A federal court blocks FCC's "TELRIC" cost rule, but some states endorse it anyway.
With the Federal Communications Commission (FCC) having lost a major court battle last fall, the state...
test" now used by the FERC to decide whether assets qualify as gathering facilities exempt from regulation. Docket No. RM98-8-000, notice issued June 1, 1998, 83 FERC ¶61,235.
The FERC applies a "primary function test" under its current policy, last refined in 1996 (74 FERC ¶61,222), but that test was thrown in doubt last year in the Sea Robin case (127 F.3d 365), when a federal court rejected the FERC's interpretation under the Outer Continental Shelf Lands Act.
The FERC has received many other comments - from pipelines (Williams, ANR, Enron, Duke, El Paso), utilities (Brooklyn Union, Con Ed), producers (Independent Petroleum Association of America, Natural Gas Supply Association) and even a gas marketer (Dynegy), many of which favor less FERC regulation. But attorney Katherine Edwards, representing OCS producers (Shell, Texaco, Exxon, Mobil, etc.), counters that Congress intended in its 1978 OCSLA amendments to regulate OCS pipelines under the Natural Gas Act "in the same manner" as onshore pipes. Attorney Edward Grenier, representing the Process Gas Consumers and industrial gas users, adds that light-handed regulation of OCS pipes "is no more appropriate today than it was two years ago."
STUDIES & REPORTS
GAS PRICE RELATIONSHIPS. Gas Research Institute released a study that looks at the dynamics driving short-term natural gas prices and how the industry is responding. The study, Short-Term Gas Prices: How the Market Adjusts to Changing Fundamentals, discusses how five key factors affect short-term prices: weather, fuel competition, infrastructure, market dynamics and financial issues. It also identifies a number of possible future developments that may further affect short-term prices.
A two-page graphic relates those five factors to the most significant market events in the 1990s - from the launching of the Henry Hub (Louisiana) futures market in 1990 to the collapse of previously observed basis relationships between regions (differences in the value of gas) during the extreme cold snap in 1996. (For a copy, contact GRI Document fulfillment center via fax 630-406-5995.)
POWER CONTRACT DEFAULTS. Moody's Investors Service reports that failures to deliver electricity by Federal Energy Sales and the Power Company of America likely are not anomalies - rather, it expects to see more defaults by power marketers.
The assets of Federal Energy Sales were seized on June 24, after the power marketer failed to deliver power to its counterparties, including the Power Company of America, which in turn failed to make its contractual deliveries. The defaults occurred during the record price spikes in the Midwest of up to $7,000 per megawatt hour and Moody's believes the defaults may have contributed to the problem.
POWER PLANT EMISSIONS. Public Service Electric and Gas Co. and the Natural Resources Defense Council on July 16 released a report benchmarking the 1996 environmental performance of the nation's 100 largest electric utilities. They believe that the report, Benchmarking Air Emissions of Electric Utility Generators in the United States, shows the need for more stringent, uniform environmental standards and tough disclosure rules as the electric industry becomes more competitive. The report compares emissions rates for nitrogen oxide, sulfur dioxide and carbon dioxide for the 50-largest