State Utility Commissioners back reform of interstate gas pipeline rates

The idea of retroactive refunds for overcharges by interstate natural gas pipelines got a boost Feb. 12 from an association representing state regulators of public utilities.

The board of directors of the National Association of Regulatory Utility Commissioners (NARUC) approved a resolution saying the Federal Energy Regulatory Commission (FERC) should be given the flexibility to order retroactive refunds when it finds that the rates charged by a gas pipeline no longer are fair.

The board endorsed the resolution at the Winter Policy Summit of its association. The resolution’s language in calling for a legislative fix reads much like the arguments for a change heard one week earlier during a hearing of the House Energy and Commerce Committee.

A bipartisan bill, H.R. 5718, pending in the House would allow FERC to order refunds that could be retroactive to the date a complaint was filed.

The NARUC resolution noted that under the Natural Gas Act, policies work to the disadvantage of customers seeking refunds from gas pipeline operators. Because the refunds cannot be retroactive, a pipeline company has an incentive to drag out a rate dispute as long as possible, delaying the day when the rates change.

At the same time, another facet of the Natural gas Act discourages customers from incurring the expense of filing a rate complaint under Section 5 of the act. A pipeline company can file a proposal for a rate increase under Section 4, rendering the Section 5 rate review moot.

“FERC should have more flexibility in its authority under NGA to, if proper and after due diligence review, allow for appropriate retroactive refund rates,” the NARUC resolution reads in part.

The resolution concludes that the board “supports federal legislation to reform the procedural and substantive provisions of the Natural Gas Act to allow for meaningful and timely opportunities to achieve appropriate relief from unjust and unreasonable rates and to allow FERC the discretionary authority to order, when appropriate, full and complete refunds.”