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Producers Say FERC Gas Rulemakings Show Promise
Major gas producers said they were “encouraged” by FERC’sproposals to remove the price caps on capacity in the short-termmarket and to give pipelines the authority to negotiate terms andconditions of service subject to certain restrictions.
“I’m not saying that we’re fully on board…but I’m encouragedthat the Commission is looking out for the interests of thecustomer by putting some of these restrictions on negotiated termsand conditions,” said Philip Budzik, director of federal regulatoryaffairs for the Natural Gas Supply Association.
FERC proposed granting pipelines the ability to negotiateservices, but only if certain conditions could be met – such asallowing customers to define the recourse rate service, requiringpipelines to undergo periodic reviews of their recourse rateservices, and identifying the terms and conditions that would benon-negotiable.
Producers also warmed to the proposal under which all availableshort-term capacity would be put up for auction in return forlifting the price caps. “I would characterize that as an intriguingproposal. Quite frankly, we were fearful that it [FERC] was goingto go in the other direction” towards capacity brokering, Budziksaid. Direct brokering of capacity is “less public and moresusceptible to manipulation” than capacity auctioning, he noted.
Both proposals were contained in the Commission’s notice ofproposed rulemaking (NOPR) on regulation of short-termtransportation [RM98-10], which were approved on Wednesday.
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