Additional regulatory requirements on Hinshaw pipelines, particularly a capacity release program, are unnecessary given the limited nature of the jurisdictional transactions in which they engage, the American Gas Association (AGA) told FERC.

The AGA, which represents natural gas utilities, called on the Federal Energy Regulatory Commission (FERC) to review the data provided in the quarterly reports filed by Hinshaw pipelines under Order 735 before imposing further requirements on the intrastate pipelines.

Hinshaw pipelines are exempt from FERC jurisdiction because the gas they deliver, although received from interstate pipeline sources, is consumed totally within the state in which they operate.

Gas utilities are opposed to FERC increasing the requirements for Section 311 intrastate pipelines and Hinshaw pipelines to mirror the stiffer requirements for interstate pipelines under the Natural Gas Act (NGA).

If the agency should decide to take action, it “should limit any such requirements to Hinshaw pipelines whose businesses are predominantly interstate and whose jurisdictional services significantly affect interstate markets. In the alternative, at a minimum the Commission should establish a de minimis exemption for those Hinshaw pipelines whose jurisdictional services are insignificant,” the AGA said (RM11-1).

It called on the Commission “not to impose a capacity release program on Hinshaw pipelines with regard to their jurisdictional services. AGA is not aware of any evidence of discrimination with regard to their jurisdictional services.”

If FERC decides otherwise, it should adopt a “much simpler” capacity release program for Hinshaw pipelines than the one it adopted for the interstate capacity release program, AGA said.

AGA’s comments were in response to a notice of inquiry (NOI) seeking public comment on whether and how holders of firm interstate capacity on some intrastate pipelines can allow others to use their capacity, including to what extent buy/sell transactions should be permitted (see NGI, Oct. 25, 2010).

The NOI also grants a blanket waiver allowing buy/sell transactions involving section 311 and Hinshaw pipelines to continue while the Commission is considering these policy issues. FERC’s ruling in a July order that a buy/sell transaction on intrastates or Hinshaws could only proceed if specifically approved by FERC raised a firestorm of protest from all points in the industry.

FERC’s general prohibition, tacked onto an order regarding transportation for Arizona Public Service and Sequent Energy Management, represented an attempt by FERC to roll back Section 311 of the Natural Gas Policy Act and sweep the capacity transactions back under the older NGA, the protesters said.

Granting case-by-case waivers “will ensure that any buy/sell transactions are transparent and can be monitored for undue discrimination,” the Commission said in issuing the decision.

FERC has extended the comment deadline on the NOI to Jan. 26.

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