The two big energy issues in Washington-the energy bill in Congress and the Federal Energy Regulatory Commission's Order 636-are feeling election year political pressure.
The energy bill is now in a race against the legislative calendar. The Senate has to approve an energy tax bill before conferees can be appointed and begin work.
But Nevada's senators plan to filibuster because the House bill would allow the Department of Energy to study Yucca Mountain in Nevada for a potential nuclear waste repository.
Senate Majority Leader George Mitchell (D-Me.) plans a July 22 cloture vote, which, if approved, would limit debate.
PRORATION ISSUE
If and when the energy bills go to conference committee, there could be a spirited battle over gas prorationing.
The House bill prohibits natural gas producing states from limiting their gas production to drive up prices. Sen. Bennett Johnston (D-La.), leader of the Senate conferees, has vowed the final bill won't limit gas prorationing.
At a House energy subcommittee hearing on the issue last week, consuming state congressmen simply would not listen to the reasoning behind producing states' prorationing. It was clear that election year politics demanded that congressmen protest the threat of higher gas prices, whether real or imagined.
Exactly the same political incentive was behind complaints at the same hearing about FERC's Order 636.
Local distribution companies, municipal gas systems, and consumer groups complained that 636's acceptance of the straight fixed variable rate methodology will shift many pipeline costs to small customers.
The American Public Gas Association said the rule will allow pipelines to pass through "several billion dollars" in transition costs. It noted Texas Eastern Transmission Corp. estimated its transition costs at $624 million.
Rep. Phil Sharp (D-Ind.) twice asked FERC Chairman Martin Allday, "What is the incentive for pipelines to keep transition costs down?" Sharp did not get a satisfactory reply.
Allday said he has ordered his staff to develop options for the commission to consider that will take into account the concerns many small customers have raised.
And he said 636 would let small volume customers continue to receive a one part subsidized rate, and pipelines would have to phase in during 4 years any rate increases of 10% or more for any customer class.
A SCOLDING FOR MMS
In a remarkable display of audacity, the House interior appropriations panel scolded the Minerals Management Service for gleaning too little from offshore lease sales.
In its Interior appropriations bill, the committee complained the Chukchi Sea and Beaufort Sea sales off Alaska last year took in only $7.1 million and $16.8 million, respectively.
"The committee suggests that the MMS should optimize the timing of its lease sales to maximize revenues," the committee said.
In the same bill, the committee banned all lease sales off the East Coast, Southeast Florida, the West Coast, and in Alaska's Bristol Bay.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
