Through Order 636, The Federal Energy Regulatory Commission (FERC) required interstate pipelines to unbundle, or separate, their sales and transportation services and to provide open-access transportation services equal in quality whether the gas is purchased directly from the pipeline company or from a producer, marketer, or elsewhere.
The order includes provisions that
(1) encourage use of market centers where several pipeline systems interconnect and buyers and sellers can make or take gas deliveries;
(2) established a “released capacity” market for transportation and storage capacity under which shippers are permitted to release their unneeded firm capacity to a replacement shipper who may re-release that capacity if permitted by the terms of the initial release; and
(3) imposed and new rate design (“straight fixed-variable”) that was intended to promote competition among gas suppliers by eliminating price distortions inherent in the pre-existing rate design that allocated certain fixed costs such as return on equity and related taxes to a commodity (usage) charge. This charge was levied on a per unit basis and applied to the volume of gas actually used, thus affecting costs for firm and interruptible customers alike.