A group of 10 major gas marketers protested in August that the prohibition, which was contained in an otherwise minor order, created regulatory uncertainty and threatened to disrupt the gas market.
Saying it wanted to hear industry comments on the issue, the commission granted a blanket waiver allowing intrastate pipelines -- "Hinshaw" systems and those governed by Natural Gas Act section 311 -- to continue the buy/sell deals while it considers the policy.
"FERC recognized that the policy issues are more appropriately addressed in a rulemaking proceeding, where all affected industry participants will have an opportunity to comment," the commission said in a statement.
In July, FERC granted a waiver to allow Arizona Public Service Co. and Sequent Energy Management to buy and sell gas at an underground storage facility to allow the utility to manage demand spikes. FERC said buy/sell transactions by intrastate market players were prohibited, just as they are on
interstate pipelines. But the commission said it was willing to consider waivers on a case-by-case basis as long as companies showed that their deals provided "significant benefits to the market."
The gas traders said the prohibition can't be reconciled with commission precedent and asked FERC to rescind the ruling.
"Markets for trading gas and capacity develop quickly -- on a daily and intraday basis -- and market participants must be able to response quickly to changing market dynamics," the group said. "This ability benefits the market as a whole because it results in the more efficient use of pipeline capacity.
"Imposing the buy/sell prohibition on non-interstate pipelines would hamper the efficient use of non-interstate pipeline capacity to the detriment of both the intrastate and interstate market."
The firms were Shell Energy North America, Chevron USA, Citigroup Energy, ConocoPhillips, Encana Marketing, Iberdrola Renewables, Barclays Capital Energy, JP Morgan Ventures Energy Corp., Tenaska Marketing Ventures and Sempra Energy Trading.
Mark Lewis, a lawyer for the group, said the prohibition came as a surprise to intrastate gas buyers who use the transactions routinely.
"No one really knows how the commission sees this working," he said in August. "When they've taken action like this before, they typically will build a record, hear from the industry and look at, 'What are the issues we're trying to protect? What are the issues we're trying to protect? What are the
practical implications of this?' None of that happened."
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