Natural gas pipeline policies came under fire in Congress Feb. 5 as Democrats and some Republicans took aim at pipeline rates, regulatory approval policies, and the treatment of landowners along routes.
Several Democrats on the House Energy and Commerce Committee spoke favorably of the idea of giving federal regulators authority to order retroactive refunds when rates charged for use of a gas pipeline are no longer judged to be reasonable.
Republicans did not openly oppose the idea, though some counseled caution, and one Republican cosponsored bipartisan legislation Jan. 30 to mandate such refunds.
Rep. Frank Pallone Jr. (D-N.J.), chairman of the committee, commended the bill, H.R. 5718, introduced by Rep. G.K. Butterfield (D-N.C.) with Rep. Billy Long (R-Mo.) as a cosponsor. The bill would allow refund orders to be retroactive to the date a complaint was filed.
Pallone spoke at a hearing of the energy subcommittee of the House Energy and Commerce Committee that explored ways to modernize the Natural Gas Act. The hearing included the question of why the Federal Energy Regulatory Commission (FERC) should be authorized to order retroactive refunds for electric transmission overcharges but not for interstate gas pipeline overcharges.
One witness at the hearing urged lawmakers to think twice about revamping rate regulations when the system overall seems to work well for gas sellers, transporter, and buyers alike. Michael McMahon, senior vice-president of Boardwalk Pipelines LP, appeared before the subcommittee on behalf of the Interstate Natural Gas Association of America, a pipeline group, to argue that gas pipeline rate disputes do not usually devolve into prolonged fights.
About 60-70% of pipeline rates are negotiated rather than the “stated” rates imposed on customers, McMahon said. Nevertheless, retroactive refunds would be appropriate for cases where FERC decides a stated rate is no longer reasonable, testified Cheryl LaFleur, a former FERC chairman.
What makes the rate disputes more frustrating to gas buyers, including local gas utilities, is that the buyers so often are captive customers of a pipeline, testified Richard Worsinger, director of the municipal gas utility of Wilson, N.C., who appeared on behalf of the American Public Gas Association. About 95% of public gas utilities are captive to one interstate pipeline, he said.
Tougher regulation wanted
When FERC gives a pipeline project a green light, it does so by granting a certificate of public convenience and necessity. LaFleur and another witness, Susan Tierney, senior adviser of consulting firm Analysis Group Inc., both told the hearing that FERC should not be basing its assessment of the public need for a pipeline solely on whether enough preliminary contracts have been lined up.
FERC should consider a fuller range of anticipated benefits and costs, including economic and environmental costs, Tierney argued.
LaFleur cited the example of the Atlantic Coast Pipeline and the Mountain Valley Pipeline, which were proposed with such similar routes that LaFleur thought they could have been combined into one pipeline, reducing their environmental and landowner impacts. That would have entailed a broader consideration by FERC of the public interest than merely market demand, she said.
Landowner protections sought
Rep. Morgan Griffith (R-Va.) said landowners often feel their rights are not respected and their voices are not being heard when pipeline projects are considered. Landowners are frustrated that they have inadequate warning of an impending pipeline project that may include use of “eminent domain” authority to run a line across private property whether the property owner accepts it or not, Griffith said.
Pallone, the committee chairman, wants pipeline companies obligated to obtain all necessary permits at the federal and state levels before proceeding to use eminent domain, and he wants a pipeline company prevented from using eminent domain while FERC is considering the company’s request for a material change in a certificate of public convenience and necessity.
A discussion draft bill sponsored by Reps. Bobby Rush (D-Ill.), Paul Tonko (D-N.Y.), and Pallone includes those Pallone goals and a host of others, especially to address climate change. The discussion draft of the CLEAN Future Act was released Jan. 28 by Rush.
Carbon pricing, too
The draft would, among many other things, give FERC authority to approve carbon pricing as a means of addressing the costs associated with greenhouse gas emissions. That could be a large step too far for legislation in a divided Congress.
“Republicans continue to reject carbon taxes,” Rep. Greg Walden (R-Ore.), top minority member on the House Energy and Commerce Committee, warned during the Feb. 5 hearing.
Rep. Fred Upton (R-Mich.) had other things on his mind in addition to the Natural Gas Act. “We have unfinished work to reauthorize the Pipeline Safety Act, which expired in September,” he reminded the committee.