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GISB Backs Away From Advocacy Role

October 5, 1998
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GISB Backs Away From Advocacy Role

While the FERC last week handed the Gas Industry Standards Board (GISB) a much-desired extension of the pipeline industry's move to the Internet, a heated debate erupted at the standards-setting group's annual board meeting about whether the Commission was asking it to tackle standardizing subjects that were "out of the scope" of its role.

At issue was the July notice of proposed rulemaking on short-term pipeline capacity in which the Commission asked the gas industry to comment on whether GISB should set standards for pipeline penalties and define a recourse service for those shippers who decide not to negotiate terms and conditions of service.

GISB members last week balked at taking up the issues, saying they fell outside the scope of standards-setting group, whose charter specifically prohibits advocacy of policy issues. GISB's board voted to send a letter to FERC explaining why it wouldn't take up the NOPR issues. A GISB spokesman said Friday the letter has yet to be drafted and likely would have to go through a review process before being sent out. Other objections the letter will bring up, he said, include GISB's limited resources and the fact that consideration of the NOPR is not in the GISB plan for the coming year.

Although some said the letter would be a sharp rebuff to the Commission, others saw it as something less than that. "That's the spin the pipes want to put on it. The pipes would like the FERC to think that GISB rebuffed it," said Greg Lander, president of TransCapacity and a GISB board member. But "what we're going to say basically is at this stage the issues aren't well enough defined for us to respond to them. We'll respond to specific questions posed to us. But at this stage we're not volunteering to get involved on these issues," he noted. A member of the board's executive committee, who requested anonymity, said she also remembered the letter would be along those lines, noting that it would be far from a rebuff to the Commission.

Chairman James Hoecker, who spoke at the GISB board meeting, said he was aware of the dilemma facing the group. "Because of the way GISB operates and the way it is, they don't want to be put in the position of making policy decisions," he said. However, "they're more than anxious to help implement policy choices and FERC directives..."

Hoecker suggested last week that GISB also might want to get involved in working out the details of how a real-time interactive auction process would be conducted - another issue that was raised in the July NOPR. "...[I]t's one of those issues where the technical and the operational requirements of the system and information technology sort of intersect. There may be some technical questions involved in how you structure auctions and how they are conducted that GISB may be uniquely suited to help us answer," he told NGI. "I think the auctions are an important way in which the gas industry can participate in a real information-based economy."

But Lander thinks that would be asking too much of GISB right now. "I have to say that even though I would be encouraged and supportive of GISB trying to come to some recommendation and really putting its collective wisdom to the test, I see that [tackling the auction issue] as premature for GISB," he said. "We're just not ready as an organization. We're still grappling with our historically complex and vexing issues."

Lander noted that GISB excels at tackling problems associated with existing practices, such as imbalance trading and title-transfer tracking. "But in the case of auctions, there really isn't an example yet of a pipeline...where auctioning is taking place of the type or nature that the Commission's talking about. GISB just doesn't have the tools to deal with the hypothetical, or in other words, to create something out of nothing."

Some of the tension at the annual board meeting was eliminated by a FERC decision last week that gave the industry a short reprieve before it has to begin conducting business on the Internet. FERC pushed back the deadline for pipelines to do transactions over the Internet until June 2000. GISB members breathed a "collective sigh of relief," Lander said, adding "they bought some time."

GISB Executive Director Rae McQuade told NGI before GISB's board meeting that the group's relationship with the FERC is evolving. "I think that it gets better as both of us learn how to work with each other, and I think that will continue to be the case." McQuade said GISB has enjoyed support from the two newest FERC commissioners. "What helps though is the longevity of some of the commissioners, like Chairman Hoecker and Commissioner Massey, who have been very strong proponents of GISB from its inception and continue to be so."

However, McQuade emphasized the difference between FERC and GISB. "There is definitely a line. We're not regulators. They are. And we basically look at considerably different issues. We don't get involved in really any financial issues, nor do we get involved in setting policies. What we do is once policies have been set, the industry's embraced them and the industry requests standardization - and that's a key point, the industry and the membership requesting standardization - then our organization gets behind that and works through the various committees to provide the needed standards."

Susan Parker; Joe Fisher, San Antonio

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