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NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES
R E S O L U T I O N
Urging the Federal Energy Regulatory Commission
To Incorporate NASUCA Concerns Regarding Consumer
Needs In Its Rulemakings on Short-Term and Long-Term
Transportation Services, Docket Nos. RM98-10 and RM98-12
WHEREAS, the Federal Energy Regulatory Commission (FERC) has issued
two complementary notices: 1) Docket No. RM98-10, a Notice of Proposed
Rulemaking (NOPR) entitled "Regulation of Short-Term Natural
Gas Transportation Services"; and 2) Docket No. RM98-12, a
Notice of Inquiry (NOI) entitled "Regulation of Interstate
Natural Gas Transportation Services," which concerns the FERC’s
policies governing the long-term market for transportation;
WHEREAS, the Notices propose a radical restructuring of the regulation
of interstate pipelines, which will have a dramatic impact upon
the ability of Local Distribution Companies (LDC’s) to obtain
interstate pipeline transportation services at just and reasonable
rates;
WHEREAS, in Order 636-C, the FERC provided an important consumer
protection by allowing current firm capacity holders (the majority
of which are LDC’s) the ability to retain firm capacity at
the end of the current contract term by exercising a right of first
refusal to match any competing bid up to the pipeline’s maximum
rate for a term of five years;
WHEREAS, the FERC has proposed to eliminate a firm transportation
capacity holder’s ability to exercise a right of first refusal
in renewing transportation contracts, which will limit the ability
of LDC’s to retain firm capacity under long term contracts
necessary to serve their customers after the expiration of current
transportation contracts;
WHEREAS, the FERC has expressed concerns that its current regulations
may bias shippers against long term contracts with interstate pipelines
and favor short term contracts;
WHEREAS, there is substantial uncertainty at this time concerning
the status of retail unbundling efforts in the various states that
leads to uncertainty as to whether LDC’s should enter into
contracts with terms as long as five years;
WHEREAS, allowing current firm capacity holders to use their right
of first refusal to obtain contracts of varying terms, from one
to five years will enhance a firm capacity holder’s ability
to enter into long term contracts;
WHEREAS, an important factor that serves to lower the extraordinarily
high cost of long term firm capacity is the ability to obtain revenues
from the release of capacity, receipt and delivery points on electronic
bulletin boards;
WHEREAS, the FERC has proposed to revise its rules and policies
relating to scheduling, nominations and flexible receipt and delivery
points to make released secondary capacity more comparable to short-term
firm primary capacity offered by interstate pipelines;
WHEREAS, the FERC has proposed to eliminate price regulation for
all types of short term transportation transactions (long term capacity
released as secondary capacity, short-term firm primary capacity
and interruptible capacity) and to allow the prices for these transactions
to be set by a mandatory auction rather than regulation;
WHEREAS, in order to protect against the potential abuse of market
power by interstate pipelines, the FERC should continue to set a
price cap for short term transportation controlled by the interstate
pipeline (short term firm capacity and interruptible capacity);
WHEREAS, in order to provide a mechanism for determining prices
below the price cap for short term transportation controlled by
interstate pipelines, short term firm and interruptible capacity
should be subject to the mandatory auction procedure;
WHEREAS, a necessary step before the price caps on short term firm
and interruptible capacity can be eliminated is a finding by the
FERC that the interstate pipeline does not possess market power
in the relevant geographic market;
WHEREAS, NASUCA has consistently supported the elimination of the
FERC’s current policy of placing price caps on released secondary
capacity; and
WHEREAS, a policy that makes released capacity comparable with
short term primary capacity and eliminates the price cap on released
capacity will allow LDC’s to maximize revenues from their
released capacity.
THEREFORE BE IT RESOLVED, that the National Association of State
Utility Consumer Advocates (NASUCA) calls upon the FERC to include
the following provisions in its policies governing natural gas transportation
services: a) retain the right of first refusal for current firm
capacity holders, b) allow current firm capacity holders to use
their right of first refusal to obtain contracts of varying terms,
c) revise its rules and policies to make released secondary capacity
comparable to short term firm capacity, d) continue to set price
caps on short term firm and interruptible capacity, e) subject short
term firm and interruptible capacity to a mandatory auction, f)
only lift the price caps on short term firm and interruptible capacity
after a finding that the interstate pipeline does not possess market
power.
BE IT FURTHER RESOLVED, that NASUCA calls upon the FERC to incorporate
the concerns of NASUCA as expressed in this and other resolutions
and in the comments to be filed setting forth NASUCA’s positions
in Docket Nos. RM98-10 and RM98-12.
BE IT FURTHER RESOLVED, that NASUCA authorizes the Executive Committee
to develop specific positions and to take appropriate actions consistent
with the terms of this resolution. The Executive Committee shall
advise the membership of any proposed action prior to taking such
action if possible. In any event, the Executive Committee shall
notify the membership of any action taken pursuant to this resolution.
Approved by NASUCA:
Submitted by: NASUCA Gas Committee
Orlando, Florida
Place
November 11, 1998
National Association of State Utility Consumer Advocates
8380 Colesville Road, Suite 101, Silver Spring, MD 20910
Phone: (301) 589-6313 Fax: 589-6380
e-mail: nasuca@nasuca.org |