Based on “the urgency of the situation caused by the nexus between the upcoming storage injection season and the lack of clarity in Commission policy,” Constellation Energy Commodities Group Inc. has submitted an emergency request for expedited action on FERC’s notice of proposed rulemaking (NOPR) to remove the price cap on short-term releases of transportation capacity and provide a partial exemption for capacity released under asset management arrangements (AMA).
The NOPR, which the Federal Energy Regulatory Commission (FERC) voted out at its regular monthly meeting in November, seeks to permanently lift the maximum rate ceiling on secondary capacity releases of one year or less (see NGI, Nov. 19, 2007). The NOPR does not apply to long-term releases of more than one year or to primary sales of capacity by interstate natural gas pipelines.
The NOPR also seeks to encourage the use of AMA by exempting capacity releases in this area from the time prohibition on tying any capacity to extraneous conditions, and exempting capacity releases made as part of an AMA from the bidding requirements in Section 284.8 of the Commission regulations.
An AMA is a prearranged capacity release where a capacity holder releases some of its capacity to an asset manager who then agrees to supply the gas needs of the releasing shipper.
Constellation requested immediate action by the Commission, at least on an interim basis, to allow a generic exception for AMAs set up in conjunction with local distribution companies (LDC) “in order to create a level playing field, which will not only increase competition but will benefit the ratepayers of the LDCs.
“Specifically, Constellation requests that where an LDC conducts an RFP [request for proposals] for an AMA with approval of its associated public utility commission, then the Commission will make clear that the jurisdictional contracts associated with that AMA are neither subject to the Commission’s policies on tying or buy/sell arrangements nor are required to be subject to bidding when released to the asset manager.”
Constellation said it supports previous requests from other companies, including Hess, for FERC to act quickly or put in place interim rules.
“Where all parties including the Commission acknowledge the benefits of AMAs, it is a travesty, if for yet another year, LDCs are not able to pass on to their ratepayers the full benefits of AMAs,” Constellation said in its request to FERC.
More than 60 comments have been filed in response to the NOPR. Most recently, PPM Energy Inc. submitted comments in support of Constellation’s emergency request for expedited action, writing that “until the Commission adopts the regulations set forth in the NOPR, this cloud of regulatory uncertainty will persist to the detriment of the market.
“Like Constellation, PPM has been unable to bid on many of these AMAs because they are structured in ways that appear to be noncompliant under the Commission’s current rules, but compliant under the proposed rules set forth in the NOPR.”
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