On November 21, 2008, the Federal Energy Regulatory Commission (FERC) issued Order No. 712-A, affirming Order No. 712 which primarily removed the rate ceiling for secondary short-term capacity release transactions and facilitated the use of asset management arrangements (AMA) by exempting releases involving AMAs from the prohibition on tying and FERC's bidding requirements. Although the requests for rehearing were generally denied, FERC made a number of clarifications.

In particular, FERC clarified that the five-month minimum delivery or purchase obligation within the definition of an AMA does not require the that the five-month period be for five consecutive months. This clarification provides flexibility for parties who want to divide the delivery/purchase obligation in a way that corresponds to the variations that exist in the releasing shipper's need to use the capacity over the course of the year. Further, the minimum delivery/purchase obligation may be satisfied by use of any combination of months and/or days during the term of the release that equals the requisite obligation of the release. In addition, Order No. 712-A clarified that:

  • Releases of transportation and storage capacity are subject to the same obligation to deliver and/or purchase "up to" 100 percent of the daily contract demand of the applicable agreement;  
  • A delivery/purchase under a storage AMA incorporates any limitations on the customers' injection or withdrawal rights contained in the service provider's tariff;  
  • The prohibition in 18 C.F.R. § 284.8(h)(2) on rolling over a thirty-one (31) day or less release to the same replacement shipper without bidding does not apply to AMAs or to releases pursuant to a state approved retail access program; and  
  • Holders of capacity in an open-access liquefied natural gas terminal can tie their connecting downstream pipeline with terminal capacity.  

These revised rules will become effective thirty (30) days after publication in the Federal Register.