Columbia Energy President and CEO Oliver G. “Rick” Richard IIIsays proposals for seasonal ratemaking and negotiated terms andconditions are the most important of the reform initiatives pendingbefore FERC, and deserve priority. Obtaining regulatory approvalfor both will be a “key initiative” of pipelines this year.

He specifically cited the seasonal rate proposals of Columbia’spipelines and Northern Natural Gas, which would permit interstatepipelines to collect more fixed costs during the peak-time winterperiod when capacity is the “most valuable.” He indicated seasonalrates “could” be an alternative to the Commission’s proposal formandatory auctioning of short-term capacity.

“I think the FERC is traveling down the right path – I’m notsaying the auction is the way to go – [in that] they’re trying tocreate transparency on the pipelines…,” said Richard, who aschairman of the Interstate Natural Gas Association of America(INGAA), addressed pipeline regulatory priorities for 1999 at apress briefing Thursday.

Seasonal rates “can go a long way towards doing that,” providingthe transparency that producers seek, he told reporters. “Producerswant as simple [a] business as we can divine so that [it’s] auser-friendly system…And seasonal rates can help us get there.”

Producers, on one hand, want transparency to choose the bestrates, while customers seek transparency to determine the bestprice for delivered gas. “…[I]f you can combine those two, Ithink it’s a win-win [situation],” Richard noted.

He declined to comment on the progress so far of theindustry-sponsored negotiations on major initiatives in theCommission’s mega-notice of proposed rulemaking (NOPR) and noticeof inquiry (NOI). He said the process has been “very, verypositive,” but added that he had “no predictions on how it all mayturn out.”

Richard indicated the gas industry will meet FERC’s April 22nddeadline for comments on the NOPR and NOI. “There’s a sense ofurgency in the group to meet the deadline. I think everyone in theentire value chain from producers all the way to the end-usecustomer [has] been engaging in the dialogue to try to move ittowards some conclusion…by that deadline.” The industry is nearthe half-way point in its negotiations, completing three of sevenscheduled sessions.

For Columbia, Richard said the company’s goal is to growearnings by about 10-12% annually over the next five years. Inaddition, it wants to convert its “income mix,” which currently is90% regulated and 10% unregulated, to 70-30% by the year 2002. Hedismissed questions about possible merger plans involving ColumbiaEnergy. “I couldn’t answer that [even] if it were” considering suchplans, he quipped.

“…[W]e believe we have the culture and the assets to grow at avery good percent, even faster than utilities” in the year ahead.”Our core businesses are transmission and distribution. We likethose businesses…We think we have some good growth potentialthere,” Richard said, adding that Columbia also planned to continueas “one of the major [producer] players” in Appalachia, was “veryinterested” in the propane market and independent power generation,as well as acquiring generation assets.

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