In the early 1980s, the interstate pipelines began seeking FERC approval of certain "Special Marketing Programs" (SMP) and the "Special Transportation Programs" (STP). Briefly explain the basic structure of these proposals and how they attempted to addres

Special Marketing Programs (SMP) and Special Transportation Programs (STP) were two initiatives put forward by interstate pipelines in the early 1980s in an effort to address the gas marketability problem. The pipelines proposed a set of schedules and/or regulations that provided incentives for customers to reduce their contract demand levels, thereby reducing their payment obligations and, in turn, improving their ability to sell excess gas on the open market. The proposed SMP and STP programs sought to encourage customers to cut their payments and increase their flexible purchasing options in a number of ways. These included constructing storage facilities and/or marketing centers, providing discounts on transportation and/or storage services, implementing creative exchanges of gas or energy products, or renegotiating contracts with producers to reduce prices and provide more flexible purchase options. The FERC initially agreed to approve these programs, likely reluctantly, because of the potential benefit for captive residential and small commercial gas customers who were not able to switch to alternative fuels such as fuel oil. The programs, if successful, could drive down market prices for natural gas, making it more affordable and more attractive to potential residential and small business customers. Additionally, the programs helped limit the amount of "take or pay" pressure by redressing contract imbalances and reducing potential future liabilities. Allowing the programs to go ahead could also help stabilize the market and reduce the overall risk of gas supply disruption.