Key Ferc Rule on Natural Gas Industry Overturned on Appeal

Article excerpt

WASHINGTON (AP) - A federal appeals court Tuesday overturned a Federal Energy Regulatory Commission decision that drastically altered the natural gas industry, and ordered FERC to correct certain legal defects in its 1985 rule.

The U.S. Circuit Court of Appeals upheld most elements of the 1985 FERC order that directed natural gas pipeline companies to transmit the gas from other producers.

But the court vacated the rule and ordered FERC to examine a key provision allowing utilities to alter their contractual relationship with pipeline suppliers.

The order applied to pipeline companies that contract with more than one producer to transmit natural gas. Pipeline companies that chose to exclusively transmit their own gas were not covered by the order.

The FERC order effectively dissolved the dual role of gas seller and transporter that was played by many pipeline companies.

It allowed utilities to get out of long-term contracts to buy natural gas from one pipeline, permitting them to shop on the spot market for cheaper sources of fuel. …