Subject: Notice on affiliate Staff Conference, January 31, 2001
From: [email-masked]
To: [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked], [email-masked]
Cc: [email-masked]
Date: Mon, 27 Nov 2000 05:50:00 -0800 (PST)

Late Wednesday, FERC issued a notice scheduling the Staff Conference focusing 
on pipeline affiliate issues.  The roundtable conference will take place on 
Wednesday, January 31 at 1:00 p.m. (note that FERC does not intend for this 
to be an all-day conference).  Preliminary comments and requests to 
participate are due by January 5, 2001.  [There is an INGAA Regulatory Policy 
Committee meeting this Thursday, November 30, in Washington, DC, in which the 
pipelines' approach to this conference will be discussed and organized.  
Shelley Corman is Chair of that committee.}

The purpose of the conference, as stated in Order No. 637, is to discuss how 
changes in the natural gas market may impact the Commission's regulation of 
pipelines and their affiliates and non-affiliates, as well as capacity 
holders and their affiliates, capacity managers and agents.  The conference 
is structured as a roundtable debate with no opening remarks from 
participants, though Staff requests parties to "provide input on how to 
structure the discussion."  Over the past month or so, Staff has spoken with 
industry representatives on the structure of this conference, aware that the 
subject matter lends itself to the possibility of an unproductive grudge 
match among industry sectors.  Staff is requesting comments before the 
roundtable to inform the structure and substance of the roundtable as led by 
Staff.

The notice asks that parties submit written comments by January 5th to 
identify issues and examples to foster a meaningful dialog and to suggest 
questions the Staff moderator may wish to pose to the panel.  Comments should 
include a one-page single spaced position summary and whether the commentor 
is interested in participating in the roundtable.  Like-minded entities are 
encouraged to select one spokesperson (ie, pipelines, LDCs, producers).

The broad question in the notice is whether the current standards of conduct 
need to be eliminated, expanded or modified based on the changing nature of 
the industry, and whether there should be uniform standards for all holders 
of pipeline capacity, or do distinctions need to be made in the treatment of 
affiliate relationships (and ownership rules) between the gas and electric 
industries.

The notice also delineates some specific areas of concern for comment.  
Boiling them down to the main questions, these are:

(1) Current Regulatory Approach:  Are current standards effective; discuss 
successful or unsuccessful experiences; do current reporting mechanisms allow 
for effective affiliate market activity monitoring?

(2) Potential Concerns:  Whether and when do affiliate transactions pose the 
potential for anticompetitive or discriminatory effects, or explain why such 
effects are not likely?  PROVIDE EXAMPLES OR SCENARIOS.  Do different types 
of affiliates (LDC, gas/power marketer, power gen, asset manager) pose 
different risks?  What are the effects of the changing market conditions, and 
is there potential for market or consumer benefits from affiliate 
transactions? 

(3) Potential Approaches:  Are there better methods to regulate affiliate 
transactions beyond the standards of conduct and reporting requirements?  
What are costs and potential adverse impacts of the following possible 
alternatives: open and fair bidding procedures; prohibitions on affiliates 
holding capacity on affiliated pipelines; limits on affiliate capacity market 
share; changes to open-season bidding to break-up large capacity packages; 
divestiture of affiliates.  "Similar approaches could be considered for 
affiliates of non-pipeline capacity holders."   Comment on the following 
possible adverse impacts of such alternatives: risk of unsubscribed capacity; 
potential cost shifts; lack of affiliate contracts to underpin new 
construction projects.

The full FERC notice (PL00-1-000, November 22, 2000) is attached here.