Natural Gas Wellhead Decontrol Act
This act completed the process of deregulating wellhead prices. It required the removal of all price controls on wellhead sales with effect from 1 January, 1993, allowing natural gas prices to be freely set in the market.
Mega-Notice of Proposed Rulemaking (Mega-NOPR)
FERC requested comments from consumers and industry about new ways of structuring gas transportation.
The Restructuring Rule (FERC Order 636)
Order 636 resulted in major restructuring of interstate pipeline operations. The most notable provisions of Order 636 were the separation of sales from transportation services (unbundling), so that customers could select supply and transportation services from any competitor in any quantity and combination, making TOP contracts a thing of the past. Order 636 impacted the market resulting in increased exploration, pipeline construction, falling prices and increasing profits.
FERC Order 637
Further refinement of the remaining pipeline regulations addresses inefficiencies in the capacity release market.
Deregulation in the gas industry has seen the development of commodity products that parallel the evolution of physical natural gas markets. Consumers can negotiate the best terms for supply and transportation to their site and simultaneously negotiate better terms in other markets as a price hedge. The natural gas commodity market has become the most active commodity market on the NYMEX.
This has led to the market as it is today, with opening and deregulation at differing stages in the 3 main components of the industry.
From total regulation in 1970 the market has evolved into partial deregulation, with varying degrees of market opening at the different stages of the industrial process. This has happened in 3 stages; wellhead deregulation, pipeline reform and finally unbundling gas services. At the retail level, reforms and restructuring have occurred on a piecemeal basis. For example, state commissions have allowed LDCs to offer unbundled transportation service to large customers; occasionally to provide flexible pricing in competitive markets; and to engage in other competitive activities.