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Industry Talks on NOPR, NOI 'Suspended'

Industry Talks on NOPR, NOI 'Suspended'

The formal, bi-weekly negotiations on major gas restructuring initiatives, which had been under way for more than two months, were "suspended" when various industry segments decided that a "unified proposal" wasn't likely, sources said. This action was not totally unexpected (See NGI, March 1 issue).

Industry negotiators ended the dialogue because "it became obvious that an agreement was not going to be reached" by April 22nd, when the gas industry is due to file comments on the controversial gas initiatives in FERC's mega-notice of proposed rulemaking (NOPR) and notice of inquiry, said one source close to the talks. Although a number of proposals had been considered during the sessions, "as a group, it didn't appear they were moving forward" on any of them, remarked an observer.

Negotiators made the decision to call it quits at their last meeting in Houston on March 4th, which had been billed as a "make-or-break" session. They were scheduled to have to two more discussion sessions - March 17th and April 7th - prior to the deadline for industry comments.

The "party line" is that although the "big formal" industry dialogue is over for now, industry talks will continue on an informal basis, the source noted. "People are going to keep on talking to one another. I could still call up AGA, INGAA or whatever to discuss the issues." Also, it's "entirely possible" the industry dialogue could resume after the April 22nd filing date. But "whether they are resumed [then] is anybody's guess," said another source, even though FERC Chairman James Hoecker has urged the industry to do so.

Hoecker reportedly wasn't upset when informed of the breakdown in the industry dialogue, but rather "expressed gratitude" that high-level gas executives had made a good-faith effort to reach a compromise on the NOPR and NOI issues. He's expected to speak at a Natural Gas Council meeting this week. If he has anything at all to say about the failed negotiations, some believe it might come then.

Representatives of various gas segments have been meeting behind closed doors every other week since mid-January in an attempt to reach a consensus on contentious NOPR/NOI issues and/or to develop alternatives to the Commission's proposals. The more controversial FERC proposals being reviewed were the auction of short-term capacity, negotiated terms and conditions, lifting of the price cap in the short-term market and rate design. Negotiators also were considering a proposal for seasonal, term-differentiated rates as a replacement for the proposed auction.

Despite the breakdown in talks, participants last week weren't calling the industry dialogue a waste of their time. "I don't know that it changed my mind" on any of the issues, but it "gave me a better understanding" of the industry, said one observer.

SusanParker

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