The Federal Energy Regulatory Commission is not likely to issue a sweeping rule this spring decontrolling U.S. interstate pipelines' gas gathering activities.
FERC Chairman Elizabeth Moler said last week, "I anticipate we would consider a series of the representative gathering cases this spring. I think we will attempt to act on several cases simultaneously, resolving the pending gathering issues that way.
"I don't believe a rulemaking will be necessary. None of the commission's past gathering decisions has been made in rulemakings, and I don't see why this should be an exception."
PIPELINES' COMPLAINT
Gas pipelines have complained it is hard for their regulated gathering lines to compete in the market created by wellhead price decontrol and FERC Order 636, which requires long lines to separate their gathering and trunkline tariffs (OGJ, Mar. 7, p. 23).
Moler said the commission has been focusing on pipelines' filings to recover the costs of transition to rate unbundling. FERC has issued more than 10,000 pages of orders implementing Order 636.
She said, "Most of the costs people are complaining about are costs over which the commission has no jurisdiction, such as old take or pail expenses."
About 52% of the costs before FERC involve producers' gas sales contracts. Another major category is pipelines' cost to abandon unprofitable facilities.
Moler said FERC also faces lots of "small, nitty gritty" implementation issues.
One such issue, price differential costs, will be the subject of a May 26 FERC conference.
Order 636 allows lines to recover all their transition costs in their rates, including costs to realign gas supplies.
FERC has said in some cases it will allow pipelines to recover during 2 years the difference between a producer contract price and the lower market price for the gas.
But the size of some price differential claims has prompted FERC to question whether there is a better way to reduce gas supply realignment costs.
Moler said after Order 636 cases are settled, "I do not see on the horizon any large natural gas issues bearing down on the commission. I do not think we will embark on a further restructuring of the natural gas industry."
She said FERC's initiatives during the past 5 years have resulted in lower gas costs for consumers and a more efficient industry.
CHALLENGES TO ORDER 630
A dark cloud hanging over Order 636 is the fact that more than 200 lawsuits have been filed challenging either the validity of the order or aspects of its implementation.
The suits have been shifted to the District of Columbia Federal Court of Appeals. FERC has asked the court to examine Order 636 first, then bear the "as applied" cases.
Moler said, "We have seen nothing that causes us to question whether this whole thing will come crashing down."
