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FERC First Changes Announced At Last

FERC First Changes Announced At Last

After a four-month struggle and $700,000 in consulting fees, FERC went public with the first tier of its FERC First reorganization last week. The initiative, which includes creating several new offices, efforts to increase pre-filing activities, and new regulatory approaches designed to speed up processing of applications, will be made effective over the next two years.

The announcement marks the beginning of a top-to-bottom restructuring that promises to leave nearly everyone at the Commission with their heads spinning. "A lot of people are bewildered and I'll tell you, you can get bewildered by this process," said Richard P. O'Neill, director of FERC's Office of Economic Policy. "It is different from anything I've been involved in before. If you try to describe it, it's hard to describe."

And it's still difficult to tell how and where the gas industry will be affected. "Hopefully [the companies we regulate] will get a more responsive and effective FERC," said Christie L. McGue, FERC's executive director and chief financial officer and the project manager of FERC First. "One of the things that we found in our focus groups from our external constituents was that our decisions were not always timely and in some cases we were a black box. There was frustration with our filing requirements, our being able to get information in and out. We feel this is a blueprint for a new way of doing business with more of a focus on the external constituency."

The structural changes include the creation of the new offices of Markets, Tariffs and Rates; Administrative Litigation; Information and Technology; Strategy and Organizational Management; and Finance, Accounting and Operations. The offices of the Secretary, External Affairs, Hydropower Licensing and the General Counsel will remain basically as they were prior to the restructuring.

"I think [the new] office of Markets, Tariffs and Rates, organizationally probably is one of the most significant things that came out of this," McGue added. "It's a combination of the current office of Electric Power Regulation, many functions of the Office of Pipeline Regulation, Economic Policy and certain accountants from the Office of the Chief Accountant - the idea being a more collaborative approach. Instead of us passing off within the Commission from office to office, we'll have all parties involved from the beginning, including an attorney assigned. That will be a more efficient way of doing business."

Some of the operational changes include devoting more effort to monitoring market activities and identifying potential market problems. Beyond that general statement, however, the Commission gave no specifics on how it will take a closer look at the market. FERC said it also intends to pursue a pre-filing process for rates, terms and conditions and will emphasize "collaborative pre-filing procedures and early resolution of issues." McGue said those issues might have to be dealt with through a Notice of Proposed Rulemaking.

The Interstate Natural Gas Association of America (INGAA) has been supportive of the Commission's restructuring, but the possibility of including pre-filing requirements for pipeline construction raised some eyebrows at the association. "We'll have to evaluate that further," said an INGAA official.

Commenting on the pre-filing recommendations, Natural Gas Supply Association President Nicholas Bush noted, "There is probably some conflict between due process and the need for timely decision-making. At the same time, a collaborative process might improve our industry's ability to resolve some issues without wholly relying on the Commission."

Other FERC operational changes include a review of ex-parte rules, greater use of Alternative Dispute Resolution, time limits for the issuance of decisions, greater effort toward building relationships with other stakeholders, and the implementation of a largely paper-free environment with electronic filing and document posting. The reorganization plan was accomplished with the help of Andersen Consulting.

Rocco Canonica

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