FERC Proposes Removing Gas Rate Cap

FERC said the new rule was designed to promote more efficient natural gas pipeline capacity release markets by easing some restrictions on short-term capacity release transactions.

Specifically, FERC said the proposed rule would permit market-based pricing for short-term capacity releases instead of the rate cap and make the use of asset management arrangements that are important to many gas utilities easier.

Those arrangements constitute contractual relationships in which a party agrees to manage gas supply and delivery arrangements, including transportation and storage capacity, for another party.

"The proposed rule should strengthen competition in the secondary capacity release market and improve access to the interstate natural gas pipeline system," FERC Chairman Joseph Kelliher said.

"As a result, shippers will have more options for how they obtain natural gas supplies, which should benefit gas consumers," he said.

The commission said it wasn't proposing the removal of price caps for primary pipeline capacity.

Public comments on the proposed rule said FERC's current capacity release regulations hinder asset management arrangements by making it more difficult for capacity holders to release their capacity to an asset manager of their choice.

In public comments submitted to the commission on the proposed rule, FERC's current capacity release regulations were said to hinder asset management arrangements by making it more difficult for capacity holders to release their capacity to an asset manager of their choice.