The formal, bi-weekly negotiations on major gas restructuringinitiatives, 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 nottotally unexpected (See NGI, March 1 issue).

Industry negotiators ended the dialogue because “it becameobvious that an agreement was not going to be reached” by April22nd, when the gas industry is due to file comments on thecontroversial gas initiatives in FERC’s mega-notice of proposedrulemaking (NOPR) and notice of inquiry, said one source close tothe talks. Although a number of proposals had been consideredduring the sessions, “as a group, it didn’t appear they were movingforward” on any of them, remarked an observer.

Negotiators made the decision to call it quits at their lastmeeting in Houston on March 4th, which had been billed as a”make-or-break” session. They were scheduled to have to two morediscussion sessions – March 17th and April 7th – prior to thedeadline for industry comments.

The “party line” is that although the “big formal” industrydialogue is over for now, industry talks will continue on aninformal basis, the source noted. “People are going to keep ontalking to one another. I could still call up AGA, INGAA orwhatever to discuss the issues.” Also, it’s “entirely possible” theindustry dialogue could resume after the April 22nd filing date.But “whether they are resumed [then] is anybody’s guess,” saidanother source, even though FERC Chairman James Hoecker has urgedthe industry to do so.

Hoecker reportedly wasn’t upset when informed of the breakdownin the industry dialogue, but rather “expressed gratitude” thathigh-level gas executives had made a good-faith effort to reach acompromise on the NOPR and NOI issues. He’s expected to speak at aNatural Gas Council meeting this week. If he has anything at all tosay about the failed negotiations, some believe it might come then.

Representatives of various gas segments have been meeting behindclosed doors every other week since mid-January in an attempt toreach a consensus on contentious NOPR/NOI issues and/or to developalternatives to the Commission’s proposals. The more controversialFERC proposals being reviewed were the auction of short-termcapacity, negotiated terms and conditions, lifting of the price capin the short-term market and rate design. Negotiators also wereconsidering a proposal for seasonal, term-differentiated rates as areplacement for the proposed auction.

Despite the breakdown in talks, participants last week weren’tcalling the industry dialogue a waste of their time. “I don’t knowthat it changed my mind” on any of the issues, but it “gave me abetter understanding” of the industry, said one observer.

SusanParker

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