Columbia's Richard Pitches for Seasonal, Negotiated Proposals
Columbia Energy Chairman Oliver G. "Rick" Richard III says
proposals espousing seasonal ratemaking and negotiated terms and
conditions are the most important of the many reform initiatives
pending before FERC, and deserve priority. Obtaining regulatory
approval for both will be a "key initiative" of pipelines this
He specifically cited the seasonal rate proposals of Columbia's
pipelines and Northern Natural Gas, which would permit interstate
pipelines to collect more fixed costs during the peak-time winter
period when capacity is the "most valuable." He indicated seasonal
rates "could" be an alternative to the Commission's proposal for
mandatory auctioning of short-term capacity.
"I think the FERC is traveling down the right path - I'm not
saying the auction is the way to go - [in that] they're trying to
create transparency on the pipelines...," said Richard, who as
chairman of the Interstate Natural Gas Association of America
(INGAA), addressed pipeline regulatory priorities for 1999 at a
press briefing last Thursday.
But seasonal rates "can go a long way towards" providing the
transparency that producers seek, he told reporters. "Producers
want as simple [a] business as we can divine so that [it's] a
user-friendly system...And seasonal rates can help us get there."
To extend transparency even further, "you could have something
like...[what's] currently being done in California where Sempra is
putting up its bid and ask price, or you're doing it on the
Internet with commercial and residential customers" so they're able
to see gas prices a lot more quickly and choose. "And I think
Producers want transparency to choose the best rates, while
customers seek transparency to determine the best price for
delivered gas. "...[I]f you can combine those two, then I think
it's a win-win [situation]," Richard noted.
He believes that providing pipelines with seasonal ratemaking
authority, as well as the ability to negotiate terms and
conditions, would offer the "flexibility needed going forward" for
all concerned - producers, pipelines, LDCs and customers. The key
concern with negotiation of terms and conditions has been its
potential to degrade "recourse" service.
He declined to comment on the progress so far of the
industry-sponsored negotiations on major initiatives in the
Commission's mega-notice of proposed rulemaking (NOPR) and notice
of inquiry (NOI). He said the process has been "very, very
positive," but added that he had "no predictions on how it all may
turn out." Seasonal rates and negotiated terms and conditions have
taken center stage at the sessions so far, according to sources.
Richard indicated the gas industry will meet FERC's April 22nd
deadline for comments on the NOPR and NOI. "There's a sense of
urgency in the group to meet the deadline. I think everyone in the
entire value chain from producers all the way to the end-use
customer [has] been engaging in the dialogue to try to move it
towards some conclusion...by that deadline." The industry is near
the half-way point in its negotiations, completing three of seven
For Columbia, Richard said the company's goal is to grow
earnings by about 10-12% annually over the next five years. In
addition, it wants to convert its "income mix," which currently is
90% regulated and 10% unregulated, to 70-30% by the year 2002. He
dismissed questions about possible merger plans involving Columbia
Energy. "I couldn't answer that [even] if it were" considering such
plans, he quipped.
"...[W]e believe we have the culture and the assets to grow at a
very good percent, even faster than utilities" in the year ahead.
"Our core businesses are transmission and distribution. We like
those businesses...We think we have some good growth potential
there," Richard said, adding that Columbia also planned to continue
as "one of the major [producer] players" in Appalachia, was "very
interested" in the propane market and independent power generation,
as well as acquiring generation assets.