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The Affiliated Marketer Problem: Causes, Cures and Consequences

โœ Scribed by Marston, Philip M.

Publisher
John Wiley and Sons
Year
2007
Weight
504 KB
Volume
4
Category
Article
ISSN
0743-5665

No coin nor oath required. For personal study only.

โœฆ Synopsis

The issue of how pipeline companies deal with their affiliated marketing companies is currently being hotly debated in the industry. It now appears clear that the Federal Energy Regulatory Commission has concluded that strong remedial action must be taken.

Hut before addressing the recent developments at the commission and what they mean for the industry, it is important to put the phenomenon of affiliated marketers into a broader perspective. For as this article will show that broader perspective suggests that the issue will likely command ongoing regulatory scrutiny in one form or another for the foreseeable future. Moreover, a good deal of the focus will likely shift from pipelines to local gas utilities and hence from the federal to the state level.

I. Regulation and Deregulation: The Origins of the Affiliated Marketing Phenomenon

Interstate pipelines have been regulated โ‚ฌor nearly 50 years. But it has only been within the last year or two that concerns have been raised regarding pipeline-affiliated marketing companies. Frequently the problem has been viewed as just a symptom of the pipeline's take-or-pay problem. Under this scenario, the primary reason a pipeline would create a marketing &l- iate was to mitigate its take-or-pay exposure. If this were the case, pipeline marketing affiliates -and the concern over favored dealing by the pipeline --would fade away as take-or-pay obligations are gradually brought into line with market realities. Moreover, if take-or-pay con---

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