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Fortnightly Magazine - February 15 1996

R&D output for these few subscribing utilities, to put them a step ahead of the madding crowd. Some utilities will have; others will have not.

As scientists, engineers, or other R&D organizations offer ideas, E-TEC subscribers will peruse them, choosing only proposals that fit their needs. Groups of five or fewer subscribers will then fund the idea, which will remain confidential and proprietary to the R&D bidder and the co-funding subscribers,

according to individual contracts. It works like a

mutual fund for R&D.

I asked Hirsch whether subscriber membership might end up trading at a premium above the nominal membership fee, if any initial E-TEC projects turn out successful and attract late-joining subscribers. He said "no." He added that researchers should not be discouraged at the thought of assigning proprietary rights to utilities (em it's probably not much different from Bell Labs.

Turn Back?

"Increasingly, interstate natural gas pipelines inhabit a twilight region between regulation and competition." That comment refers to the remarkable problem of unsold, long-term capacity rights on natural gas pipelines, and comes from an issue paper, "Future Unsubscribed Pipeline Capacity," released by the LDC Caucus. A splinter group of local distribution companies (LDCs) created out of the American Gas Association, with its own set of governing officers and board of directors, the Caucus was formed to identify and give voice to regulatory and policy issues over which a difference of opinion might likely arise between the LDC and pipeline membership cohorts within the broader association.

The paper reflects a survey of some 75 natural gas local distribution companies (LDCs) and concludes that two regions (em California and the area around Chicago ("North Central East") (em are most likely to develop a problem with unsubscribed capacity.

To that extent, the paper generally comports with a previous study of gas pipeline capacity "turnback" released in September by the by the Interstate Natural Gas Association of America (INGAA), which predicted that as much as 13 percent of interstate pipeline capacity will not remain under long-term firm contracts by 2002. Jerald V. Halvorsen, INGAA president, suggested on January 10 that gas pipelines are attacking the problem on several fronts, such as through negotiations with customers.

The LDC Caucus acknowledged that the percentage (28) of LDCs in its survey that expected to increase capacity reservations would "partially offset" those LDCs (45 percent) who anticipated reductions in capacity reservations. But it also warned readers that the first group tended to be "the smaller ones," while the respondents predicting capacity reductions are "generally the larger LDCs."

Frank Heintz, executive director of the LDC Caucus, lets the study speak for itself. Heintz, who served as chairman of the Maryland Public Service Commission before joining the Caucus in May, told me last month of "rumors on the street" that in late January or early February, the FERC would release "something" in Docket RM95-6, its investigation of alternatives to traditional ratemaking for gas pipeline transportation. And Heintz sees parallels between gas transportation and electric transmission: "Both industries ought to be looking at what happens to the other."