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LDCs Want Some (Not Too Much) Standardization

LDCs Want Some (Not Too Much) Standardization

In the view of local distribution companies, standardization can be a good thing if it streamlines business practices. However, standardization efforts that ignore the uniqueness of individual LDCs, their customers and the states and markets they operate in are unacceptable. LDCs' view of GISB and its standards is one reason cited for flagging LDC involvement in the standards organization.

While it can sometimes cut costs and create efficiencies, LDCs don't want standardization across the board, and voice opposition to GISB standards they view as unworkable at the local LDC level. "Many aspects of unbundling programs are fundamentally different from state to state," said Andy Sonderman, general counsel for Columbia Gas Distribution Companies. He pointed to variations such as whether capacity assignment is mandatory or voluntary and how daily balancing is handled. "At this point in time, variations are necessary and appropriate," he told attendees at the Gas Industry Standards Board's (GISB) fourth annual meeting last week in San Antonio.

"Some of the [GISB] standards just don't make too much sense at the local level," said Mary Jane McCartney, senior vice president for gas operations at Consolidated Edison. "The gas day, central clock time, is useful at the state level if you live where central time is the time. But for us using central clock time dealing with New York customers and New York providers doesn't really make a lot of sense.

"At ConEdison, we've implemented quite a lot of the GISB standards. The ones that don't make sense at the state level we haven't. The first one and the one that we've had the most success with is the [standardized] short-term contracts. I think that's universal. I think that that's what brought the end user into our [GISB] membership."

Mike Novak, assistant general manager of National Fuel Gas Distribution, advocated a balanced view toward standardization at the LDC level. "Over time we've found a way to balance what was unique with what was common, and I don't see that that can't continue in the future, but we have to look at where it can apply." Novak said National Fuel does much of its business using the GISB standard contract. Noting that about 40% of National Fuel throughput is transportation service, the bulk of it provided to smaller marketers, Novak said his company can't turn away shippers simply because they can't accommodate X12 EDI (electronic data interchange) as a communication medium. "The final question you should ask yourself is should GISB standards have a direct or indirect impact [on business]"

Last week FERC took heed of industry concerns over migration to the Internet and gave pipelines an extra year to adopt interactive web sites and EDI. The FERC rule extended the deadline to June 1, 2000. The order requires a combination of interactive web sites and EDI. "The fact that customers will have the choice of using EDI for bulk data transfer or standard interactive web sites, which seem to be more the wave of the future, I think is very important," said FERC Chairman James J. Hoecker. "I think it's important that industry has the time to adapt to these changes. This Commission is looking for a smooth transition and looking for the best technological solution..."

One of GISB's goals in the coming year will be to drum up participation in the organization among LDCs. While 33 of GISB's 157 members are LDCs - making the industry segment the third most heavily represented, behind pipelines and service providers - LDC input into standards development could be greater, conceded GISB Executive Director Rae McQuade. "We have not had much LDC participation, but the LDC participation that we have had has been stellar. The LDC community as a whole is being represented by a couple of extremely strong leaders. I think the agenda that we have - we're looking at web site standards - will necessarily bring more LDCs in because that's what they're interested in."

Losing LDC Members

However, GISB recently lost six LDC members who did not renew memberships from last year, noted McCartney. She suggested the four smaller LDCs of the non-renewing group probably were put off by a GISB dues increase. Dues now are $5,000/year for renewing members and $2,000 for a new member's first year of membership. McCartney and other speakers pointed out some concerns LDCs have with regard to GISB. To some, she said, GISB is seen as a driving force pushing LDC unbundling. Mainly though, McCartney and others said LDCs simply fail to see the relevance of GISB to their businesses as they view the standards organization as a player at the federal level only.

That perception exists among regulators, too. "It has struck me from the beginning that GISB was known as an interstate pipeline activity, one which would give them the tools with which to share information and make information available to their customers," said Bruce Ellsworth, a commissioner with the New Hampshire Public Utilities Commission. However, "State regulators, I think, are greatly affected by the activities of GISB because the LDCs are more and more finding themselves affected by GISB. So that is why I think we have a presence on the advisory council. We have a very definite reason to want to protect the interests of the LDCs, protect the interests of the customers of the LDCs, and I think it's fitting that we all work together in learning from the interstate pipelines and their reaction to GISB."

Joe Fisher, San Antonio

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