National Fuel Gas Distribution has asked FERC for a one-yearwaiver of the “shipper-must-have-title” policy in order toimplement retail gas unbundling on its entire system by April 1 ofthis year.

The Commission’s approval of the policy exemption is criticalfor National Fuel Distribution to switch from its current EnergySelect unbundling pilot, which expires on March 31, to asystem-wide program by April, the Buffalo, NY-based LDC said. Sinceit expects the Pennsylvania Public Utility Commission (PaPUC) toapprove its request for a system-wide retail program inmid-January, National Fuel Gas wants FERC to act by Feb. 1.

Suppliers participating in system-wide unbundling will providegas to customers using both released capacity and capacity that isretained by the LDC. National Fuel Distribution seeks to retainno-notice capacity on its pipeline affiliate, National Fuel GasSupply Corp., and all of the capacity it now holds on Tennessee GasPipeline. However, it needs the waiver of title policy in order toship the other suppliers’ gas on the retained capacity [RP99-190].

Retaining its no-notice EFT service on National Fuel Gas Supplyis “the glue that enables a seamless gas supply delivery service[to occur] across the entire distribution service territory,” theLDC affiliate told FERC. “If EFT is released [rather thanretained], the efficiencies that have so well served the NationalFuel Distribution market over time would be destroyed.Administrative costs would soar. At the same time, customers wouldpay the differing costs depending on where they live.”

National Fuel Distribution said retaining its capacity onTennessee also would be preferable to release. Release wouldpresent too many obstacles. For example, given that Tennessee’srelease mechanism works on a point-to-point basis, a recipient ofreleased capacity – unlike National Fuel Distribution – would notbe able to take the capacity to more than one point on a primarybasis, it noted. Also, “using secondary rights would subject thecapacity to [greater] curtailment…National Fuel Distribution atpresent, therefore, must retain the contract in total to protectliability.”

National Fuel Distribution, which serves customers in bothPennsylvania and New York, argued that similar operationalconstraints were cited by Atlanta Gas Light (AGL) when it soughtand received from FERC a one-year waiver of the”shipper-must-have-title” policy in order to implement gasunbundling in Georgia.

“Although state public utility commissions, including the[PaPUC], are arbiters of when and how state retail unbundling willbe implemented, this Commission can assist substantially in theprocess by showing flexibility in its own policies. Pennsylvaniaregulators have made it clear that unbundling, while desirable,should not threaten reliable no-notice service and should not causecost-shifting. The waiver…is essential to those ends,” it said inits request to FERC.

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