|
|
Enron Mail |
Gas Rule
The Commission voted out a draft Gas Rule today (Rm98-10/RM98-12). Based on the discussion, the rule contains the following major provisions: Waiver of Capacity Release Price Caps. A waiver of the price cap on short-term (1 year or less) capacity release transactions through September 2002. Hebert would have preferred a permanent removal of the price cap. Seasonal Rates. A framework for pipelines to propose peak & off-peak rates for short-term services. Pipelines would make pro forma filings. The Commission commits to act on the filings within 60 days. There would be a requirement to make a cost and revenue study after 15 mo. to demonstrate whether there are overcollections as a result of the seasonal rates. Any overcollections would be shared 50-50 with customers. Term Differentiated Rates. Approval of the concept of term-differentiated rates, subject to the requirement that a pipeline would have to make a Section 4 filing to implement term-differentiated rates. Operational Provisions. Scheduling/segmentation/penalty rules along the lines set forth in the NOPR, including: (1) equality of scheduling between capacity release and pipeline services, (2) standardization of segmentation rules, (3) moving away from "command and control" imbalance/OFO provisions in favor of new services and better information to manage imbalances, and (4) a requirement to credit remaining penalty revenues. Real-time Reporting. Transactional data would be electronically posted on a real-time basis. Right of First Refusal. The rule continues a ROFR for all existing long-term contracts with the 5-year matching cap, subject to the following revisions: (1) for future contracts, only contracts of more than 1 year at maximum rates will have the ROFR (i.e. discount rate contracts will not enjoy ROFR), and (2) on systems with incremental rates, a customer exercising ROFR may be required to match the incremental rate, but these provisions will not take effect until a pipeline has made a Section 4 filing to determine the correct rate for ROFR on a particular system. Not Included in the Rule. The rule does not have a mandatory auction requirement, although voluntary auctions are discussed. The rule does not authorize negotiated terms. Clarification of Certificate Policy Statement/NOPR to Eliminate Optional Expedited Certificates The Commission proposed to eliminate OEC in favor of a single framework for all Section 7 certificates. During the pendency of the NOPR, OEC would still enjoy a presumption that the facilities are in the public interest, but the factors set forth in the Policy Statement may be used to rebut the presumption. With respect to the Certificate Policy statement, the Commission generally sticks with the policy in the September order. It reaffirms the no subsidy policy, provides guidance on projects that are a combination expansion/existing system, clarifies that Memphis clauses can still be used in expansion contracts (although the FERC doesn't necessarily think its the best way to allocate risks), and discusses ROFR in the expansion context. It does not appear that the clarification addresses the issue of timing of applicability. Keep in mind that this summary is based only on the open discussion. A written copy of the rule is not yet available. I will send a more detailed review once I have seen the rule.
|