FERC Seeks Comment on Intrastate Pipeline Capacity Transfers

On October 21, the Federal Energy Regulatory Commission (FERC or Commission) denied rehearing of its ruling in Arizona Public Service Co. (APS), 132 FERC ¶ 61,064 (2010), where it announced that the prohibition against buy/sell transactions applies equally to intrastate pipelines engaged in NGPA Section 311 transactions and to Hinshaw pipelines. At the same time, the Commission issued a Notice of Inquiry (NOI) in Docket No. RM11-1 seeking comments on whether and how holders of firm interstate capacity on intrastate pipelines and Hinshaw pipelines¹ can allow others to use their capacity, including whether buy/sell transactions should be permitted.

In Order No. 636 (issued in 1992), the Commission instituted its capacity release program, which was designed to permit holders of firm capacity on interstate pipelines to reallocate any unneeded capacity to the person who values it the most. FERC's capacity release program requires reassignment of capacity to