campaign director of New Jersey Conservation Foundation, said. "The fact that FERC has not dismissed it creates uncertainty for them."
"It's no longer a settled matter," Gilbert said. "We hope that FERC will conduct a full investigation and find that this proposed pipeline is a solution to a problem that doesn't exist."
"It is encouraging that FERC has agreed to consider this valid challenge to PennEast's tenuous claim that there is market need for its proposed pipeline," SBMWA executive director, Jim Waltman said in a statement.
PennEast spokeswoman Pat Kornick denies that FERC's notice is an acknowledgement to consider the hearing request.
FERC's Notice of Motion -- the announcement -- states that, "Action on the Movants' (NJCF and SBMW) request for an evidentiary hearing, as well as consideration of the merits of the Movants' allegations, will take place."
FERC declined to comment on the grounds that this is a pending matter.
Greg Wright may be reached at gwright@njadvancemedia.com. Follow him on Twitter @GregTheWright. Find NJ.com on Facebook.