U.S. Regulatory Environment

Abstract

Decontrol of natural gas prices created more competition at the wellhead and the need for greater flexibility in the transportation rules to allow sales directly to end users and distribution without middlemen. In 1987, the Commission issued Order No. 500 which would end the disputes that had arisen by addressing three concerns: take-or-pay, contract demand adjustments, and ‘grand fathering’. The first and the most important was dealt with by a flexible crediting mechanism, the second eliminated and the third of insufficient importance to change the rules. Other issues about natural gas trade of concern to the Commission include: Marketing affiliates which threatened monopolistic practices that have required procedures to eliminate prohibitive practices and to deal with complaints: Rate design, which is the principal role of the Commissions that is treated on an individual basis; Certificate Proceedings for new construction that involve solving issues of rates and environmental impact.