Dialog Concerning Natural Gas Transportation Policies Needed to Facilitate Development of Competitive Natural Gas Markets

AGENCY:

Federal Energy Regulatory Commission, DOE.

ACTION:

Notice of staff conference.

SUMMARY:

In Order No. 637 (65 FR 10156), issued on February 9, 2000, the Federal Energy Regulatory Commission (Commission) revised its regulatory policies, amended its regulations, and established new procedures to enhance the competitiveness and efficiency of markets for the transportation of natural gas in interstate commerce. As part of the effort to achieve these goals, the Commission determined to institute a dialog between the industry and Commission staff so that Commission staff could achieve a better understanding of industry trends and regulatory changes that better meet the changing character of the industry. This notice establishes the first of several public staff conferences that will permit an industry-wide discussion of issues affecting natural gas transportation policies and the role such natural gas transportation services play in energy markets in general.

DATES:

The conference will take place on September 19, 2000, starting at 9:30 a.m., Requests to participate are due by September 1, 2000.

A second and third conference will be held in January 2001, and April 2001. The second conference will focus on affiliate issues. The third conference will focus on the potential need for fundamental changes to the Commission's regulatory model are needed, such as the use of performance based rates or two-track regulatory models with different approaches for captive and non-captive customers.

ADDRESSES:

Federal Energy Regulatory Commission 888 First Street, NE Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:

Robert A. Flanders, Office of Markets, Tariffs and Rates, Federal Energy Regulatory Commission, 888 First Street, NE Washington, DC 20426, (202) 208-2084.

SUPPLEMENTARY INFORMATION:

Notice of Staff Conference

Take notice that on September 19, 2000, the Staff of the Federal Energy Regulatory Commission will hold a public conference to discuss the impact of Commission transportation policies on the development of natural gas markets as contemplated in the Commission's Final Rule issued in Order No. 637 on February 9, 2000. The conference will begin at 9:30 a.m. at the Commission's offices, 888 First Street, NE., Washington, DC in the Commission's Meeting Room. All interested persons are invited to attend.

This conference begins the industry dialog as discussed in Order No. 637 that will enable the industry and market participants to discuss with staff, as well as each other, issues relating to the development of Commission policy and regulatory responses to rate and service revisions to meet the needs of the changing natural gas market. These conferences will provide an opportunity for Commission staff to “achieve a better understanding of industry trends and regulatory changes that better meet the changing character of the industry.” The conferences will assist staff in developing recommendations for the Commission about whether to initiate rulemaking proceedings, changes in policy for individual cases, or Commission conferences on specific issues.

While the topics listed for discussion in Order No. 637 are interrelated, the initial set of topics have been divided into three conferences to better focus the discussions at each conference. This first conference will focus on commodity markets and transportation policies and practices that will make these markets more liquid. The second conference will be held in January 2001 and will focus on affiliate issues. The third conference will be held in April 2001 and will focus on whether fundamental changes to the Commission's regulatory model are needed, such as the use of performance based rates or two-track regulatory models with different approaches for captive and non-captive customers.

The first conference on commodity markets will examine whether regulatory changes are needed now or in the foreseeable future to promote further development of liquid markets for natural gas at both upstream and downstream trading points, to reflect the changing character of the market, such as new markets resulting from increased electric generation load and retail unbundling, and to further standardize services to meet market needs, particularly the development of eCommerce. Examples of issues that should be examined are:

• Whether downstream and upstream natural gas commodity markets are liquid today. What are the key downstream trading points?
• What are the factors that improve or impede market liquidity at upstream and downstream trading points?
• Whether rate design changes are needed to further facilitate development of upstream or downstream markets, including revisions to SFV rate design or use of volumetric firm rates.
• Whether liquidity in downstream markets facilitates retail unbundling by reducing the need for firm capacity upstream of the liquid trading point. For instance, would a reliable downstream market enable marketers participating in retail unbundling programs or electric generators to rely on the purchase of gas at the market center in lieu of subscribing to firm primary point capacity to the LDC's city-gate.
• Whether changes or revisions to the “shipper must have title” rule will facilitate the development of downstream markets. If so, how should the rule be changed?
• Whether master or umbrellas contracts aggregating released capacity contracts would further the development of markets. Does the proposal for cross-contract ranking and entity-to-entity confirmation provide the aggregation necessary?
• Whether changes to capacity allocation procedures would facilitate commodity market liquidity.
• Whether greater commoditization of capacity, such as standardized terms and conditions of service, would further the development of upstream and downstream markets and the trading of capacity.
• Whether greater standardization of penalty procedures nationally or regionally would reduce penalty arbitrage and facilitate the further growth of commodity markets.

Participants will not be limited to these areas of inquiry, but can put forth for discussion other issues or proposals to improve the liquidity of the commodity market. Among the topics for discussion at the conference will be procedural avenues for further Commission action, such as periodic published staff reports, changes in policy through individual proceedings, or the use of rulemaking proceedings.

The conference will consist of short presentations but with an emphasis on roundtable discussions of the issues. Persons interested in participating in the discussions should indicate their interest by September 1, 2000, by a letter addressed to the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, and should refer to Docket No. PL00-1-000. Each request to participate must include a contact person, telephone number and E-mail address.

Comments addressing these issues also may be filed on September 1, 2000, but those wishing to participate do not have to file comments. Comments also may be submitted within 30 days after the conference. Comments should include a one-page single spaced summary of the participant's position.

The request to participate should also state which of the issues the participant wishes to address in order of preference. Every effort will be made to accommodate requests to make presentations, but depending on the number of requests received, a limit may need to be placed on the number of participants or the time for presentations. To provide for a more productive conference, interested persons should coordinate their efforts and choose one spokesperson to make a statement on behalf of a group where interests coincide. Upon receipt of these requests, a subsequent notice of the conference presentation schedule will be issued.

The Capitol Connection may broadcast this conference in the Washington, DC area if there is sufficient interest. For those interested persons outside the Washington, DC area, the Capitol Connection may broadcast the conference via live satellite for a fee if there is sufficient interest to justify the cost. To indicate interest in either the local or national broadcast, please call David Reininger or Julia Morelli at the Capitol Connection (703-993-3100) as soon as possible, or e-male to www.capitolconnection.gmu.edu.

In addition, National Narrowcast Network Hearing-On-The-Line service covers all FERC meetings live by telephone so that interested persons can listen at their desks, from their homes, or from any phone, without special equipment. Billing is based on time on-line. Call 202-966-2211 for further details. Anyone interested in purchasing videotapes of the meeting should call VISCOM at (703) 715-7999.

Questions about the conference should be directed to: Robert A. Flanders, Office of Markets Tariffs and Rates, Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, 202-208-2084, robert.flanders@ferc.fed.us