Regulations Governing the

Conduct of Open Seasons

for Alaska Natural Gas

Transportation Projects

Federal Energy Regulatory Commission

February 9, 2005

Agenda Item C - 1

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Alaska Natural Gas Pipeline( primary mainline to lower-48 )

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• Open season regulations to be issued in 120 days

• Regulations must cover procedures for the allocation of capacity and criteria for and timing of any open seasons

Alaska Natural Gas Pipeline Act Open Season Provisions

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• Regulations must promote competition in the exploration, development, and production of Alaskan natural gas

• Expansion open seasons must provide the opportunity for the transportation of natural gas other than from the Prudhoe Bay and Point Thomson Units

Alaska Natural Gas Pipeline Act Open Season Provisions

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The open season regulations apply

to any initial or voluntary

expansion capacity on any

Alaskan natural gas transportation

project

Alaska Natural Gas Pipeline Act Open Season Provisions

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10/13/04 – Alaska Natural Gas Pipeline Act

11/15/04 – Commission issues NOPR

12/3/04 – Public technical conference in Anchorage, Alaska.

by 2/10/05 – Commission issues final rule

Open Season Rulemaking Schedule

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Open Season Process in NOPR

• Detailed project information given to the public 30 days before open season

• Open season held for at least 90 additional days

• Capacity awarded without undue discrimination or preference of any kind

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Changes to NOPR(as a result of public comments)

• Recognition of Alaskan in-state needs– In-state capacity, delivery points and transportation rates based on in-state study

–Separate bidding on specified in-state capacity

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Changes to NOPR(as a result of public comments)

• Prevention of Undue Discrimination or Preference

– Standards of Conduct of Order 2004 APPLY– Prospective applicant must create or designate

an independent unit or division for open season– Alaska natural gas production affiliates identified– Information made available to any potential

shipper must be made available to all potential shippers

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Changes to NOPR(as a result of public comments)

• Capacity Allocation– Pre-subscriptions (anchor shippers) are

allowed only for initial capacity – Pre-subscription agreements must be

made public within 10 days and all other bidders have choice of best pre-subscription terms

– Pre-subscription capacity will be subject to pro-rata reductions

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Changes to NOPR(as a result of public comments)

• Capacity Allocation (con’t)– Qualified bids made after the open

season to be considered

– Results of the open season to be made public within 10 days

– Copies of all accepted precedent agreements filed with the Commission within 20 days

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Changes to NOPR(as a result of public comments)

• Pre-filing, Project Design & Expansions– Prospective applicant’s pre-filing of its

open season proposals– The Commission will consider how

project design considers the capacity needs of initial and future shippers

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Policy Considerations

• Balance encouragement of project construction with fair and open competition

• Rebuttable presumption for rolled-in rate treatment of costs of expansions

• Balance appropriate oversight with letting market forces work