What Is An Asset Management Agreement Natural Gas


In its october 15, 2015 decision, the Commission stated that «the purchase/sale transactions in which the AMA distribution shipper sells its natural gas to its asset manager, the asset manager transport the gas via the released capacity and the asset manager resells the natural gas to the liberating shipper, are not purchase/sale transactions of this type prohibited by Regulation 636.» The Commission found that, although the exemption under Regulation 712 reviewed and expressly granted a purchase/sale exemption only for delivery AAAs, the exemption should apply to «corresponding transactions conducted pursuant to a DELIVERY AMA.» The Commission found that buy/sell transactions related to AMA such as delivery AMA did not circumvent capacity release rules, as capacity continues to be used for the same purpose as that for which the shipper of the AMA delivery company originally purchased it to transport its natural gas to the market. In addition, the transfer of capacity to the asset manager is transparent, both in deliveries and in delivery AAAs, in accordance with the Commission`s capacity release rules (which do not require tenders for AMA, but which require unblocking). In 2008, the Commission acknowledged that AMAs were bringing significant benefits to market participants and took steps to facilitate the increased use of AMA. In Regulation 712, the Commission found that AMMs will maximize the use and value of pipeline capacity by creating a mechanism for capacity holders to call on third-party experts to ensure their capacity. The Commission found that AAMs ultimately result in savings for end-customers, as they provide for reduced gas supply costs and more efficient use of pipeline capacity. In order to facilitate the increased use of AMA, the Commission exempted qualified CASs (which meet certain requirements for the volume of the asset manager`s gas supply or purchase obligations) in Regulation 712 from the tendering requirements of the intergovernmental ironc rules for the release of pipeline capacity. This derogation, codified in Section 284.8 of CEC regulations, allows FERC capacity holders to free up PIPELINE capabilities in conjunction with an AMA to an asset manager without providing tender capacity (although approvals are still publicly published). Recognizing that AMAs are complex agreements, the Commission also exempted qualified CAPs from prohibiting the opening of intergovernmental pipeline capacity on foreign terms. Finally, the Commission found that its prohibition on sale/sale transactions did not prevent a party from managing its own gas purchase contracts, but relied on an asset manager to manage its pipeline capacity, whereas these agreements could include sale/sale transactions prohibited elsewhere. With the increase in domestic natural gas production, supply AMS has become an increasingly important tool for natural gas producers and other major sellers to manage the marketing functions and capabilities of pipelines.


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