Natural Gas Pipeline Co. of America (NGPL) contends a FERCdecision that found a recent auction to be “unreasonable and undulypreferential” would “nullify” its negotiated-rate authority and”aggravate” its decontracting problems.

Both are distinct possibilities if FERC in its Nov. 4 ordermeant for Natural in future auctions to set a reserve price for arecourse-rate bid that is identical to the floor price for aprearranged negotiated-rate bid, according to the pipeline. Naturalhas asked FERC to clarify that it didn’t intend to requireidentical reserve prices. In the event clarification isn’t granted,the pipeline said it seeks rehearing of the order for annulling itsnegotiated-rate authority.

Natural has asked for fast-track processing of its case. “Thereis a critical need for Commission guidance on procedures forawarding firm capacity as the industry approaches the winterseason. Natural urges the Commission to act on its clarificationrequest by no later than Dec. 1. This is the date on which any firmcapacity awards in the auctions to be held shortly will becomeeffective,” the Midwest pipeline said.

Natural believes how FERC decides the case on rehearing couldhave industry-wide implications. “The index-based negotiatedtransactions which the market has come increasingly to demand mayno longer be feasible, depending how the Commission addressesNatural’s clarification request. If so, the efficiency of themarket will be jeopardized and the effectiveness of thenegotiated-rate program largely destroyed…”

In the meantime, “Natural has little choice but to move forwardwith [its] auctions based on its interpretation of the Commission’scomplaint order,” which it believes permits “different” reserveprices for negotiated-rate and recourse-rate bids for auctioncapacity. “Any other approach would be contrary to marketfundamentals.”

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