CONTENTS Page 392 Allday, Martin L., Chairman, Federal Energy Regulatory Commission. Danielsen, Albert L., director, James C. Bonbright Utilities Center, Uni- 378 Baly, Michael, III, president, statement... Gartman, John A., vice president, Public Service Electric & Gas Co. Krueger, Bob, commissioner, Railroad Commission of Texas... Schildkraut, Marc G., Assistant Director, Bureau of Competition, Federal Schroeder, Mark C., Deputy General Counsel, Department of Energy Scherman, William S., Counsel, Federal Energy Regulatory Commission Threadgill, Eugene E., counsel, on behalf of the Coalition Against Material submitted for the record by: American Gas Association: 190 172 129 Association of Texas Intrastate Natural Gas Pipelines: Letter to Chair- man Sharp from Patrick J. Nugent, executive director, dated July 7, Bruder, Gentile & Marcoux: Letter from J. Michel Marcoux, counsel, Commonwealth Energy System: Letter to Chairman Sharp, from William Edwards, Hon. Mickey, a Representative in Congress from the State of 126 EDWARD J. MARKEY, Massachusetts W.J. "BILLY" TAUZIN, Louisiana GERRY E. STUDDS, Massachusetts CARLOS J. MOORHEAD, California MATTHEW J. RINALDO, New Jersey WILLIAM E. DANNEMEYER, California Testimony of: CONTENTS Alcorn, George A., president, Alcorn Exploration Co., on behalf of the Independent Petroleum Association of America.. Allday, Martin L., Chairman, Federal Energy Regulatory Commission. Gartman, John A., vice president, Public Service Electric & Gas Co.. Krueger, Bob, commissioner, Railroad Commission of Texas.. Schildkraut, Marc G., Assistant Director, Bureau of Competition, Federal Schroeder, Mark C., Deputy General Counsel, Department of Energy Scherman, William S., Counsel, Federal Energy Regulatory Commission Threadgill, Eugene E., counsel, on behalf of the Coalition Against Material submitted for the record by: Baly, Michael, III, president, statement.... Policy and analysis issues: "Price Impacts of Structural Changes in 190 172 129 Association of Texas Intrastate Natural Gas Pipelines: Letter to Chair- man Sharp from Patrick J. Nugent, executive director, dated July 7, Bruder, Gentile & Marcoux: Letter from J. Michel Marcoux, counsel, Commonwealth Energy System: Letter to Chairman Sharp, from William Comptroller General of the United States: Letter to Charles A. Bowsher Corporation Commission of Oklahoma: Letter to Chairman Sharp from Cody L. Graves, commissioner, dated D'Alessandro, David, statement on behalf of the Public Service Commis- Edwards, Hon. Mickey, a Representative in Congress from the State of Material submitted for the record by-Continued Kent, Calvin A., administrator, Energy Information Administration, Schroeder, Mark C., Deputy General Counsel, Energy Resources and Page 175 246 223 Answers to subcommittee questions 132 Letter to Chairman Allday from Robert S. Cave, executive director, 166 Letter to Chairman Allday from Chairman Dingell and Chairman 168 Independent Petroleum Association of America: Responses to subcommittee questions. 412 Indiana Gas Co., Inc.: Letter to Chairman Sharp from Lawrence A. 520 Indiana Utility Regulatory Commission: News release, dated June 10, 1992 406 McCloskey, Hon. Frank, a Representative in Congress from the State of 128 529 Oklahoma Office of the Secretary of Energy: Letter to Representative Grover Campbell from Charles Nesbitt, State Secretary of Energy, dated October 22, 1991. Public Service Commission of Wisconsin: Letter to Chairman Sharp from Cheryl L. Parrino, chairman, John T. Coughlin and Scott A. Neitzel, commissioners, dated July 2, 1992 Public Service Electric & Gas: Letter from John A. Gartman, vice president, to Hon. James H. Scheuer, dated August 26, 1992, responding to followup questions. 96 574 580 Public Utilities Commission of Ohio, J. Michael Biddison, commissioner, statement 594 Railroad Commission of Texas: Letter and statement of Lena Guerrero, chairman 101 Scheuer, Hon. James H., letter to Hon. W.J. "Billy" Tauzin, dated July 9, 1992 94 Texas Independent Producers & Royalty Owners Association: Statement dated May 26, 1992, and letter to Chairman Sharp from Julian G. Martin, executive vice president, dated July 1, 1992 606 United Distribution Companies: Letter to Chairman Sharp from Donald D. Jones, chairman, dated 614 Statement... 616 Walters, David, Governor, State of Oklahoma, statement. 60 NATURAL GAS REGULATION WEDNESDAY, JULY 8, 1992 HOUSE OF REPRESENTATIVES, COMMITTEE ON ENERGY AND COMMERCE, SUBCOMMITTEE ON ENERGY AND POWER, The subcommittee met, pursuant to notice, at 10:15 a.m., in room 2322, Rayburn House Office Building, Hon. Philip R. Sharp (chairman) presiding. Mr. SHARP. The subcommittee will please come to order. Today's hearing is on two significant Federal and State changes in natural gas regulation and their impact on consumers, especially captive residential consumers. Ostensibly, FERC's Order No. 636 seeks to increase competition in the industry and increase options for gas buyers. New State prorationing rules ostensibly seek fairer protection of producer property rights. If this is true in both cases, I would strongly support both of these changes. We, obviously, need accurate pricing to have efficient markets, and, of course, we must protect property rights to have workable free markets. But both changes do not entirely seem to be truly neutral and evenhanded or aimed only at better markets and consumers that are better served. Instead they seem to have a large chunk of regulatory tilt that may limit pipeline competition, which has been extremely intense recently; it may limit wellhead competition, which has been even hotter; and it may place both larger gas and fixed costs on the captive consumers. As we approach complete decontrol next January 1, both producers and pipelines may be tiring of the new competitive gas market, and State and Federal regulators seem to be listening to them. FERC is letting pipelines recover all their costs and profits just from captive consumers. Sharing of these costs by all consumers and the higher risk that entails for the pipelines is being ended. A new round of take-or-pay is being triggered, but this time without any sharing by all consumers or by pipelines. Some producing States are responding to the low wellhead prices of our latest warm winter by new prorationing programs. Some are shutting back just what we hoped the NGA and decontrol might bring: high flowing, low-cost super wells that enlarge our gas_markets, back out more oil imports and lower consumer prices. Other plans, it is said, will do for gas what used to be done with oil in the 1950's and 1960's when price supports for U.S. oil were achieved by market demand prorationing. (1) |