Unlike those given to Atlanta Gas Light (AGL) and National FuelGas Distribution, the exemption to the shipper-must-have-titlepolicy awarded to Baltimore Gas and Electric (BG&E) was”unnecessary” and represented an “unacknowledged policy shift” byFERC, said Exxon Corp. It warned the Commission’s decision inBG&E could open up the floodgates to similar requests from themultitude of LDCs that are looking to unbundle their systems.

The Baltimore utility sought the waiver, which FERC granted inJuly, based on “its speculation as to the number of customers whowill participate in the non-obligatory choice program, and [its]inability to successfully conclude ongoing negotiations with[Columbia Gas Transportation and Consolidated Natural GasTransmission] that would resolve its operational concerns,” theproducer told FERC [RP99-355].

A waiver premised on the need to “complete negotiation ofcapacity arrangements with upstream pipelines” and provide BG&Ewith enough lead time to incorporate computer design changes “couldapply broadly to many LDCs,” Exxon said. If permitted to stand,such “exceptions” to the shipper-must-have-title policy “couldswallow the rule.” The producer has asked FERC to reconsider/denythe July 29 order granting BG&E a one-year waiver, effectiveNov. 1, or defer action until it issues a final rule addressing theshort-term transportation issues [RM98-10]. In the alternative, itrequested that the Commission hold a technical conference on theBG&E waiver.

In Exxon’s view, the BG&E decision can be “regarded ashaving established a generic regulatory exemption to, and quitepossibly an outright reversal of, the capacity-release regulationsand the shipper-must-have-title policy” in Order 636. The basis forgranting BG&E the waiver “appears sufficiently broad so as tocategorically excuse a large segment of the industry (LDCs) fromcompliance with the capacity-release rules.”

Exxon contends the BG&E order signaled a significantdeparture from prior precedent in which the Commission grantedwaivers only in very limited cases where “exceptionalcircumstances” existed, such as with AGL and National Fuel. In bothcases, “the Commission stressed the unique circumstances presentedby the petitioners, and stressed that the waivers granted did notimply any change to the shipper-must-have-title policy.” One uniqueaspect involved firm capacity assignment, which is required underthe AGL and National Fuel customer-choice programs, but is optionalwith BG&E. AGL was further “distinguished” by its petitionseeking to convert Part 157 services to Part 284.

BG&E sought the waiver of the shipper-must-have-title rule,which requires shippers to have title to gas when it’s delivered tothe transporter and while it’s being transported, as part of itsunbundling program, which begins Nov. 1 of this year. The waiverwould permit marketers/suppliers to inject their gas intoBG&E’s no-notice storage capacity on Columbia and CNG, thusproviding them with ready access to gas to meet daily demandswings, BG&E said. At the same time, BG&E noted the waiverwould enable it to maintain operational control over its storageassets for system balancing.

But Exxon believes no-notice flexibility could be achieved onBG&E’s system without resorting to a waiver. BG&E and otherLDCs either could directly release their storage capacity tomarketers participating in their unbundling programs, or themarketers could directly contract for no-notice storage capacity ona primary basis, as was proposed earlier by Columbia. “Columbiaasserts that Columbia Gas of Ohio had successfully implemented anapproach to unbundling in which the marketers have directlycontracted with Columbia for primary storage and transportationno-notice capacity, and according to Columbia it has worked well,”Exxon said. “Thus, Columbia informed the Commission that unbundlingprograms have proceeded without the need for a waiver of theshipper-must-have-title policy, or for the development of newstorage services.”

If penalties are BG&E’s “primary concern,” Exxon suggestedthat the utility could either seek a temporary waiver from Columbiaand CNG of the penalty provisions of their tariffs, or seek aCommission order waiving the penalty provisions.

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