Following an extensive four-month, $700,000 review of FERC’sprocedures and organization by staff and Andersen Consulting, theCommission yesterday formally announced its changes in structureand regulatory approach. The initiative, which includes creatingseveral new offices, efforts to increase pre-filing activities andnew regulatory approaches designed to speed up processing ofapplications, will be made effective over the next 18 months.
It’s still difficult, however, to tell how and where the gasindustry will be affected by FERC’s reorganization. “Hopefully [thecompanies we regulate] will get a more responsive and effectiveFERC,” said Christie L. McGue, FERC’s executive director and chieffinancial officer and the project manager of FERC First. “One ofthe things that we found in our focus groups from our externalconstituents was that our decisions were not always timely and insome cases we were a black box. There was frustration with ourfiling requirements, our being able to get information in and out.We feel this is a blueprint for a new way of doing business withmore of a focus on the external constituency.”
The structural changes include the creation of the new officesof Markets, Tariffs and Rates; Administrative Litigation;Information and Technology; Strategy and Organizational Management;and Finance, Accounting and Operations. The offices of theSecretary, External Affairs, Hydropower Licensing and the GeneralCounsel will remain basically as they were prior to therestructuring.
“I think [the new] office of Markets Tariffs and Rates,organizationally probably is one of the most significant thingsthat came out of this,” McGue added. “It’s a combination of thecurrent office of Electric Power Regulation, many functions of theOffice of Pipeline Regulation, Economic Policy and certainaccountants from the Office of the Chief Accountant-the idea beinga more collaborative approach. Instead of us passing off within theCommission from office to office, we’ll have all parties involvedfrom the beginning, including an attorney assigned. That will be amore efficient way of doing business.”
Some of the operational changes include devoting more effort tomonitoring market activities and identifying potential marketproblems. Beyond that general statement, however, the Commissiongave no specifics on how it will take a closer look at the market.FERC said it also intends to pursue a pre-filing process for rates,terms and conditions and will emphasize “collaborative pre-filingprocedures and early resolution of issues.” McGue said those issuesmight have to be dealt with through a Notice of ProposedRulemaking.
The Interstate Natural Gas Association of America (INGAA) hasbeen supportive of the Commission’s restructuring, but thepossibility of including pre-filing requirements for pipelineconstruction raised some eyebrows at the association. “We’ll haveto evaluate that further,” said an INGAA official.
Commenting on the pre-filing recommendations, Natural Gas SupplyAssociation President Nicholas Bush noted, “There is probably someconflict between due process and the need for timelydecision-making. At the same time, a collaborative process mightimprove our industry’s ability to resolve some issues withoutwholly relying on the Commission.”
Other FERC operational changes include a review of ex-parterules, greater use of Alternative Dispute Resolution, time limitsfor the issuance of decisions, greater effort toward buildingrelationships with other stakeholders, and the implementation of alargely paper-free environment with electronic filing and documentposting.
“It is different from anything I’ve been involved in before,”said Richard P. O’Neill, director of FERC’s Office of EconomicPolicy, reflecting on the four-month process. “If you try todescribe it it’s hard to describe.. A lot of people are bewilderedand I’ll tell you, you can get bewildered by this process.”
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