Auctions, interconnections, negotiated services and e-commerceare some of the top Order 637-related issues that FERC plans totackle, says a top Commission official.

Speaking at GasMart/Power 2000 in Denver, Kevin P. Madden,deputy director of FERC’s Office of Markets, Tariffs and Rates,said he expected to see “a great deal more movement on auctions inthe near future.” He noted a number of interstate pipelines alreadyhave submitted pre-filing proposals for auctions on theirindividual systems.

Madden said he favored the use of auctions in the industry.”Personally, I believe we should move forward on auctions.” Hebelieves “if you have an auction that is real-time” and thatprovides protections for customers and transparency, “you couldrelease the price cap on some of the pipeline’s short-termservices.”

Some auction-related issues to be discussed in a “dialogue” withthe industry include whether limitations should be placed onpipeline affiliates, and whether there should be a reserve price inauctions, he said.

Madden also expects FERC to issue a policy for interconnectingto the interstate gas pipeline grid. “I wouldn’t be surprised ifthe Commission looks at that on the gas side,” he said. In fact,FERC is expected to address the issue today in two cases involvingPanhandle and ANR/Transcontinental.

He further anticipates “a lot of movement” on negotiated rates,adding that he foresees much more negotiated activity thancost-based ratemaking.

As for e-commerce, “I think this is going to be the linchpin ofa successful market in the future,” Madden noted. The Commission”is going to have to focus on this soon,” he told pipelineexecutives at the conference.

Electronic trading in natural gas is the “furthest along of allenergy markets,” with Madden estimating on-line trading of morethan $10 billion in 1999. This is expected to jump more thanthreefold this year, he said.

Additionally, FERC is looking at “overhauling all of ourreporting regulations from all of the industries that we regulate,”he noted. Madden conceded that “we don’t need” a lot of theinformation that it receives as a result of its reportingregulations.

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