I believe the major issues with which the ~t ~r a l gas access to pipeline capacity and allocation of capacity; the nature of pipeline service obligations and the the evolution of long-term gas-supply arrangements industry will grapple during 1989 are implications of abandonments; and and supply security.
Pipeline Capacity and Allocation of Capacity
Open access is finally here, or is it? Although most of the major pipelines have accepted blanket certificates under Orders 436/500, or soon will do so, the cry heard is that open access is a figment of the FERC's imagination. Most of this sound and fury emanates from the fact that LDC customers of pipelines are holding on to firm capacity, which remits producers, brokers, and marketers to interruptible capacity and its inherent limitations.
The LDCs are appropriately concerned about the pmdency implications of releasing firm capacity rights on the interstate pipeline systems. "he LDCs foresee a day when, having released firm capacity rights they are presently not using--arising through FERC-certificated contracts for gas supply from interstate pipelines-gas demand will go up on their systems, and they will not be able to provide service or will only be able to provide service by paying what will then be much higher rates for scarce gas and, perhaps, scarce capacity. Should this cost increase occur, they expect to have to answer for their actions to their state commissions and consumers.
Producers, marketing companies and brokers all complain that they are unable to enter into long-term supply arrangements because they lack access to firm capacity, and thus cannot guarantee long-term deliveries. A related complaint is that the rates these companies must pay for Michael R. W a k r is of counsel lo the Washington Inwjirm of Arent, Fox, Kintner, Plotkin & Kahn. He was formerly general counsel of the Natural Gas Pipeline Division of Tenneco Inc.