Industry Meetings Begin Debating NORP, NOI
The first of a series of industry-sponsored meetings aimed at
bringing the divided gas segments closer together on some of the
major regulatory initiatives proposed by FERC got underway in
Houston last week. Not surprisingly, industry representatives at
the initial session agreed to narrow the "primary focus" of their
negotiations to two proposals to ease pipeline rate regulation -
short-term capacity auctioning and negotiated terms and conditions.
The closed-door sessions are expected to be a "dynamic process"
characterized by "interactive dialogue" that hopefully will result
in, if nothing else, the filing of "richer" industry comments on
both the mega-notice of proposed rulemaking (NOPR) and notice of
inquiry (NOI) in April, said Nicholas J. Bush, president of the
Natural Gas Supply Association (NGSA). Bush outlined procedure at a
press briefing last Tuesday in Washington DC prior to the first
round of talks. Sources indicated industry representatives quickly
got down to work last week, putting alternative proposals on the
table for consideration.
"...[T]here have been differences of opinion among the
segments in the industry about the need for further [regulatory]
changes, about the scope of those further changes, the breadth of
those changes [and] the nature of those changes," he noted. The
meetings are intended as a forum to help the various industry
segments bridge some of those differences - to "at least better
understand [and possibly accommodate] each other's position." The
NOPR/NOI comments to be submitted to FERC will have "more clarity"
as a result, he said, adding that no one in the industry "want[s]
to do this wrong."
But Bush doesn't realistically expect industry to achieve
uniformity on all the key issues. "I think that it [would] be naive
for somebody to believe that this would result in four, five or six
or seven filings that [are] homogenous," he told reporters. At
best, it's hoped the meetings will help the various gas segments to
find some common ground.
Bush and other NGSA officials dismissed the suggestion that the
industry-wide meetings had the earmarks of a negotiated-rulemaking
effort. "We're not doing any rulemaking here. We're not doing any
dealmaking," Bush said.
"The negotiated-rulemaking concept requires unanimous agreement
among all the parties. Given the different perspectives that the
different industry segments have on the issues, that's not likely
to occur," noted Philip Budzik, NGSA's director of federal
regulatory affairs. "But that doesn't mean you can't come together
on some of the issues and reduce the degree of contentiousness."
Industry plans to meet seven times in Houston (on the first and
third Wednesday of each month) until April 22, when comments are
due at FERC. The producers, pipelines and distributors each will
have six representatives attending, while the American Public Gas
Association, the Process Gas Consumers Group and Edison Electric
Institute each will have one representative. Also, there will be
antitrust counsel in attendance, and the major gas trade groups
will be represented to take notes for their full membership.
Commission staff members have not been invited, nor will the press
be allowed to attend. "I don't think it's a good idea. That might
put a different tone" on the proceedings, Bush said. This is a
"shared conversation among the industry" without it having to
"weigh every word."
"These meetings are going to tie up a lot of the associations'
time" over the next couple of months, Budzik said. He noted that
NGSA also plans to meet with its own members on alternate weeks to
inform them of the progress in the industry talks.
The industry-sponsored meetings were the brainchild of Robbi
Luxbacher, vice president of natural gas for Exxon U.S.A., and Stan
Horton, chairman and CEO of the Enron Gas Pipeline Group. The
details of the sessions were worked out among the various gas
segments during the past couple of months, Bush said. He lauded the
Commission for giving industry a second extension of the deadline
on the NOPR/NOI comments last month, which paved the way for the
talks. "I think this has been a really good move by FERC."
Auctioning of short-term capacity and negotiated terms and
conditions, primarily because of their controversial nature, will
top the agenda at the industry powwows. Although much of the
industry has indicated its distaste for the auction proposal in the
NOPR, producers are undecided on the issue, according to Bush.
"Everybody has written that the industry has reacted negatively to
auctions. Well, we're not dismissive entirely of the auction
process. We think it's too soon to make some kind of a final
determination on any one issue."
Overall, however, producers "still question the seriousness of
the need for extensive [regulatory] changes," he said. They're
especially concerned that the regulatory initiatives proposed by
the Commission will have a "large and significant impact" on the
allocation of capital within the natural gas industry.
Procedurally, the order of importance in which the issues were
presented to the gas industry - with the short-term transportation
issues framed in a more-pressing NOPR, and the long-term
transportation issues outlined in a less-urgent NOI - proved
"difficult for us to manage," Bush said. He noted it quickly became
apparent that it was difficult to address the short-term issues
without first looking at the long term. The two areas were
intertwined. And so the producer group did a reverse, deciding
first to "talk about what the NOI ought to be, and then maybe we'll
make some decisions about the way the NOPR [ought to be]."