Detroit Edison Co. (DE) has received approval from the Michigan Public Service Commission for
10-year sole-supplier contracts for electric power and related services with Chrysler, Ford,...
we had two choices: Standardize everyone's EBB and get everyone to agree on what the gas business was, or standardize the information and create another channel giving standardized access to information."
Of course one shouldn't blame the pipelines entirely for the problem. the Federal Energy Regulatory Commission (FERC) directed the pipelines to offer EBBs, and so they did, even though they weren't all speaking the same language. As Transco's Wolgel observes, "How do you consolidate EBBs when business practices are so different?
Lander doesn't hesitate to criticize EBBs as a vehicle for commerce. "As a user, you're a terminal on the system," says Lander. "Your computer is a slave to the EBB."
He adds, "If your company has a person who is smart enough to log on a gas pipeline EBB and understand how everything works and what everything means, and if that person is actually doing the logging on and is doing work on it, then you are wasting his time. He should be doing deals."
Lander doubts that a forward futures market in gas pipeline capacity will develop in exactly the same way as for gas volumes. The impediments are too great, he says: "Capacity to Pennsylvania is not the same as capacity to New York. The product is not fungible. You have a diversity problem. The key is to settle the market on paper in dollars. So the paper market will be only for the basis." (For those electric executives in the audience, "basis" represents the difference between gas prices in different areas, or the gas transportation cost.)
Meanwhile, the gas industry isn't just standing still. Ask Rae McQuade, executive director of the Gas Industry Standards Board (GISB), which now includes some 184 member companies, including gas processors, marketers, storage operators, producers, distributors, end users, gatherers, information aggregators, and pipelines (em both interstate and intrastate. "Greg Lander has been one of the key players in GISB," says McQuade.
GISB and its members are busy at the task of working out electronic communications standards for nominations, confirmations, and other gas industry practices. In fact, GISB's executive committee has recently approved proposed standards for capacity release, having sent those standards to GISB members for ratification.
"GISB is moving in a direction which it expects should be productive, from the viewpoint of the industry and regulatory agencies," notes McQuade. Our hope is that GISB's efforts are market responsive to the needs of the industry."
GISB's efforts could pave the way for Lander's fledgling project, and then again might not. "The standards don't always go the way that any single interest wants them to," notes McQuade, "But having information standards makes the information more accessible, and helps information aggregators, including Greg's company."
Will electric transmission capacity also prove compatible with real-time information systems?
One train of thought argues that EBB and EDI systems can never adapt to electric transmission capacity, electrons don't obey the contract path model. Lander will concede that argument up to a point, but he thinks he's found a way out. "Yes, you cannot predict the future," he