FERC Filings
MOTION TO INTERVENE OUT OF TIME AND REQUEST FOR REHEARING OF THE ELECTRIC POWER SUPPLY ASSOCIATION re: TENNESSEE GAS PIPELINE COMPANY
BACKGROUND
With the demise of Enron, significant changes in the industry have occurred, including subsequent credit downgrades among several major industry participants in the energy sector. The Enron fallout and the subsequent credit downgrades have caused the constriction of energy industry participants, especially energy marketers. Adding to these problems has been the overall downturn in the U.S. economy, with the recession putting significant downward pressure on wholesale electric prices across the nation, and the shift in credit rating agency standards.
Historically, credit issues in the FERC-regulated natural gas interstate transportation sector were not an overwhelming concern of either pipelines or their customers. The vast majority of, if not all, energy providers paid their transportation obligations in full and on time and continue to do so, with no disruption in day-to-day business activity. As a result, many pipeline gas tariffs vary and are ambiguous on how creditworthiness is determined. With Enron’s and various utility bankruptcies, and the more conservative approach by credit analysts, credit issues have become a primary focus for the industry. Pipelines have recently begun proposing extensive changes to their credit requirements, which in turn significantly impacts energy providers and the energy infrastructure they support. Given the number of various sudden industry events that have impacted credit policies, pipeline responses have been varied and therefore difficult for shippers to sort out.
In the September 13 Order, the Commission recognized the importance of developing a generic standard for creditworthiness and encouraged parties to initiate the standards development process at NAESB in order to see whether a consensus standard can be developed for creditworthiness. The Commission also ordered that a status report be filed by June 1, 2003 in order to aid the Commission in determining whether further action is necessary.