One of the most significant regulatory events at FERC in 1998went by practically unnoticed: the word “proposed” was put backinto the notice of proposed rulemaking (NOPR), said CommissionerCurt Hebert Jr. in reflecting on his first full year at the agency.Commissioner Linda K. Breathitt, who also just ended her initialyear, agreed “proposed” took on a “stronger meaning” in a specificNOPR last year, but she hardly found it to be precedent-setting.

“There were a lot of things that occurred last year, but I canboil it down into one…,” said Hebert. “If you look historicallyat what this Commission has done, even if you go back to [Order]636, you can see that the NOPR was the rule,” but all that changedin July when FERC issued the landmark NOPR that touched off acomprehensive review of the entire gas industry.

That NOPR was not viewed as pre-ordained law by the Commission,but rather was a genuine invitation to the industry to discussissues critical to natural gas, he said. It sparked immediatedebate on two fronts – inter-industry and FERC, and intra-industry- that is still ongoing and will likely consume much, if not all,of 1999. “For the first time, we are finally making people believethat this is a Commission that is interested in intellectualscoming forward and giving us information to help us shape and moldthis industry…into what it can be.”

Restoring the real meaning to the NOPR “is the one thing thatwe’ve done this year that affects everything. It has a huge effecton how this industry operates…The industry can now look at a NOPRand say ‘we’re going to study this NOPR and we’re going to debateit because we genuinely believe that the FERC will listen and evenaddress our concerns.’ What more could you ask for?” Hebert asked.

Breathitt agreed greater emphasis was placed on “proposed” inthe July NOPR, but she doesn’t think it marked a shift inCommission policy. Rather, it was done that way due to the natureof the specific proposed rulemaking. “…[W]e put something outthat was so new, and quite frankly it didn’t have a lot of detailas to how a mandatory auction would work. It was a theoreticalpiece in some regards and a thought piece in some regards,” shesaid. Because the NOPR was “so broad,” it elicited an unparalleled”response and thought” from the industry.

The former state regulator from Kentucky said she expects theCommission to continue its “openness” with future NOPRs, “but itdoesn’t mean that they’re all [going to] be so broad that they’lltake this amount of time” to debate. For Breathitt, the mostsignificant events for gas in 1998 were the mega-NOPR and notice ofinquiry (NOI) and the “package” of issues they addressed, such aslifting the price cap in the short-term market, auctioning andnegotiated terms and conditions.

Hebert was particularly pleased that the mega-NOPR has promptedthe gas industry to sponsor a series of meetings to discuss the”real” issues in a collaborative fashion. “I think it’s wonderfulthat cross-entities within the industry are meeting with eachother. Heretofore, that did not happen.”

Breathitt said this was one of the “unintended consequences orunintended benefits” of the mega-NOPR. “You have sectors of theindustry that have traditionally kept to their [own] segments” towork out their problems. But now “they’re coming together [under]the auspices of the Natural Gas Council for what is beginning tolook like very effective sessions for coming to consensus on whatmight be another way to handle the capacity release and theshort-term market,” she told NGI.

Breathitt sees “quite a lot” in store for gas at FERC in 1999.”Whereas 1998 was the year of the NOPR, 1999 may be the year of therulemaking.” She said she expects the mega-NOPR to become a finalrule in the new year, along with NOPRs on the complaint,certificate and ex parte processes. She noted that FERC discussionson the landowner-notification process also will move along.

Hebert, a former state legislator and regulator fromMississippi, was more issue-oriented in his predictions. He seesthe “real” issues continuing to be whether there will be an auctionprocess to address market-power concerns, negotiated terms andconditions, the prospect of seasonal ratemaking, and “whether ornot we’re going to have additional pipelines…and how hard they’regoing to be to put together and make happen, and how costly that’sgoing to be.”

©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.