FERC yesterday flatly rejected a request by two Enron affiliatesfor a limited waiver of the capacity-release regulations and the”shipper must have title” policy that would enable them to transfertitle to gas being shipped on five New York State-bound pipelinesbefore the gas actually hits the market.

Enron Capital & Trade Resources and Enron Energy Servicesurged the Commission to take this action so they could compete withother suppliers which they claimed have been transferring the titleoutside of New York State in order to escape the state’s grossreceipts tax. This action, the Enron affiliates noted, enablestheir competitors to sell their gas more cheaply.

FERC noted that it had awarded “certain limited exceptions” tothe title rule in the past, but “those exceptions were for validbusiness or operating reasons,” the order said [RP98-220]. “Statetaxing policy is beyond the regulatory purview of the Commissionand [is] not a sufficient basis for an exception to theshipper-must-have-title policy.” Moreover, “the noncompliance ofothers…is not a valid basis for granting the waiver,” the ordernoted.

In the event the Commission turned them down, the Enronaffiliates asked that FERC issue a warning to other marketparticipants to cease this practice. “If Enron brings to theattention of the Commission an identification of those entities[it] believes are not in compliance, the Commission could then takeappropriate steps to ensure compliance,” it noted.

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

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