FERC is committed to make deregulated markets work, says Brownell

"We are committed to making markets work," said Nora Mead Brownell, a member of the Federal Energy Regulatory Commission at the 73rd annual meeting of the Independent Petroleum Association of America Monday in Dallas.

By Sam Fletcher
OGJ senior writer

DALLAS, Oct. 29 -- "We are committed to making markets work," said Nora Mead Brownell, a member of the Federal Energy Regulatory Commission at the 73rd annual meeting of the Independent Petroleum Association of America Monday in Dallas.

But FERC doesn't want "to be intrusive in the gas market. Where things are working, we want to get out of the way," said Brownell, who was appointed to commission in April by President George W. Bush.

Responding to questions about a major issue among US producers of natural gas, Brownell said FERC will "look at" the adverse price differential to which Rocky Mountains gas is subjected.

"We're trying to get a better understanding of what the (market) drivers are," she told IPAA members. "I can't tell you now that we have the answers. We'll have more to say about that in the not too distant future."

Pipeline companies
FERC also will guard against any attempts by pipeline companies to jack up transportation costs through regional monopolies, via the spin-down or spin-off of unregulated units. "That's absolutely on the agenda" to protect both producers and consumers, Brownell said.

Acting on recommendations by an administrative law judge, FERC recently reasserted its jurisdiction over pipeline system under Williams Cos. Inc.'s subsidiary Transcontinental Gas Pipe Line Corp. and set a "reasonable" rate for its unbundled gas gathering service in the Gulf of Mexico off Padre Island along the Texas coast (OGJ Online, Sept. 10).

In taking that action, government officials stressed that FERC policies for gas-gathering systems are not to be "used to circumvent or undermine regulation of interstate transportation of gas" under the Natural Gas Act or the open access provision of the Outer Continental Shelf Lands Act.

FERC intends "to be sure you're treated fairly," she told the independent producers. "Economic development is what it's all about, and that's something that we (as a nation) have forgotten," said Brownell. "We (at FERC) do share your aim in which we expand production."

California problems
Botched efforts to deregulate the natural gas industry in California and the meltdown of the energy trading business in the wake of the Enron Corp. scandal have produced "huge mistrust" of the industry among "customers and policy makers at the state and national levels," but not at FERC, Brownell said.

"Cleaning up California" is FERC's first priority. "We are going to bring this to closure," said Brownell, possibly "by the first quarter of next year." One of the problems in California, she said, is that no one had effectively monitored the marketing and pipeline infrastructures to determine if they were capable of meeting the market's needs.

Another important mission at FERC is to help restore the public's and investors' faith in the gas marketing industry following the Enron Corp. scandals. "No one anticipated that meltdown and the (resulting) devastation," said Brownell. FERC will investigate what transpired, "find some bad guys and hang them in the parking lot," she said.

Contact Sam Fletcher at samf@ogjonline.com

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