Electric Groups' Complaint Plan Comes Under Fire

Natural gas producers last week assailed an electric industry proposal that, if approved by FERC, could require them and others in the energy market to first try to resolve their commercial disputes among themselves using mediation before being permitted to file a formal complaint at the Commission. The aim of the proposed plan is to cut down on the number of complaints requiring the Commission's direct attention, with the result being a more streamlined complaint system at FERC, electric officials say.

"We're glad to see the electric industry is also interested in expediting complaints at FERC. However, we view a mandate to mediate as adding new regulatory hurdles and additional cost, which may keep smaller players, such as independent producers, from ever using an expedited complaint process," said David Sweet, vice president of natural gas for the Independent Petroleum Association of America (IPAA).

Additional costs would be incurred if producers were forced to hire outside mediators and/or lawyers, he noted. Moreover, since "rate relief in the gas industry is prospective only, any delays [in the complaint process, such as might occur with mediation] would be costly."

Major gas producers agreed. The electrics' complaint-reform proposal would mean "money down the drain" for producers and other pipeline customers, said Charlotte LeGates, spokeswoman for the Natural Gas Supply Association (NGSA). "In the electric industry, you can get retroactive [rate] refunds so it doesn't matter how long the dispute resolution takes. It doesn't matter to them if the thing takes a century."

But the Natural Gas Act doesn't provide retroactive refunds for the gas industry. Consequently, mandating resolution of complaints via dispute resolution, which producers believe would unnecessarily delay the process, is a "huge issue for us," noted LeGates.

The gas industry is concerned about the electric proposal because FERC Chairman James Hoecker indicated last March that he wanted a uniform, expedited complaint process in place for all the energy companies subject to Commission regulation. The gas side sees the electric proposal as a threat to its own complaint-reform measures.

The Pipeline Customer Coalition (PCC), of which NGSA and IPAA are members, and the interstate pipelines have come up with separate plans to hasten FERC's complaint process. Specifically, the PCC has proposed that the Commission act on various types of complaints by specific deadlines in an effort to speed up the process. The pipelines also favor an expedited system for resolving complaints, but they are against imposing deadlines on the Commission.

The Electric Industry Dispute Resolution Working Group, which developed the latest proposal, "met with some gas industry representatives and heard some of their concerns and took some of them into account" during its negotiations, said Christina C. Forbes, director of federal commercial and regulatory policy at Edison Electric Institute (EEI). "However, we didn't design it one way or the other with regard to the gas industry. They have a different statute...and they are at a different stage in their commercial evolution." The proposal was primarily fashioned with the electric industry in mind, noted electric representatives on the working group. Forbes and officials from six other electric organizations sat on the working group.

"The Commission staff was interested [in industry coming up with] a way that it could go to work itself [to settle disputes] before filing a complaint at the Commission," Forbes said. She believes the electric industry working group achieved this with its proposal.

"It was pretty clear from the symposium [held by FERC in March] and discussions with FERC staff that elements of ADR [alternative dispute resolution] had to be worked into the proposal. We could not set ADR over on a separate pedestal," said Kurt J. Conger of the American Public Power Association (APPA).

The proposal was structured in such a way that "anybody at anytime can call the [Enforcement] Hotline, anybody at anytime can sit down and try to settle their differences," said EEI's Forbes. But "if a party wants to file a complaint at FERC...we've provided for a mediation process for what in essence are disputes that don't fall into two other categories - if you are asking for expedited relief on the grounds of irreparable harm, or if you're seeking to change rates, terms and conditions of a filed rate or tariff. So what in effect that leaves are the commercial disputes."

Susan Parker

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