The formal, bi-weekly negotiations on major gas restructuringinitiatives, which have been under way for two months, were”suspended” last week when various industry segments agreed that a”unified proposal” was not likely, sources said. This action wasnot totally unexpected.

Industry negotiators ended the dialogue because “it becameobvious that an agreement was not going to be reached” by April 22,when the gas industry is due to file comments on the controversialgas initiatives in FERC’s mega-notice of proposed rulemaking (NOPR)and notice of inquiry, said a producer source close to the talks.Although a number of proposals had been considered during thesessions, “as a group, it didn’t appear they were moving forward”on any of them, remarked an observer.

Negotiators met last Thursday in Houston, and were scheduled tohave two more discussion sessions-March 17 and April 7.

The “party line” is that although the “big formal” industrydialogue is over for now, industry talks will continue on aninformal basis, the producer source noted. “People are going tokeep on talking to one another. I could still call up AGA, INGAA orwhatever to discuss the issues.” Also, he believes it’s “entirelypossible” that the industry dialogue could resume after the April22 filing date.

Representatives of various gas segments have been meeting everyother week in closed-door sessions since mid-January in an attemptto reach a consensus on contentious NOPR/NOI issues and/or todevelop alternatives to the Commission’s proposals. The morecontroversial FERC proposals being reviewed were the auction ofshort-term capacity, negotiated terms and conditions, lifting ofthe price cap in the short-term market and rate design. Negotiatorsalso were considering a proposal for seasonal, term-differentiatedrates as a substitute for the proposed auction.

The fact that an industry agreement on the issues wasn’trealized came as no surprise to some. “These [talks] were notbilled as settlement conferences,” said one participant, but ratherwere an “industry dialogue.”

Despite the breakdown in talks, participants aren’t ready to saythe dialogue was all for naught. “I don’t know that it changed mymind” on issues, but it “gave me a better understanding” of theindustry, said the producer observer. “Everybody goes out with agreater appreciation of the industry dynamics and the problemsfacing the various gas sectors.” And most importantly, the dialogue”will help people file better comments” on the NOPR/NOI, he noted.

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