Columbia Gas Transmission and Columbia Gulf Transmissionyesterday followed through on a long-standing promise to provideFERC with some new regulatory ideas in the area of negotiated termsand conditions of service. The transmission subsidiaries ofColumbia Energy filed a proposal to establish a new regulatorymodel called Standard/Customized services. Columbia said it’s the”next logical step in the evolution of pipeline regulation andnatural gas markets.”

Northern Natural recently filed a general rate case thatincluded a request for authority to negotiate specific provisionsof its tariff, including right of first refusal, flow rights andpressures, and lower quality of service. Columbia’s filing isdifferent in that it narrows down the terms and conditions thatshould remain non negotiable in its own pipeline tariffs.

“.We’re coming in with a framework for the service that’s goingto continue to be available, what should be off the table. Ourfeeling is once you’ve got those pieces in place you ought to beable to negotiate anything else,” said Carl Levander, Columbia’smanager of regulatory analysis.

The areas that should remain in the non-negotiable category fallinto two main groups, according to Columbia: “things that could[interfere with] the service of other customers and things thatcould interfere with Commission policy,” Levander said. One area iscapacity rights. “If you were to be able to negotiate a higherquality of [firm] service, you would by definition hurt somebodyelse. For example, if you could buy your way into a higher priorityfor capacity or a better allocation of capacity, or pay more not tobe interrupted, or not to have OFOs imposed, those are situationswhere your additional service could come at the expense of anothercustomer.

“The other category is where you’re running afoul of FERCpolicy… We think that the GISB terms ought to remainnon-negotiable so that the benefits of standardization aren’tundone through negotiation. Also taking capacity release rights offthe table makes some sense to us so you don’t open the door tothings that could interfere with the competitive market. It kind ofleaves the door open for creativity,” said Levander.

With a significant number of pipeline transportation contractsexpiring at a time when retail unbundling is picking up speed andelectric restructuring is proceeding, there’s a large degree ofuncertainty about the requirements of future transportationcustomers, he noted.

“Retail unbundling is affecting the customer base of interstatepipelines and changing the types of services customers require,”said Glenn Kettering, Columbia Gas Transmission senior vicepresident. “In response, we need the ability to offer more diverseand customized transportation services. Customized services will bedesigned to better fit a particular customer’s operationalrequirements and provide a needed mechanism to effectively respondto changing competitive markets.”

Columbia’s proposal already has the support from some of itscustomers, including Baltimore Gas & Electric and AlliedSignal. “We believe that service flexibility will be a key tosuccess in addressing retail unbundling and other changes in ourmarket,” said Bob Fleishman, BG&E’s general counsel and vicepresident. “This will provide an important tool to helpdistribution companies manage the changes occurring in ourenvironment.”

Under the proposal, any customer could elect to customize itsservices to more closely fit its requirements, while no customerwould be made worse off, Columbia said. It’s going to be a”continuing priority” at Columbia not to degrade recourse serviceof existing customers. “We’re not looking to provide more byproviding less to the customer that brought us to the dance,” saidKettering.

The pipelines did not request immediate approval of its proforma tariff sheets. Instead, they seek a general discussion andconsideration of the concept by FERC.

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