The natural gas policy options paper, still officially underwraps at FERC, apparently has blown enough of its cover to piquethe interest of lawmakers on Capitol Hill, and start the war-drumswithin the industry, according to sources.

Chief of Staff Michael Ware of Sen. Larry Craig’s office, forone, met recently with the Commission to discuss the “potentialprocedures” outlined in the options paper, said Michael Frandsen,press aide for the Idaho senator. He said the meeting was “veryminor,” but a gas industry group contends otherwise. It insists themeeting was called to “alert FERC that they need to involveCongress ‘at the front end of this process.'”

The industry group said that at the meeting “FERC staff wasgiven a number of questions to answer – some procedural questionsand…some not necessarily favorable to the proposal. It was alsosuggested that Sen. Craig would hold an oversight hearing on theoptions paper.It was also mentioned that it was not a good ideato release the paper during an election year.” Moreover, the groupinsisted producers had contacted Craig’s office about the optionspaper, triggering the senator’s interest in the issue.

Craig’s office, as well as producers, deny these claims. “Thedecision as to whether there should be an oversight hearing will bemade by somebody else, not Sen. Craig,” Frandsen noted. “Thoughfrankly, if there’s a policy change being contemplated [by FERC],it seems like it would be an appropriate subject for a hearing.”Furthermore, the senator “doesn’t have any position either way”about when the options paper should be released, he said.

Nor, he added, was Craig’s interest in the options paperprompted by gas producers. “Sen. Craig has [a stake] in this issuebecause first of all of his position on the Energy and NaturalResources Committee,” and because the options paper “apparentlyaddresses the issue of deregulation,” which Frandsen said was a”topic of enormous importance right now in the Senate.” Inaddition, he refuted the gas group’s claims that Craig has beengiven a copy of the options paper by FERC staff. “I don’t [even]think he has seen the options paper,” he told NGI last week.

“Our initial reaction [to all of this] was ‘they have a lot ofnerve to lean all over FERC. There isn’t even a paper out yet.There isn’t even a real firm initiative,” a representative of theindustry faction said. “Congress is asking about issues that areonly being discussed, not proposed, internally. I wouldn’t be happyif I were FERC [and was] getting hostile questions from members ofCongress at this point in time.” The group has “briefed our membersto let them know that members of Congress are being contacted[about the options paper] in this manner. I think we’ll leave it upto the individual companies to deal with it.” Efforts to reach FERCChairman James Hoecker on this matter last week were unsuccessful.

Charlotte LeGates, spokeswoman for the Natural Gas SupplyAssociation, said she was aware of Craig’s interest in the gasoptions paper, but she failed to see what all the fuss was aboutover his staff member meeting with FERC. “Well, everybody and theirgrandmother has had a meeting with FERC about this paper. I meannot about it specifically, but about the issues.”

She believes it’s “quite possible” that an oversight hearing onthe options paper will be held. particularly if it leads to a “newand sweeping inquiry” of the natural gas industry. The paper takesa close look at a number of ways in which to resolve lingering,second-generation gas issues, such as pricing in thecapacity-release market, negotiated terms and conditions of serviceand regulation of pipelines on the Outer Continental Shelf. It wasprepared by FERC staff and has been in the hands of thecommissioners since about March.

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.