The Federal Energy Regulatory Commission has closed the books on Order 636, clearing the way for a federal lawsuit challenging the order.
Order 636 continues the commission's efforts to deregulate the U.S. natural gas market by requiring interstate gas pipelines to reform and itemize their rate charges.
636-B
In the latest order, 636-B, FERC denied petitions for rehearing to change aspects of the natural gas rule and clarified and reaffirmed several requirements.
Earlier, FERC had modified Order 636 to meet the major objections of small municipalities and local distribution companies (OGJ, Aug. 10, p. 29).
In Order 636-B the commission said, "The regulations governing the historic restructuring of the natural gas pipeline industry are now final. No further petitions for rehearing of Order 636-B will be considered."
"The commission intends now to turn its attention and resources to processing each pipeline's compliance filing as quickly as possible so that gas consumers throughout the nation can begin to realize the competitive benefits of a restructured gas industry."
LAWSUITS TO PROCEED
The final order also clears the way for the 11th Circuit Court of Appeals in Atlanta to fully consider a number of lawsuits filed there to challenge Order 636.
Some parties also have requested the case be transferred to the District of Columbia Circuit Court of Appeals.
In denying rehearing of Order 636-A, FERC reaffirmed that pipelines must adopt measures to avoid significant cost shifts that could result from implementation of the straight fixed variable method for calculating rates.
It said pipelines also must maintain their one part volumetric rates, computed at an imputed load factor, for transportation provided to small consumers.
FERC also clarified the capacity release provisions of 636-A, the implementation of single fixed variable rates, and transition costs.
Regarding transition costs, FERC confirmed pipelines will be able to recover 100% of their prudently incurred transition costs and said it will be flexible in the application of its purchased gas adjustment regulations.
Separately, the commission is requesting public comment by Jan. 11, 1993, on standards for gas pipelines' electronic bulletin boards required by Order 636. It plans to hold a technical conference on the matter after reviewing the comments.
FERC noted, "Lack of uniform standards (for bulletin boards) may hamper efficient movement of gas across pipeline systems and inhibit the development of market centers."
INDUSTRY RESPONSES
The Natural Gas Supply Association applauded the end of the Order 636 process, saying, "It is now time for the entire natural gas industry and its customers to get on with the task of ushering in the new area."
It said Order 636 "expands the ways in which natural gas can flow to market, and it will ultimately expand the size of the market while allowing customers to negotiate the best possible price."
Mike Baly, American Gas Association president, said, "Because the order has the effect of making customers responsible for supply, economics of scale will become more important. So we expect to see gas purchasing pools established and we might also see some additional consolidation within the utility industry."
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