Given that the high natural gas prices “no longer exist” that prompted FERC to require suppliers to report sales made to the California market, a group of major producers and marketers has asked the Commission to terminate the requirement when it comes up for renewal in January.

“A radically different market exists currently than existed one year ago. The monthly contract index prices for the California region for the month of December are equivalent to the national average, as they have been since the Commission promulgated the reporting rule [in July],” said Indicated Shippers last week in their petition for termination.

“Additionally, the differential between the average index price at the California border and the index price in the supply basins is minimal…These pricing conditions have existed for several months, and given the warm weather predictions, high storage levels and early abundant precipitation in the Pacific Northwest, there is no reason to expect that they will not persist for the foreseeable future,” the group noted.

In an attempt to bring gas prices under control, FERC in July required all sellers of natural gas to California, along with interstate pipelines and local distribution companies, to report their sales to the Commission on a monthly basis for the period between Aug. 1 and Jan. 31, 2002. At the time, FERC said it planned to extend the requirement to Sept. 30, 2002 when the current period expired, provided it received the okay of the Office of Management and Budget (OMB).

But Indicated Shippers believe an extension would be unwarranted in light of several favorable conditions — California utilities and the chief forecaster for the California Energy Commission have said it is “highly unlikely” that there will be a return to the supply-demand imbalance that existed in the winter of 2000-2001; El Paso Natural Gas has returned to service about 250,000 Mcf/d of capacity that was interrupted as a result of the New Mexico blast; six nuclear generating facilities that were refueling last summer are back on-line; El Paso, Kern River and Transwestern are expanding the capacity of their pipelines to California; and Southern California Gas has expanded its in-state capacity by 375,000 Mcf/d.

The “compliance burden associated with the rule is immense,” Indicated Shippers said, adding that about 15 hours per company each month are required to assemble and collect the information for FERC. At the same time, the reporting rule offers “de minimis benefit” to the public.

Even the OMB, while it approved the reporting requirement until January, cited concerns with the “burden” of the rule on individual companies, and directed the Commission to address those before it renewed the requirement beyond January, the group noted.

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