While US natural gas pipelines remain financially healthy, broader economic conditions could challenge their ability to raise money to expand and maintain their systems, the Interstate Natural Gas Association warned on Jan. 14.
"The industry's ability to continue to invest in safe, reliable energy infrastructure is challenged by an inability to access capital on reasonable terms," Interstate Natural Gas Association of America President Donald F. Santa said in a Jan. 14 letter to President-elect Barack H. Obama.
"Consequently, like other capital-intensive segments of the economy whose growth depends on access to external financing, the interstate natural gas pipeline industry would benefit from [a] tax policy that promoted investment in infrastructure, plant and equipment," he continued.
Accelerated depreciation, investment tax credits and a reduced dividend tax rate could be part of such a policy, Santa said.
He noted that as transportation service providers, INGAA members "take great interest in the discussions concerning energy infrastructure in the upcoming economic stimulus legislation and future energy legislation."
Natural gas is in a position to play a significant role as the United States makes the transition to a lower-carbon economy and complements renewable technologies such as wind and solar power by providing low-emission back-up generation, according to Santa.
Gas pipeline construction has increased dramatically in response to booming domestic supply development, he added. "The interstate pipeline industry has invested $51 billion already in this decade to maintain and expand the US natural gas transmission network. 2008 likely will represent the largest one-year increase in natural gas pipeline capacity since the 1960s," he predicted.
Santa said that the Federal Energy Regulatory Commission's regulatory regime for authorizing new pipeline construction and the pipeline rate certainty provided by the Natural Gas Act have been instrumental in this infrastructure development.
"While we do not believe that the natural gas pipeline industry needs federal funds to continue our infrastructure expansion and upgrades, we do believe that maintaining this regulatory certainty will be essential to raising additional private capital," he said.
The INGAA official specifically questioned proposals to change the Gas Act by decentralizing the process for authorizing new pipeline construction and alter the ratemaking regime, which he said would place future and existing pipeline investments at greater risk.
"We urge policymakers to avoid changes to the pipeline regulatory program that would increase the cost of capital for, and drive investment away from, new natural gas pipeline infrastructure," Santa said.
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