Gas Regulatory Outlook: Are Rules Changing for the Better?

 

Keith Bailey and David W. Biegler discuss FERC policy for pipelines.

What does Order 637, the Federal Energy Regulatory Commission's Feb. 9 Final Rule on short-term pipeline capacity mean for the gas industry? Keith Bailey, chief executive officer at Williams, and David W. Biegler, president and chief operating officer at TXU, give their reactions and describe what else must be done to facilitate growing natural gas demand.

On the Price Cap:

What are the benefits of the price cap removal for short-term capacity markets?

: It is a step in the right direction. It is a move toward market-based pricing, but it, again, is only a move in that direction. It is a positive move rather than status quo.

[What would make it perfect are] freely negotiated rates, terms, and conditions. The way we have proposed it, both as an industry and a company, is that it be done against a safe harbor. If a customer chose to fall back on a regulated pricing model, they would always have that ability to do that. Beyond that, the pipelines and customers could engage in free negotiations like they do in every other part of our business. You could tailor the rates, terms, and conditions to the specific needs of each individual customer.