[BETA] Fortnightly

The Federal Energy Regulatory Commission (FERC) has clarified the terms and conditions for default contracts designed for use on an interim basis when disputes arise over the sale or spinoff of pipeline-affiliated gas gathering systems. The clarification comes as part of a series of orders on rehearing that concern the FERC's deregulation of gas gathering systems.

The rehearing orders mandate a default contract for a period of two years when an interstate pipeline sells its gathering system and the system's producers and shippers cannot reach agreement on terms and conditions with the new owner. The contract, or pro forma agreement, must contain terms and conditions consistent with existing contracts in order to provide certainty to producers and shippers. If negotiations fail after two years, remedies must be sought at the state commission or state court level.

In one of the eight rehearing orders, the FERC ordered NorAm Energy Corp. (em which is seeking approval to sell its gathering facilities to a wholly owned subsidiary, Arkla Gathering Service Co. (CP94-36-001, et al.) (em to substantially modify its proposed default contract.

The FERC also denied the pipelines' rehearing requests on abandonment of service, saying that pipelines must continue to file with the FERC under the Natural Gas Act for authorization to terminate their gathering services. Overall, the FERC upheld the basic tenets of the gas gathering policy it unveiled in May. That policy exempts gathering companies affiliated with interstate natural gas pipelines from federal regulation, except where preferential treatment or discriminatory practices may affect interstate competition. (em LG

Articles found on this page are available to Internet subscribers only. For more information about obtaining a username and password, please call our Customer Service Department at 1-800-368-5001.