CA Gas Reporting Order Sparks Rehearing Requests

While many marketers are complaining to FERC that its drastic order "Imposing Reporting Requirements on Natural Gas Sales to California Market" is not needed or oversteps its jurisdiction, state utilities and regulators would like to see the order expanded and the results shared.

The Federal Energy Regulatory Commission (FERC) issued the July 25 order in an attempt to understand why natural gas prices rose considerably more in California when compared to the rest of the country (see NGI, July 30). The adopted gas sales reporting requirements will cover gas sellers, local distribution companies (LDC) and transporters serving the California market. In its ruling, FERC said it plans to collect the data on a monthly basis for the period between Aug. 1-Jan. 31, 2002, and then extend it to Sept. 30, 2002 upon approval by the Office of Management and Budget.

Two of the petitioners, Enron North America and Enron Energy Services, said among other things in their request for a rehearing that the "price anomaly of last winter was a transitory problem, with solutions already in sight, at least at the federal level." The companies added that prices are continuing to fall over time, and thus there is no reason for the Commission to require the permanent reporting rules that were included in the order.

The Enron companies said they support the continuation of "ad hoc reports" that the Commission already has requested from certain parties. They said that while they prefer the reports more than the reporting requirements that "contain no sunset date," they believe that the formalized adoption of these reports is not appropriate for the situation, "imposes undue burden" on affected companies and "in light of market changes, is no longer justified."

e-Prime Inc., a gas marketing subsidiary of Xcel Energy, and Tractebel Energy Marketing Inc. (TEMI) also filed motions for rehearing based upon claims that they do not fall under the Commission's Natural Gas Act (NGA) jurisdiction. TEMI claims that although it is a marketer of natural gas and electricity, the Commission has "erred" in ordering that the reporting requirement may apply to companies that are not jurisdictional for purposes of the NGA and related statutes.

TEMI further stated in its request that if the Commission continues to find that the gas reporting requirement may be applied to such companies, it should have "refrained from doing so with respect to entities whose volumes of gas sales are clearly not material to the Commission's core inquiry."

e-Prime's request stated that neither Section 14 nor Section 16 of the NGA "empowers" FERC to require non-jurisdictional companies to report. "The Commission has no authority to compel non-jurisdictional entities to report any information regarding non-jurisdictional transactions to the Commission," e-Prime stated in its request.

e-Prime said the Commission noted that its jurisdiction to regulate prices charged by natural gas sellers is limited to "sales for resale" of domestic gas by pipelines, LDCs or their affiliates. Furthermore, the marketer said that the information demanded by FERC is "highly confidential" with sensitive marketing information, which even with regards to jurisdictional entities cannot be required. e-Prime said to do so could "jeopardize the potential release of sensitive trading information, which serves no useful regulatory purpose."

Not every company was seeking to have the order tamed, however. Southern California Gas Co., San Diego Gas & Electric Co. (collectively Sempra utilities) and the California Public Utilities Commission all would like it expanded.

The Sempra utilities filed a request of limited clarification with the Commission regarding the order's scope. The utilities requested that the Commission clarify that it intends for interstate pipelines serving California to provide data on "capacity utilization by shippers east and north (upstream) of California" in addition to data regarding capacity utilization by shippers directly serving the state. The request for clarification requests that upstream entities such as LDCs and utilities also be included in the reporting requirements.

The Sempra utilities stated that since activity upstream of California affects deliveries to and prices at the California border, it is essential that the Commission obtain the same data from these entities as it would for California LDCs, utilities and marketing affiliates. "Absent this information, it is impossible for the Commission to gain a comprehensive understanding of the pricing disparity between California and the rest of the nation."

In the CPUC's request for a rehearing and clarification, it is requesting again that the Commission share the information with the CPUC. The CPUC argued that information explaining how the "exceptionally high" California border price of gas in 2000 and 2001 occurred could aid the state in understanding how it happened and how to spot the indicators in the future. The organization said it would maintain the confidentiality of any sensitive material under the FERC's rules, as it does under its own rules for confidential information.

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