Subject: Texas Eastern
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Date: Mon, 19 Feb 2001 02:35:00 -0800 (PST)

Either I didn't fully understand the December Texas Eastern order or else 
FERC has just put a new and unhelpful spin on it.  The Thursday rehearing 
order dramatically changes how the "shipper must have title" rule applies to 
acquisitions of upstream capacity.   I thought the Dec. order pretty clearly 
allowed a pipe to acquire upstream capacity and then resell that capacity 
under the acquiring pipeline's rate schedules.  FERC specifically held that  
the "shipper must have title" policy won't be applied if the acquiring pipe 
treats the acquired capacity "as though it were part of its own system".  (p. 
61,886)  The Dec. order even cited TW's acquisition of park n ride capacity 
from PG&E as an example of the type of transaction that (I thought) could be 
done without advance Commission approval.   Now, FERC explains that it did 
not intend a "blanket waiver" of the shipper must have title policy.   Pipes 
can still acquire upstream capacity without advance FERC permission, but only 
if the acquiring pipe is going to use the acquired capacity for operational 
needs or to resell under the selling pipe's release mechanism.  If the 
acquiring pipe wants to use the acquired capacity to support sales of service 
under the acquiring pipe's rate schedules, a specific waiver of the "must 
have title" policy is required (see FN 20 and text).   We are right back to 
where we started.  I guess the orders signal that FERC is  much more likely 
to grant waivers of the "must have title" policy than in the past, but I 
don't think we are good to go to acquire upstream storage, for example, and 
resell it as FDD or IDD until we get permission first.  

Shelley--let me know if you hear any expressions of outrage from other 
pipes.  This might be worth chasing on rehearing since it is such a clear 
about face by FERC.