Groups object to negotiated pipeline fees
Thirty-three groups representing gas pipeline customers have urged the U.S. Federal Energy Regulatory Commission to reject a proposal that pipelines be allowed to negotiate terms and conditions for their services.
The groups have formed the Pipeline Transportation Customer Coalition to oppose the proposal by the American Gas Association and the Interstate Natural Gas Association of America.
In May, AGA and Ingaa asked FERC to establish a process for pipelines and their shippers to negotiate service terms. It would begin with an initial voluntary filing by a pipeline to establish a benchmark service. That would provide the basis for individually negotiated terms and conditions of service.
Karen Hill, AGA vice-president, said, "Greater flexibility in negotiation will allow all the parties to respond more rapidly and inventively to changing market conditions.
"Gas utilities will have greater freedom to offer further choices to their customers. And allowing utilities to negotiate terms and conditions of service will help them to use their pipeline capacity more effectively."
Lorraine Cross, Ingaa senior vice-president, said, "This proposal will significantly improve customer services by allowing pipelines to tailor contracts to meet the changing needs of the marketplace with flexible terms and conditions of service. It also includes specific customer protections against discrimination and service degradation."
The two associations urged FERC to reform its regulations and implement the proposal. Current FERC rules allow pipelines to negotiate rates for transportation services.
Other views
Producer groups in the Pipeline Transportation Customer Coalition said the AGA-Ingaa proposal would let pipelines offer some customers better terms and conditions for services than others and would put many customers at an unfair advantage.David Sweet, gas vice-president for the Independent Petroleum Association of America, said, "This proposal runs counter to the commission's current goal to enhance competition by standardizing more pipeline services.
"If FERC accepts this proposal, pipelines and select customers will reap the financial benefits by wielding their market power, while other pipeline customers-particularly captive customers such as small independent producers-will pay the price."
Phil Budzik, director of federal regulatory affairs for the Natural Gas Supply Association, said current federal regulations allow for such innovation through a process that permits new services to be implemented after full public review:
"This regulatory process ensures that customers who rely on the pipeline's basic services will not suffer a degradation in their service, will not subsidize new pipeline services, and will avoid the potential for undue discrimination.
"The current market is working quite well without any known dislocations or impediments, and thus the Ingaa-AGA proposal is not addressing any specific market problem. The commission should be wary of any proposal that discards the traditional customer protections provided by the current regulatory schedule."
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