The US Federal Energy Regulatory Commission should ensure that captive natural gas producers continue to be protected before repealing two regulations covering offshore gathering facilities, the Natural Gas Supply Association warned.
Otherwise, investment risk in offshore systems could increase and discourage development, NGSA said in comments to FERC on a notice of proposed rulemaking.
FERC said it is considering repeal of two gas regulations, as well as provisions involving electricity, that aim to prevent anticompetitive practices because they may be duplicated in the Energy Policy Act of 2005, which it is implementing.
The new energy law adds to the Natural Gas Act a section that bars market manipulation by pipelines and other resellers, FERC said in its notice.
FERC said it proposed new rules and regulations prohibiting market manipulation authorized under the new law in an Oct. 20 notice. Its more recent notice proposed repealing Sections 284.288 and 284.403 of its existing regulations once it has done so.
NGSA said in its comments that while the Energy Policy Act of 2005’s antimanipulation provisions expand FERC’s authority, “nothing in the statue grants the commission rate or certificate jurisdiction over deregulated first sales of natural gas in the United States.”
It noted that Outer Continental Shelf investments were based on the assumption that the investors could continue to rely on federally regulated pipelines to get gas to market, it said.
Lifting such regulations without considering the public interest may transfer monopoly power to unregulated entities, NGSA warned.
“At a time when all producers, large and small, are actively searching for every means to increase the supply of clean-burning natural gas in this country, it is critical that the commission’s offshore policies do not unintentionally add another impediment to natural gas development,” said Patricia Jagtiani, NGSA’s vice-president of regulatory affairs.
In its comments, NGSA said FERC should:
• Clarify that it does not intend to incorporate by reference disclosure obligations and insider trading restrictions applicable to securities into the context of bilateral energy trading.
• Confirm its intent to use prevailing Securities and Exchange Commission precedent with respect to elements required to sustain a market manipulation claim under Section 315 of the new energy law.
• Indicate that it plans to follow established judicial doctrine on relevant settled issues, such as the nature of “recklessness” necessary to establish a violation. It also should clarify the applicable statute of limitations under which the new rules would be applied.
• Clarify that its new notice does not supersede or modify FERC’s policy statement on price reporting and the related safe harbor created under that policy.✦