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News Digest

Fortnightly Magazine - November 1 1999

impacts on the city of Las Vegas based on operation of the Yucca Mountain waste repository. It denied objections that its study gave insufficient consideration of risks stemming from traffic gridlock. RIN 3150-AGO5, Aug. 26, 1999 (N.R.C.), 64 Fed.Reg. 48,496 (Sept. 3, 1999).

Gas Pipelines

Construction Pricing. The FERC altered its policy on interstate pipeline certification, indicating a preference for pricing of new pipelines without customer subsidies. The policy marks a departure from prior policy favoring rolled-in pricing, where construction costs are recovered from existing customers, in favor of incremental pricing, where costs are recovered only from customers benefitting from the new project. The new policy applies retroactively.

But the FERC said it will not altogether rule out rolled-in pricing under certain circumstances, such as if a project improves service to current customers by replacing existing capacity, improving reliability or providing more service flexibility.

The new approach is part of a policy statement in which FERC outlines the analytical framework it will use in considering need for new pipeline facilities. It now will weigh other factors in assessing need for the new project, such as demand projections, potential cost savings to consumers and comparisons of projected demand with amount of capacity serving a market. Also, an applicant no longer is required to produce new contracts as evidence of need for pipelines, but instead can rely on existing studies as evidence of market need for new construction.

"Our objectives are actually quite straightforward: through pricing policy, to let the market tell us clearly whether and how much new pipeline capacity it is likely to support; and to make clear what analytic process the commission engages in balancing all the factors that constitute the public convenience and necessity," said Chairman James Hoecker.

Citing the "strong departure" from FERC policy, Commissioner Vicky Bailey dissented, with claims that there is "too little recognition that some projects are different and that rolled-in pricing may be needed." Docket No. PL99-3-000, 88 FERC ¶61,227, Sept. 15, 1999.

Pipeline Planning Process. The FERC also issued a final rule intended to expand public participation and resolve potential conflicts before a natural gas pipeline application even arrives at the commission, offering pipelines the option of engaging in a voluntary collaborative process before filing an application for a certificate to construct or abandon new facilities.

Under the new rule, applicants would notify all parties in interest, including landowners and state government officials, to begin consultations prior to filing. The voluntary collaborative process is similar to the voluntary procedures adopted by the FERC in 1997 for hydroelectric licenses, which have been credited with cutting FERC review time. Docket No. RM98-16-000, 88 FERC ¶61,226, Sept. 15, 1999.

Business Wire

Caminus LLC, a provider of software and consulting services to the energy industry, has completed the acquisition of Texas-based DC Systems Inc. The terms of the deal were not disclosed. Founded in 1988, DCS was a privately held corporation that provided software and services to the natural gas and fuels market. Caminus intends to integrate "Gas*Master," DCS's integrated natural gas information system, into its Zai*Net suite