While the FERC last week handed the Gas Industry Standards Board(GISB) a much-desired extension of the pipeline industry’s move tothe Internet, a heated debate erupted at the standards-settinggroup’s annual board meeting about whether the Commission wasasking it to tackle standardizing subjects that were “out of thescope” of its role.

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

GISB members last week balked at taking up the issues, sayingthey fell outside the scope of standards-setting group, whosecharter specifically prohibits advocacy of policy issues. GISB’sboard voted to send a letter to FERC explaining why it wouldn’ttake up the NOPR issues. A GISB spokesman said Friday the letterhas yet to be drafted and likely would have to go through a reviewprocess before being sent out. Other objections the letter willbring up, he said, include GISB’s limited resources and the factthat consideration of the NOPR is not in the GISB plan for thecoming year.

Although some said the letter would be a sharp rebuff to theCommission, others saw it as something less than that. “That’s thespin the pipes want to put on it. The pipes would like the FERC tothink that GISB rebuffed it,” said Greg Lander, president ofTransCapacity and a GISB board member. But “what we’re going to saybasically is at this stage the issues aren’t well enough definedfor us to respond to them. We’ll respond to specific questionsposed to us. But at this stage we’re not volunteering to getinvolved on these issues,” he noted. A member of the board’sexecutive committee, who requested anonymity, said she alsoremembered the letter would be along those lines, noting that itwould 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 theway GISB operates and the way it is, they don’t want to be put inthe position of making policy decisions,” he said. However,”they’re more than anxious to help implement policy choices andFERC directives…”

Hoecker suggested last week that GISB also might want to getinvolved in working out the details of how a real-time interactiveauction process would be conducted – another issue that was raisedin the July NOPR. “…[I]t’s one of those issues where thetechnical and the operational requirements of the system andinformation technology sort of intersect. There may be sometechnical questions involved in how you structure auctions and howthey are conducted that GISB may be uniquely suited to help usanswer,” he told NGI. “I think the auctions are an important way inwhich the gas industry can participate in a real information-basedeconomy.”

But Lander thinks that would be asking too much of GISB rightnow. “I have to say that even though I would be encouraged andsupportive of GISB trying to come to some recommendation and reallyputting its collective wisdom to the test, I see that [tackling theauction issue] as premature for GISB,” he said. “We’re just notready as an organization. We’re still grappling with ourhistorically complex and vexing issues.”

Lander noted that GISB excels at tackling problems associatedwith existing practices, such as imbalance trading andtitle-transfer tracking. “But in the case of auctions, there reallyisn’t an example yet of a pipeline…where auctioning is takingplace of the type or nature that the Commission’s talking about.GISB just doesn’t have the tools to deal with the hypothetical, orin other words, to create something out of nothing.”

Some of the tension at the annual board meeting was eliminatedby a FERC decision last week that gave the industry a shortreprieve before it has to begin conducting business on theInternet. FERC pushed back the deadline for pipelines to dotransactions over the Internet until June 2000. GISB membersbreathed a “collective sigh of relief,” Lander said, adding “theybought some time.”

GISB Executive Director Rae McQuade told NGI before GISB’s boardmeeting that the group’s relationship with the FERC is evolving. “Ithink that it gets better as both of us learn how to work with eachother, and I think that will continue to be the case.” McQuade saidGISB 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 verystrong proponents of GISB from its inception and continue to beso.”

However, McQuade emphasized the difference between FERC andGISB. “There is definitely a line. We’re not regulators. They are.And we basically look at considerably different issues. We don’tget involved in really any financial issues, nor do we get involvedin setting policies. What we do is once policies have been set, theindustry’s embraced them and the industry requests standardization- and that’s a key point, the industry and the membershiprequesting standardization – then our organization gets behind thatand works through the various committees to provide the neededstandards.”

Susan Parker; Joe Fisher, San Antonio

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