Regulatory Judgment Termed `Inherently Late, and Wrong' / by Ferc Commissioner

Article excerpt

TULSA - The long-run natural gas market will see regulations subplanted by free market conditions, said Federal Energy Reg ulatory Commissioner Charles Trabandt.

In a speech before the Oklahoma Independent Petroleum Association in Tulsa Monday, Trabandt characterized regulatory judgment as "inherently late and inherently wrong."

The current job of the FERC is to build a foundation under the existing laws, he said. The industry shouldn't depend on Congress to deregulate natural gas, Trabandt said.

"The commission seeks competition from well head to burner tip," Trabandt said.

Natural gas needs a price treatment which over the long run will kill the cycle of boom/bust, he said.

Congress knew what it was saying in the Natural Gas Policy Act of 1978 by protecting the interests of the non-affiliated producers, Trabandt said.

"There's no deterrent like the deterrents that get to the pocketbook," he said.

If a pipeline pays less than or the same amount to its affiliate producer as to a non-affiliate producer, then the pass through will be accepted, said the FERC commissioner. However, if the pipeline is found to pay more to an affiliate, then no pass through would be granted and all the profits from the transaction would be denied, Trabandt said.

In explanation, Trabandt said some comments have been made that Congress didn't mean the pass through penalty.

About FERC Order 451, which effectively de-controled so-called "old" natural gas by raising the price of all 12 "vintages" to the highest leve, Trabandt said the natural gas industry will see a natural de-vintaging, not rate shocks. …