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Hoecker Gives Counsel to NOPR, NOI Negotiators

Hoecker Gives Counsel to NOPR, NOI Negotiators

In an unusual step last week, FERC Chairman James Hoecker offered some advice to the industry negotiators who have been meeting in closed-door sessions to craft an agreement on the major natural gas initiatives contained in the notice of proposed rulemaking (NOPR) and notice of inquiry (NOI).

Speaking at a conference of The Energy Council last Monday, he said that while consensus on the major initiatives would be "very helpful," industry negotiators shouldn't focus on "agreement for its own sake but [rather] on learning from each segment of business how [they] can benefit from further evolution in FERC's policies, and craft common objectives and fair-market mechanisms that will be the most useful to the industry as a whole."

Moreover, he warned the gas industry not to "bring us lowest-common-denominator answers to our proposals in the hopes that we will take what we can get." Instead, Hoecker called on negotiators to give the Federal Energy Regulatory Commission "solid agreement where it exists and frank, solid analysis where it does not." Also, "bring alternatives if you can," he said.

Furthermore, "tell us how the short-term issues of the NOPR relate to the long-term objectives of the NOI and how we ought to view them together. Tell us how we can find practical approaches that will, to the extent possible in the market, stand the test of time and delay the need for another mega-proceeding of this kind in the future." Hoecker offered the suggestions after receiving a "personal update on the tenor" of the industry talks.

He reminded industry negotiators that the Commission's interest in NOI issues, such as straight fixed variable rate design, will continue after April 22, when industry comments are due on the NOPR and NOI initiatives. "To continue the process, however, the Commission needs ideas it can act on, procedural proposals that will be helpful and not merely tactical, and a willingness on the part of the industry to stay at the table on the issues it continues to deem important enough for further development."

He noted that generic review of the gas issues was much preferable to the "awfully slow and uncertain" case-by-case resolution. "...[I]f the gas industry tells us not to change the current rules - which were written for a far different marketplace [than today] - the consequences of that choice are something it will have to live with."

Although the proposed gas initiatives in the NOPR and NOI have created considerable controversy within the industry, Hoecker said "we cannot let controversy deter us from making progress."

Susan Parker

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