WATCHING WASHINGTON UNBUNDLING RULE DRAWS NEAR

With Patrick Crow The Federal Energy Regulatory Commission plans to vote before Apr. 8 on the final version of its "mega-NOPR," the rulemaking to unbundle natural gas pipeline services. But the regulation still has a long way to go, judging from the commissioners' discussion of the "restructuring rule" at a recent meeting (OGJ, Feb. 17, p. 23). The rule will be issued as Order 636. Commissioners will continue marathon private negotiations via written and oral proposals and counterproposals.

March 30, 1992

3 min read

The Federal Energy Regulatory Commission plans to vote before Apr. 8 on the final version of its "mega-NOPR," the rulemaking to unbundle natural gas pipeline services.

But the regulation still has a long way to go, judging from the commissioners' discussion of the "restructuring rule" at a recent meeting (OGJ, Feb. 17, p. 23). The rule will be issued as Order 636.

Commissioners will continue marathon private negotiations via written and oral proposals and counterproposals.

AGREEMENT 'SOON'

Chairman Martin Allday said he hopes the commission will agree soon on the 250 page rule and approve it in a notational vote, or, at the latest, in an oral vote at the Apr. 8 FERC meeting.

The rule will not take full effect until the 1993-94 heating season.

Allday said, "Only through the type of restructuring we're considering can the public realize the full benefits of wellhead competition that began with the Natural Gas Policy Act and continued with Orders 436 and 500 and the Wellhead Gas Decontrol Act.

"I'm convinced the commission must regulate pipeline transportation so pipeline control of the transportation system, a natural monopoly, doesn't give a competitive advantage to pipelines as gas sellers."

Allday said the rule will allow gas purchasers to buy, based on their needs, the exact services they want with full recognition of the prices they will have to pay.

"Only then will we know that all gas is transported to market on a fair and even basis."

The staff gave the commission a draft rule last week that basically followed the original proposal. Of 10 changes, the major one would require pipelines that currently make sales for resale to offer a new "no-notice" firm transportation service as an option in addition to other transportation services offered.

That would ease a major objection to the rule: that unbundling might leave local distribution companies short of gas supply during peak demand periods.

Commissioner Branko Terzic raised the strongest objections to the rule, saying it "ignores the commission's responsibility, to consumers and pipeline investors."

He said the rule provides no adequate substitutes for bundled sales, may discourage pipeline construction, and may not compensate lines for their transition costs.

Commissioner Charles Trabant called the rule "a balanced and fair package for all sections of the industry."

OTHER VIEWS

Commissioner Jerry Langdon said because all pipelines are different, the rule would affect them differently. He said, "This commission is not trying to establish rate parity but rate making parity."

Commissioner Elizabeth Moler said, "There is a lot to like in the restructured rule." But she pledged to vote against it unless it is amended to include more protection for consumers. Allday agreed that needs to be considered.

Negotiations on the rule have kept the commissioners and their staffs in long, intense negotiations the past 2 weeks. They are not through.