Nation’s Natural Gas Industry Is Now Officially Deregulated

The Federal Energy Regulatory Commission on Thursday paved the way for a sweeping restructuring of the natural gas industry by finalizing new rules deregulating the way gas pipelines operate.

At the meeting, FERC made only minor changes in Order 636, which took effect May 18. The changes were made to address concerns of smaller pipeline customers.

The 400-plus page document wraps up Washington’s seven-year effort to deregulate the gas industry. It forces pipelines to “unbundle” their services and let customers buy natural gas and transportation services separately.

It also prohibits them from discriminating against customers who buy their gas elsewhere.

Gas pipelines currently charge a set fee for the gas supplies and their transport. Now, future customers will be able to buy only the services they need, boosting competition among pipeline companies and possibly reducing costs.

“Order 636 . . . is truly a giant, far-reaching step into the competitive world of open access that should reap great dividends to all consumers,” said FERC Chairman Martin Allday.

The United States began deregulating the country’s fast-growing natural gas markets in 1985.

Allday said the new rules will help ensure that a reliable, clean source of energy remains available to citizens and industry.

All pipelines must comply with the new rules by November, 1993, with the first group of companies due to present detailed restructuring plans this October.

Pipelines will benefit from the rule because they will no longer be required to keep large volumes of gas on standby in case their customers want more.

Industry groups welcomed the commission’s rapid handling of the order, but declined to make any detailed comment until they had studied the mammoth document.

“We’re very pleased they did move it along, which is what we’ve been urging all along,” said Julie Stewart, spokeswoman for the American Gas Assn.

Producers succeeded in getting FERC to endorse a switch in rate structures, which means that pipelines’ fixed costs are passed onto customers via reservation fees, a flat fee paid by customers for access to the pipeline.