Pipeline Restructuring: Slicing a Shrinking Pie

Fortnightly Magazine - October 15 1997
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THE FERC TAKES SUGGESTIONS ON THE FUTURE OF THE GAS INDUSTRY.

Earlier this year, the Federal Energy Regulatory Commission opened a discussion of issues facing the natural gas industry. Its aim? To set "regulatory goals and priorities" for the era following from Order 636, issued in 1992. %n1%n

To gather input, the FERC scheduled a two-day public conference. It asked for comments on a myriad of topics, ranging from cost-of-service rates to hourly gas pricing and services. %n2%n

The conference followed in late May, attended by industry reps and trade-press "gasarazzi." At one point, sensing a lack of creative energy, Commissioner James Hoecker (not yet named the FERC's new chair) implored a witness to push the envelope: "Let's do some thinking outside the box. I'm not hearing much 'big picture' here."

The problem, however, may rest not so much with a lack of will as a lack of reward. Even as the FERC has unleashed upstream markets, it has done little to encourage downstream growth, leaving the pipelines and competitors locked in a zero-sum game.

The point was driven home by Claire A. Burum, v.p. for rates and regulatory affairs, signing off on comments for Koch Gateway Pipeline. She noted that progress is best achieved if the FERC "narrows its focus to the real issues," and "is not distracted by irrelevant arguments regarding division of the economic pie, especially since the size of the interstate pipelines' slice can only get smaller and never larger."

That said, here is a look at some of the issues, gleaned from hundreds of pages of initial comments filed by pipelines, local distribution companies, marketers, vendors, consumers, shippers, associations and regulators.

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