Natural gas producers last week assailed an electric industryproposal that, if approved by FERC, could require them and othersin the energy market to first try to resolve their commercialdisputes among themselves using mediation before being permitted tofile a formal complaint at the Commission. The aim of the proposedplan is to cut down on the number of complaints requiring theCommission’s direct attention, with the result being a morestreamlined complaint system at FERC, electric officials say.

“We’re glad to see the electric industry is also interested inexpediting complaints at FERC. However, we view a mandate tomediate as adding new regulatory hurdles and additional cost, whichmay keep smaller players, such as independent producers, from everusing an expedited complaint process,” said David Sweet, vicepresident of natural gas for the Independent Petroleum Associationof America (IPAA).

Additional costs would be incurred if producers were forced tohire outside mediators and/or lawyers, he noted. Moreover, since”rate relief in the gas industry is prospective only, any delays[in the complaint process, such as might occur with mediation]would be costly.”

Major gas producers agreed. The electrics’ complaint-reformproposal would mean “money down the drain” for producers and otherpipeline customers, said Charlotte LeGates, spokeswoman for theNatural Gas Supply Association (NGSA). “In the electric industry,you can get retroactive [rate] refunds so it doesn’t matter howlong the dispute resolution takes. It doesn’t matter to them if thething takes a century.”

But the Natural Gas Act doesn’t provide retroactive refunds forthe gas industry. Consequently, mandating resolution of complaintsvia dispute resolution, which producers believe would unnecessarilydelay the process, is a “huge issue for us,” noted LeGates.

The gas industry is concerned about the electric proposalbecause FERC Chairman James Hoecker indicated last March that hewanted a uniform, expedited complaint process in place for all theenergy companies subject to Commission regulation. The gas sidesees the electric proposal as a threat to its own complaint-reformmeasures.

The Pipeline Customer Coalition (PCC), of which NGSA and IPAAare members, and the interstate pipelines have come up withseparate plans to hasten FERC’s complaint process. Specifically,the PCC has proposed that the Commission act on various types ofcomplaints by specific deadlines in an effort to speed up theprocess. The pipelines also favor an expedited system for resolvingcomplaints, but they are against imposing deadlines on theCommission.

The Electric Industry Dispute Resolution Working Group, whichdeveloped the latest proposal, “met with some gas industryrepresentatives and heard some of their concerns and took some ofthem into account” during its negotiations, said Christina C.Forbes, director of federal commercial and regulatory policy atEdison Electric Institute (EEI). “However, we didn’t design it oneway or the other with regard to the gas industry. They have adifferent statute…and they are at a different stage in theircommercial evolution.” The proposal was primarily fashioned withthe electric industry in mind, noted electric representatives onthe working group. Forbes and officials from six other electricorganizations sat on the working group.

“The Commission staff was interested [in industry coming upwith] a way that it could go to work itself [to settle disputes]before filing a complaint at the Commission,” Forbes said. Shebelieves the electric industry working group achieved this with itsproposal.

“It was pretty clear from the symposium [held by FERC in March]and discussions with FERC staff that elements of ADR [alternativedispute resolution] had to be worked into the proposal. We couldnot set ADR over on a separate pedestal,” said Kurt J. Conger ofthe American Public Power Association (APPA).

The proposal was structured in such a way that “anybody atanytime can call the [Enforcement] Hotline, anybody at anytime cansit down and try to settle their differences,” said EEI’s Forbes.But “if a party wants to file a complaint at FERC…we’ve providedfor a mediation process for what in essence are disputes that don’tfall into two other categories – if you are asking for expeditedrelief on the grounds of irreparable harm, or if you’re seeking tochange rates, terms and conditions of a filed rate or tariff. Sowhat in effect that leaves are the commercial disputes.”

Susan Parker

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.