A major LDC group and a pipeline group urged FERC yesterday tofavorably consider a proposal that would clear the way for gaspipelines and their customers to negotiate the heretofore untouchedarea of terms and conditions of service. The Commission has limitedits approval so far tonegotiation of rates.

The proposal, which was filed by the American Gas Association(AGA) and endorsed by the Interstate Natural Gas Association ofAmerica (INGAA), spelled out four principles that they believeshould guide negotiated terms and conditions: high quality recoursetariff service must not be degraded; negotiated terms andconditions must be on file at FERC and available for publicinspection; there should be no undue discrimination among similarlysituated shippers; and expedited consideration by FERC ofcomplaints should be available. These four points were “quicklyagreed” on by AGA and INGAA, said AGA Vice President Karen Hill.

Before negotiating terms or conditions, the proposal calls forpipelines to set a benchmark, via voluntary filings, in order tomaintain a high quality and reliability of recourse service, and toidentify specific terms or conditions of service that cannot bechanged by negotiation without prior approval of the Commission.

Upon FERC approval, items that aren’t identified asnon-negotiable can be negotiated at the discretion of the pipelineand its customers and can be implemented after 10 days priorwritten notice to firm shippers and FERC, unless the items providefor a lesser quality of service than the benchmark service.However, a pipeline must give 30 days prior written notice to FERCand firm shippers before a negotiated deal on certain items – suchas higher curtailment or generic OFOs – can go into effect. Duringthat time, customers would have the right to protest the negotiatedtransaction, according to the proposal. If unable to resolve thedispute in that time, AGA and INGAA called for expedited proceduresto be invoked to settle it.

A pipeline filing would create a “rebuttable presumption” thatthe negotiated deal would not have any material adverse effect onthe benchmark, recourse service, the proposal noted. In the end,the “ultimate burden of persuasion” will be on the pipeline to showthat no degradation of the benchmark service will occur as a resultof the negotiated deal.

The proposal stressed the need for expedited complaintprocedures. “These procedures would allow for the extraordinaryremedy of retroactive relief in the event a customer proves thepipeline willfully and knowingly made a material misrepresentationin its initial filing of a negotiated term or condition, whichresulted in material harm to the customer.”

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