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Producer Ire Accompanies Texas Competition Findings to Legislature

The Texas Railroad Commission (TRC) has failed to meet a mandate from the legislature in its examination of competition in the state's midstream natural gas business, asserts the Texas Independent Producers and Royalty Owners Association (TIPRO).

Monday the TRC forwarded the findings of a "blue ribbon" committee to Gov. Rick Perry and the state legislature on competition in the Texas intrastate gathering and transmission market, but Adam Haynes, TIPRO executive vice president, said the report does not meet four requirements the legislature originally spelled out to the TRC.

"Our complaint is that the Railroad Commission did not meet the legislative mandate...," he told NGI. "It was incumbent upon the Railroad Commission to meet four very specific things as outlined by the legislature. They did not do that. In this case the executive branch agency did not follow through on a mandate it received from the legislative branch. It's either, A, up to the courts if somebody brings a case to determine if the commission was derelict; or, B, typically the way it works it's up to the legislature then to enforce its will on the executive branch."

The TRC had been directed by the legislature to submit a report on midstream competition by Nov. 1. The instructions said the TRC shall:

Commission members agreed to pass along the recommendations of the committee. Among the recommendations are that the commission should:

However, it would seem that what producer group TIPRO wants most is greater transparency when it comes to costs, rates and practices of gatherers and intrastate transportation providers.

"Our ultimate goal is the development of some information system in the state of Texas that applies to intrastate lines," Haynes said. This would enable "a producer to determine the basis of the price of production for that system and a basis on which the producer and the royalty owner can determine the fees and costs and the terms of service for that system and be able to compare up and down that line to determine whether or not they're getting a just, reasonable and nondiscriminatory rate, which is the statutory requirement under the Common Purchaser Act, which regulates all gas pipelines in the state of Texas."

A Railroad Commission spokeswoman did not respond to a request for comment by press time.

Haynes said the producer group will be taking its case directly to lawmakers. "We have tried for certain over the last two years, but going back as far as 10 years, to work with the Railroad Commission to get relief in the intrastate monopolistic system of the gas pipeline industry," he said. "We have been rebuffed at every turn. Now...they have failed to do this study, so you have been rebuffed.

"Now, let's work together to see if we can't either, A, develop a system that we can then impose and force the Railroad Commission to begin to regulate or monitor or verify the prices and fees, terms of the intrastate system, or look at other options of how best to regulate the intrastate pipeline system."

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