FERC OKs new GRI funding agreement

The U.S. Federal Energy Regulatory Commission has approved an agreement that will shift funding for the Gas Research Institute (GRI) from surcharges on interstate gas use to industry and government sources by 2005. GRI, Chicago, is a non-profit organization that manages research, development, and commercialization programs for the industry. Last year, FERC proposed funding GRI's core programs, which benefit the general gas-consuming public, through a permanent surcharge on gas shipments.

Aug. 17, 1998

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GRI, Chicago, is a non-profit organization that manages research, development, and commercialization programs for the industry.

Last year, FERC proposed funding GRI's core programs, which benefit the general gas-consuming public, through a permanent surcharge on gas shipments. But opposition forced a negotiated settlement.

The agreement would continue industry funding for GRI's core and non-core R&D projects for 3 years: $164 million in 1998, $132 million in 1999, and $98 million in 2000. GRI will supplement those funds with revenues from other sources.

For 2001-04, industry would fund only core projects, which would be capped at $70 million in 2001 and $60 million/year for 2002-04.

During the 7-year period, FERC will allow pipelines to collect a two-part discountable volumetric and demand surcharge for GRI programs.

Reactions

Stephen Ban, GRI president and CEO, said the institute will begin shifting "into full alignment with the more flexible direction of today's energy marketplace.

"We feel this settlement will provide a solid foundation for maintaining and building a robust gas-related R&D program that will allow GRI to continue the delivery of high-value technology benefits for the industry and its customers well into the next century."

Ban praised FERC Chief Administration Law Judge Curtis Wagner Jr. "for his incredible ability to find compromise amidst what often seemed intractable and steadfast positions of various parties."

FERC noted, "The natural gas technologies developed with GRI funding over the past decade have enabled the natural gas industry to reduce the costs of gas to all classes of consumers. Moreover, new end-use technologies have provided gas customers with improved energy efficiency, lower energy bills, and more productive ways of using energy resources in residential and business applications."

Pipelines, producers, consumers, and many local distribution companies (LDCs) supported the agreement. GRI said some East Coast LDCs opposed it, arguing that allowing the GRI surcharge to be discounted in some regions of country, but not others, discriminated against some LDC customers.

The Interstate Natural Gas Association of America said, "This agreement reflects the willingness of the natural gas pipeline industry to help craft a long-term funding solution that will allow GRI to make the transition to self-sufficiency.

"Judge Curtis Wagner deserves high praise for driving a settlement that not only exceeds the industry's expectations but also provides closure on a divisive issue."