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BGE Seeks FERC Waiver for Customer Choice

BGE Seeks FERC Waiver for Customer Choice

Following the leads of Atlanta Gas Light and National Fuel, Baltimore Gas & Electric (BGE) last week requested a 17-month waiver of FERC's "shipper-must-have-title" policy in order to maintain gas supply reliability when its customer choice program is expanded to all of its 540,000 residential customers in November.

The FERC policy requires the holder of transportation and storage capacity also hold title to the gas commodity. But the policy would be violated by BGE's plan to maintain control over the transportation and storage it allocates to marketers participating in retail competition behind its Maryland citygate.

BGE has changed its delivery requirement for marketers to a Daily Requirement Service, in which marketers must match daily gas supply deliveries to the citygate with weather sensitive daily load measurements. Transportation and storage capacity allocation to marketers assures that the marketers will have the delivery capability to meet peak winter needs. However, BGE argues it must maintain control over the allocated capacity to ensure reliability because "LDCs and pipelines have not yet developed administrative and business systems necessary to support the full no-notice feature of released or assigned storage service." The no-notice service is essential in maintaining a balance of deliveries and actual customer usage.

BGE said it is working with Columbia Gas and CNG on new pipeline and storage services that address the "no-notice" problem, but a solution is not likely before the start of system-wide customer choice in November.

"In CNG's case, it's a simple fact that they don't allow that aspect of the service to be part of capacity release," said Andrew Mosier, BGE's attorney. "Columbia's tariff seems to imply that they do [allow release of no-notice service] but apparently if one then tries to take them up on that you find out that the administrative systems aren't in place to implement it."

Besides the administrative concerns, however, Mosier said BGE really doesn't like the idea of giving marketers access to released capacity with no-notice service because the marketers could abuse that privilege. "Our concern is that the marketers not get released capacity with no-notice capability that they then would be able to take to another citygate. We're still responsible for gas flowing in Baltimore. [The marketers would be responsible] only by contract, and if they make an economic decision that 'I can get twice in New York what I can get in Baltimore' they may well take that gas to New York." Even though that may have repercussions on their ability to continue participating in the retail market in BGE's territory, it still would leave BGE in the cold. "In the meantime what do we do. We have a gas shortage and our principle means of making that up, no-notice service, has gone away somewhere. We can't allow that to happen. If the distribution system goes down it's our problem. It's our liability."

Mosier said CNG is close to proposing a service that would correct this. It could involve minor tariff changes that would allow no-notice service to be released to marketers but be recalled by the releasing LDC if there was a delivery problem. "Columbia is not as close to CNG, but we're optimistic that they will come up with something.

"We're not trying to get FERC to beat these guys up. We really believe they are trying to work with us. But there's a little pressure there now." In the meantime, BGE needs a waiver of FERC policy to handle the situation when customer choice goes system-wide this fall.

The Commission already has granted one-year waivers of the policy to Atlanta Gas Light and National Fuel for their customer choice programs.

"We hope they grant this," Mosier said. "Otherwise we'll be in a bit of a pickle on how to open our system."

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