North Carolina’s Alternative Gas Pilot Program Flares Up

North Carolina’s nascent biogas industry has witnessed significant progress in recent years. In March 2018, the Optima KV swine waste to renewable natural gas (“RNG”) project near Kenansville, North Carolina came online as the first RNG project in the state to inject RNG directly into the existing natural gas transportation system operated by Piedmont Natural Gas Company, Inc. (“Piedmont”). With the success of the Optima KV project, other RNG projects are in process and more are sure to follow in light of North Carolina’s rich bioenergy resources. However, not long after the Optima KV project achieved commercial operation, the North Carolina Utilities Commission (the “Commission”) put the brakes on future development. RNG project developers and suppliers will now need to be accepted into a pilot program established by the Commission in order to be approved to interconnect with Piedmont’s existing natural gas transportation system.

In June 2018, the Commission approved a modified version of Piedmont’s proposed Appendix F to its Service Regulations as a pilot program (the “Pilot Program”) for a three year period, 1 setting forth the terms and conditions under which Piedmont may accept and receive Alternative Gas2 onto its system and deliver such gas to its customers. In light of the Commission’s charge to ensure that Piedmont provides adequate, reliable and economical service to its customers, the Commission established the Pilot Program as a means to address concerns of potential service quality and operational issues that may arise from the injection into and delivery of Alternative Gas on Piedmont’s system. Through the Pilot Program, the Commission seeks to gain information from Piedmont regarding the impact of Alternative Gas on its system operations and its customers before permitting a proliferation of projects throughout the state.

To be accepted into the Pilot Program, an Alternative Gas supplier will need to demonstrate to the Commission that “such additions will be useful in gathering the information and data sought by the Commission.”3 Unfortunately, only sparse guidance was made available to potential Pilot Program applicants as to what specific information should be included in an application to participate in the Pilot Program in order to demonstrate usefulness in gathering the information and data sought by the Commission.