Regulators are concerned about affiliated entities gaining an advantage over their unregulated competitors through relationships among pipelines, utilities and their subsidiaries. They also seek to ensure that ratepayers do not subsidize a company’s competitive activities. More than 25 states and the Federal Energy Regulatory Commission (FERC) have adopted laws or regulations that in some way govern these relationships to prevent potential competitive advantages. Some states have adopted guidelines, often termed "standards of conduct" or "codes of conduct, " for interactions between parents and affiliates, such as arms-length transactions, separate staff and facilities, and the offering of the same terms, information and services to all marketers. In 2008, FERC promulgated final rules on the standards of conduct governing the relationship between a transmission provider and its marketing function employees and the marketing function employees its affiliates. The final rules: (1) keep separate electric marketing concepts from gas marketing concepts and limit gas marketing to sales for resale in interstate commerce or the submission of offers to sell in interstate commerce; (2) clarify that a gas distribution utility is not subject to the standards of conduct by virtue of being affiliated with an electric transmission provider; (3) provide guidance on the activities that would make high level employees such as officers and directors subject to the standards of conduct; (4) eliminate the prohibition on the receipt of non-public transmission information; and (5) expressly allow companies to continue to rely on existing standards of conduct waivers to the extent they remain relevant.
AGA believes that legislation and regulations established to govern the market must preserve the natural gas industry’s excellent record of service and reliability, and allow local natural gas utilities to compete on the same basis as other providers of energy. The final rules promulgated by FERC specifically did not adopt AGA’s recommendation to allow LDCs to make off-system sales that do not involve the use of a pipeline-affiliate’s transmission capacity without being subject to the standards of conduct. AGA supports further revisions to the standards of conduct to permit LDCs to engage in these types of transactions.
AGA Contact: Andrew Soto, (202) 824-7215, email@example.com