GAS PIPELINES. Noting a move toward shorter-term contracts since Order 636, the FERC on July 29 issued an "integrated package" of reform proposals for the natural gas pipeline...
create standards for electronic communications. These standards will improve the efficiency of the natural gas industry and make natural gas more marketable to potential large-volume users, such as electric utilities. We expect that GISB will allow the industry, through the input of all segments, to create voluntary standards that are beneficial in a competitive environment that is not burdened by excessive regulation.
However, the FERC is missing an opportunity to improve the overall efficiency of the pipeline system by not changing its rules to allow direct assignment of capacity. This approach should be allowed to supplement trading on the EBBs. An after-the-fact record of transactions can provide the FERC with the necessary information to address any legitimate complaint of market abuse. One of the biggest problems today is that an LDC wanting to sell capacity to an end user or other purchaser cannot close the deal directly, but must go through the EBBs. If the transaction involves capacity on multiple pipeline systems, then multiple EBBs are involved. Direct assignment would benefit both buyer and seller; the system would be more efficient and cost-effective, resulting in a lower cost to the end user.
Charles E. Zeigler, Jr.
Chairman, President, & CEO
Public Service Co. of North Carolina, Inc.
We believe standardizing the gas pipeline EBB and EDI system is an excellent objective as long as quality is not sacrificed to standardization. Obviously, almost everyone would like to be farther down the road. While we believe current efforts need to be continued, if not intensified, we hope that independent developers will also be encouraged in any development efforts. Creating a competitive environment with the appropriate rewards for the best products could very well increase the speed of this process while enhancing the quality of the final products.
William E. Davis
Chairman and CEO
Niagara Mohawk Power Corp.
Niagara Mohawk Gas is a member of GISB, and thus far we are pleased with the progress being made in standardizing EBBs and EDI. We are concerned, however, that all costs for EBBs and the like are currently being covered by LDCs in the form of interstate pipeline rates. After all, each segment of the industry benefits from these services (em from producers to marketers and brokers. We believe each of these groups should pay its fair share.
Corbin A. McNeill, Jr.
President & CEO
PECO Energy Co.
Yes, PECO Energy Co. is satisfied with the efforts to date to standardize gas pipeline EBBs and EDI. PECO Energy is a member of GISB. Our company, both individually and as a member of Associated Gas Distributors and the A.G.A., has participated in the planning and formation of GISB. In its initial stage, GISB instituted an organizational structure and promulgated standards for capacity release and electronic communications for business transactions within the natural gas industry. Considering the changes and activity precipitated by FERC Order 636, we think the results to date are commendable. We must now take these initial standards and incorporate them into our daily business as we manage the growing complexity of the industry. t