|
|
Enron Mail |
----- Forwarded by Jeff Dasovich/NA/Enron on 04/09/2001 11:00 AM -----
Breathitt wants more attention on Calif. gas Although the energy spotlight has been on California=01,s electricity crisi= s,=20 the number of California gas issues at FERC is continually increasing, signaling the need to focus o= n=20 the gas side of the equation, a FERC commissioner said last week. =01&[T]here is volatility in the gas markets as well as the electric market= s,=018=20 FERC Commissioner Linda Breathitt said at the American Gas Association=01,s FERC Natural Gas= =20 Regulatory and Market Issues Seminar last week in Washington, D.C. And the cost of gas= ,=20 she said, is the component that has the biggest influence on the cost of electric generation= . Two issues pending at FERC are whether to re-impose price caps on secondary= =20 market transactions and whether to cap prices on gas sales, Breathitt said. In addition, FERC recently issued an order to help remove obstacles to=20 increased energy supplies into the West (GD 3/15). In the order, FERC sought comments on the= =20 need to provide rate incentives for projects that would make additional capacity available = by=20 this summer on constrained pipeline systems. =01&I believe that if the commission does pro= vide=20 incentives, we should be very precise regarding the activity we are encouraging and the=20 incentives we will be willing to consider, if at all,=018 Breathitt said. The commissioner also voiced concern over a California issue that sits at t= he=20 state level - intrastate pipeline facilities. California, she said, needs to assess wheth= er=20 its intrastate system is adequate to take gas from the border to its market. =01&I am worried that w= here=20 there is insufficient takeaway capacity, FERC=01,s actions to increase capa= city=20 to the border may result in problems,such as prorationing,=018 Breathitt sa= id. Meanwhile, Breathitt suggested local distribution companies in California= =20 need the ability to use risk management tools. Policies should be in place to give gas buyer= s=20 an incentive to use such tools, including price hedging and the efficient u= se=20 of storage, she said. But regulators should be careful in noting the difference between hedging t= o=20 reduce exposure to price volatility and what Breathitt called =01&mere speculating.=018 Whi= le=20 hedging can be used to decrease uncertainty, speculating to beat the market can actually= =20 increase the possibility of risk, she said. Regulators in California and other states should look into the benefits of= =20 reducing gas buyers=01, dependence on the spot market. =01&A balanced portfolio of long- and short-= term=20 contracts makes a great deal of sense when spot prices are at the extreme levels of the past= =20 year,=018 she said.=20
|