NGI The Weekly Gas Market Report / NGI All News Access

Bailey Sees 'Mouse' of a Gas Rule Delivered by Christmas

Bailey Sees 'Mouse' of a Gas Rule Delivered by Christmas

Commissioners Linda K. Breathitt and Vicky A. Bailey last week joined the club of those confused about when, if ever, FERC might settle the huge number of gas issues that have been on its plate for more than a year. Much to the chagrin of the industry, which has been anticipating some type of FERC action soon, Breathitt indicated it would take up to six more months, while Bailey predicted the Commission would be delivering a package of gas decisions by Christmas.

Both appeared to agree on one thing, however. The present delivered won't be nearly as big as the Commission led on. "That, to some of you guys - maybe more than girls - means that after all this labor the elephant will deliver a mouse..," said Bailey.

"I do think that a majority of the Commission will be disinclined to significantly tamper with a system that appears to work well," she said at a conference on FERC regulation sponsored by Financial Times. Whatever the Commission decides to do, it will "not fall toward the radical end of the spectrum," despite the scare tactics FERC used to draw an army of industry attorneys out of their corporate cubbyholes and into Washington.

Bailey said although there was no consensus among industry comments on the notice of proposed rulemaking (NOPR) on short-term transportation capacity issues or on the notice of inquiry (NOI) on long-term transportation capacity regulation, one common theme did emerge. "That theme falls under the heading 'whatever you do Commission, do no harm.'

"There seems to be no great clamor for change to the post-Order 636 world that there was earlier. Everyone is telling me that the regulatory regime is working quite well. It seems that the comments lean more toward a fine-tuning and making adjustments around the edges. I suspect that's probably what we'll actually do." Breathitt agreed that this course - minor tweaking - might be the wisest for the Commission now.

Bailey said there has been entirely too much focus on the short-term capacity auction idea, but she indicated the Commission likely got the message from the nearly unanimous industry opposition. Producers did voice some support for the proposal.

Speaking at The LDC Forum sponsored by the Interchange Group in Chicago, IL, last Monday, Breathitt expressed interest in dividing up the NOPR and NOI issues, leaving the most contentious to be decided at a later date. She said FERC proposals on term-differentiated rates, enhanced market transparency and changes to penalty procedures were ripe for review, and should be included in a final rule. But like Bailey, she believes final action on the Commission's more controversial proposals for daily auctioning of pipeline capacity and negotiated terms and conditions of service should be postponed.

"After reviewing the [industry] comments we received, I know I am not alone in the belief that the time isn't ripe for a massive policy shift," she said at the Forum. She believes the two-pronged approach she advocates for dealing with the gas issues "appears to be one that many in the market could support." Perhaps, she suggested, "the wise decision would be to continue to make progress on our present course, with appropriate adjustments." while at the same time "analyz[ing] whether more extensive changes in our polices are necessary in the long term....."

Bailey said to expect a decision on removing price caps on released capacity and on how to address the perceived potential for the exercise of marker power by pipelines.

Despite rumors that FERC staff already has ironed out the details, Bailey said she has not seen anything yet. "There may be something circulating that I'm not aware of, but they haven't forwarded any recommended proposals to the Commission for consideration. That appears that maybe we're not as far down the road as we should be."

Rocco Canonica, Washington, D.C.;

Susan Parker, Chicago

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus