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Commission Upholds 'Shipper Must Have Title' Policy

Commission Upholds 'Shipper Must Have Title' Policy

Just because your competitors are breaking the rules, doesn't mean that you should be allowed to do so, FERC essentially told two Enron affiliates last week when it denied their plea for a limited waiver of its capacity-release rule and the "shipper must have title" policy. The affiliates contend they sought the waiver so they could compete with other suppliers that allegedly are ignoring the title rule in order to evade paying certain taxes in New York State.

Enron Capital &amp Trade Resources and Enron Energy Services accused competing marketers of carrying out in-transit transfers of titles to gas destined for the New York State market in order to escape the state's gross receipts tax - a practice, they say, that permits competitors to sell their gas more cheaply than Enron.

FERC acknowledged it had awarded "certain limited exceptions" to the title rule in the past, but "those exceptions were for valid business or operating reasons," the order said [RP98-220]. "State taxing policy is beyond the regulatory purview of the Commission and [is] not a sufficient basis for an exception to the shipper-must-have-title policy." Moreover, "the noncompliance of others...is not a valid basis for granting the waiver," the order noted.

In the event the Commission turned them down, the Enron affiliates asked that FERC issue a warning to other market participants to cease the practice. "If Enron brings to the attention of the Commission an identification of those entities [it] believes are not in compliance, the Commission could then take appropriate steps to ensure compliance," it noted.

The Enron companies sought the waiver for their commercial and industrial customers in New York that are receiving gas on CNG, Columbia Gas, National Fuel Gas, Tennessee and Transcontinental Gas Pipe Line.

Susan Parker

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