A plea by two Enron affiliates for a limited waiver of thecapacity-release regulations and the “shipper must have title”policy is being met, at least initially, with opposition from thenatural gas industry.
They are seeking the waiver so that they can transfer title togas being shipped on five New York State-bound pipelines to end-usecustomers before the gas actually hits that market. Enron Capital& Trade Resources and Enron Energy Services say this wouldenable them to compete on equal footing with other suppliers thatare transferring the title outside of New York State to escape thestate’s gross receipts tax and undercut competitors’ gas prices.
Enron’s petition is based on a “mistaken and faultyinterpretation” that a waiver is needed to permit “in-transit”transfer titles, the Process Gas Consumers Group (PGC) said, addingthat no policy exists to prohibit such transfers. FERC shouldeither take no action at all on Enron’s petition or simply clarifythe “permissibility” of in-transit title transfers, the group ofindustrial customers noted.
“However, the last thing this Commission should be doing isaltering industry practices in order to cause state taxes to beapplied to natural gas transactions. The fact is that the New Yorklegislature is perfectly capable of addressing any perceived taxdisparity if it chooses to do so,” PGC told FERC in comments filedlast week [RP98-220].
“If state legislatures choose not to tax the seller in suchtransactions, it is their business. Prohibiting in-transit titletransfers to address an alleged tax disparity would unnecessarilyand wrongly put the Commission into the state taxation business,,”the industrial users said.
Producers also opposed Enron’s petition for a limited waiver,but for a different reason. They object to it because it wouldrequire an exception to the “shipper must have title” rule, whichthey say is critical to FERC’s capacity-release program. “Suchexceptions, if granted here, could lead to such further additionalwaivers that the entire capacity-release program could be severelyundermined-essentially resulting in a reversion to capacitybrokering in fact, if not in name,” noted Burlington Resources Oil& Gas and Exxon Corp.
The New York Public Service Commission declined to take aposition on the requested waiver but noted that an exception to the”shipper must have title” rule would have “far broaderimplications” on retail access programs than is realized, not justin New York State but nationwide.
The Enron affiliates are seeking the waiver for gas beingshipped to their New York commercial and industrial customers onCNG Transmission, Columbia Gas Transmission, National Fuel GasSupply, Tennessee Gas Pipeline and Transcontinental Gas Pipe Line.If the Commission should deny their waiver, they have asked it toclarify that all shippers must have title, and to put an end to allin-transit transfers without a capacity release.
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