FERC regulations pertaining to the release of interstate natural gas pipeline capacity should not be strictly applied in Georgia because the state’s deregulated gas market is unlike markets in other states, said Georgia regulator Stan Wise.

Under its capacity-release rules, the Federal Energy Regulatory Commission gives a releasing shipper the opportunity to recover some of the demand charges levied by interstate pipelines by relinquishing its unutilized capacity on the secondary market. “The important thing to keep in mind here is that the typical releasing shipper relinquishes ‘unutilized’ capacity. [But Georgia’s] Atlanta Gas Light Co. is not the typical releasing shipper,” Commissioner Wise of the Georgia Public Service Commission wrote to FERC Chairman Pat Wood.

Atlanta Gas Light, an Atlanta, GA-based local distribution company, “releases its capacity on the interstate system, not because this capacity is unutilized, but because the marketers in Georgia use the capacity to serve their customers (1.5 million firm customers). In the Georgia model, the certificated natural gas marketers are the ‘pseudo’ primary releasing shipper,” Wise said in an April 28 letter.

The primary function of the certificated marketers is to use the capacity acquired from Atlanta Gas to serve their firm customers. They then release their unused capacity to the secondary market either by posting it on the interstate pipeline’s electronic bulletin board or through prearranged deals in accordance with FERC rules, according to the Georgia regulator.

“I am mindful that FERC’s overriding objective of protecting the natural gas consumer underlies its rule that capacity must be accessible to the bidder that values it the most regardless of the geographical area. However, if the FERC were to put form over substance and strictly apply that policy without attention to Georgia’s restructured natural gas market, the firm customers in Georgia would be at risk of not receiving natural gas service,” Wise said.

“To that end, I am asking that the Commission fully appreciate that Georgia’s natural gas market is unique and cannot be adequately compared to any other state.”

Wise’s letter followed a mid-April order in which FERC said it would preempt Georgia regulators if they adopted a plan to permanently assign interstate pipeline capacity held by Atlanta Gas Light to certificated gas marketers who participate in the state’s retail choice program (see NGI, April 19).

FERC at the time said its reply was “based on [its] exclusive jurisdiction over allocation of interstate pipeline capacity and…FERC’s capacity-release rules and regulations.” However, Wood indicated that the Commission wanted to work closely with Georgia to support its retail gas program, which he called the “bright star” in the world of retail choice [RP04-92].

“I appreciate your attention to this matter,” Wise said, and “trust that a resolution can be made that complies with both the Natural Gas Act and the Georgia Competition and Deregulation Act,” which opened the state’s gas markets to competition.

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