The American Gas Association has asked the Federal Energy Regulatory Commission for clarifications of its final rule, on Standards of Conduct for Transmission Providers (Order No. 2004), ensuring that LDCs affiliated with pipelines will continue to be exempt from the affiliate rules if they conduct off-system sales on non-affiliated pipelines.

The AGA notes language in the final rule, issued in November (see Daily GPI, Nov. 26), states that “an affiliated LDC that engages in any off-system sale is an energy affiliate, and subject to the standards of conduct.” The AGA contends the affiliate rules are onerous and rather than comply LDCs are likely to forego off-system sales. Either way consumers would suffer, either from the expenditures necessary for compliance or from revenue credits coming from off-system sales.

“Clarifying that LDCs conducting off-system sales on non-affiliated pipelines are exempt as energy affiliates under the final rule does not do harm to the Commission’s stated intention of the standards of conduct,” which are meant to rule out discrimination between a pipeline and its affiliates, AGA said.

The LDC advocacy organization also asked FERC to clarify that an LDC’s status as a Hinshaw pipeline either does not qualify it as an “affiliate” under the final rule or that the LDC exemption overrides an LDC’s status as a Hinshaw pipeline. Many LDCs by definition are also “Hinshaw,” that is having their sales and most of their pipelines within a state and subject to regulation by a state commission rather than FERC regulation even though some of their facilities may cross state lines.

The Hinshaw nomenclature is simply applied to an LDC and is not specific to any one part of its system so that it would be impossible to separate out the Hinshaw portion from the rest of the LDC, AGA pointed out.

The group also wants FERC to clarify that the gas distribution division of a combination gas and electric utility, or “public utility transmission provider,” should not be termed an energy affiliate. Since it’s not likely to run gas through electric power lines, there’s no opportunity to benefit from discriminatory treatment.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.