The Federal Energy Regulatory Commission has changed Order 636, its U.S. pipeline rate unbundling rule, to meet major objections raised to it.
FERC, which issued the rule Apr. 8 (OGJ, Apr. 13, p. 32), received 150 requests to reconsider various aspects.
FERC made adjustments to meet concerns of small towns and local distribution companies about how new pipeline rates will affect them.
Martin Allday, FERC chairman, said that reflects the commission's "concern for the small and low load factor customers and our commitment to be fair."
Order 636 now requires pipelines to continue existing one part volumetric rates, computed at the existing load factor, for unbundled transportation service for small customers.
FERC retained the existing eligibility criteria but increased the size of the eligible class to include customers that transport up to 10 MMcfd.
As a transitional provision for small customers seeking to continue buying gas from pipelines, FERC will condition blanket sales certificates to require pipelines to offer to sell gas on an unbundled basis to small customers under a cost based rate for 1 year beginning with the effective date that each pipeline complies with Order 636.
FERC reaffirmed its requirement that pipeline transportation rates be developed using the straight fixed variable rate design.
But to mitigate significant cost shifts to low load factor customers, it will require pipelines to consider rates based on seasonal contract volumes, or entitlements, to distribute revenue responsibility among all customers.
The order still requires pipelines to implement a capacity releasing program so firm shippers may release unwanted capacity to those who want it.
However, FERC now will allow pipelines to release capacity for periods of less than 1 month without advance bidding or prior posting on an electronic bulletin board. Information on such transactions must be posted within 48 hr of the start of the transaction.
The commission also reaffirmed a provision allowing pipelines to recover 100% of their prudently incurred transition costs. But it now will require them to recover 10% of those costs from interruptible transportation customers and the rest from firm transportation customers.
The order requires 13 pipelines to file their rate restructuring proposals by Oct. 1 and the remaining 72 at later dates, but all must comply with the order before the 1993-94 winter heating season.
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