Price caps, secondary markets, and the revolution in natural-gas portfolio management.
Bruce W. Radford is editor-in-chief for Public Utilities Fortnightly.
When the Federal Energy Regulatory Commission (FERC) decided in February, in Order 890, to lift the price cap for electric-transmission customers seeking to resell their grid capacity rights in the secondary market, it cautioned against expecting a quid pro quo for gas:
“Our findings here address the particular circumstances associated with the electric-utility industry and are not intended to suggest that corresponding changes should be made to the rate for capacity release by customers of natural-gas transportation capacity.
“Any such changes,” FERC wrote, would come “only after notice and comment based on a record applicable to the natural-gas industry.” (See Docket Nos. RM05-17, RM05-25, Feb. 16, 2007, 118 FERC ¶ 61,119 at para. 814, fn. 492.)
But wait a minute. Was the commission just teasing?
In fact, FERC already had opened a rulemaking investigation to consider exactly that question—whether to lift the price cap for gas-pipeline capacity releases in the secondary market. And it had done so in January, a good six weeks prior to the release of Order 890. Moreover, this prior investigation, announced as a simple request for comments, has since shaped up as perhaps the most compelling and thought-provoking policy discussion to have hit the natural-gas industry in years.