Overview

In an order responding to a request for approval of a transaction between
Arizona Public Service Company (APS) and Sequent Energy
Management, L.P. (Sequent), Arizona Public Service Co., 132 FERC ¶
61,064 (2010), FERC expanded its prohibitions on buy-sell transactions to
include not only transportation on open access interstate pipelines, but
also transportation by intrastate pipeline operating under Natural Gas
Policy Act (NGPA) section 311 and by Hinshaw pipelines providing
transportation under blanket certificates. While expanding its restrictions,
FERC invited market participants to apply for case-specific approval of
every buy-sell transaction. In fact, because of the breadth of the order,
such transaction-specific requests may be needed for every assignment of
transportation capacity on a section 311 intrastate pipeline or a Hinshaw.
In addition, because Local Distribution Companies (LDCs) provide blanket
certificate transportation services under the same authorization as
Hinshaws, there is no reason to believe transportation on LDCs would
receive any different treatment.