The U.S. Federal Energy Regulatory Commission has proposed extending the current method of funding the non-profit Gas Research Institute for a year and then going to a new approach.
The current funding mechanism, which would have expired Dec. 31, allows pipelines that are GRI members to discount a GRI surcharge that is approved by FERC and then remit to GRI only those funds they have actually recovered.
Although FERC extended the current funding mechanism, it recognized that it threatens the research, development, and demonstration efforts that GRI conducts for the benefit of gas consumers.
FERC proposal
FERC proposed to divide GRI research programs into two groups, core and non-core.
The core programs would include those that benefit gas consumers in general and cannot be captured by individual sectors of the industry.
They would be funded through a non-discountable, non-bypassable surcharge on all volumes transported by interstate pipelines.
The amount of the core surcharge would be based on FERC's review of the GRI core programs and throughput from the most recent year.
The non-core programs would include those that produce benefits for more limited groups, such as individual consumers, groups of consumers, specific industries, or groups of companies within an industry.
The non-core program would be voluntary.
FERC is exploring GRI's proposed funding mechanism for the non-core programs as well as a variety of other approaches.
FERC asked GRI to define core projects within 30 days of the time it issues the proposed rule.
Industry views
The American Gas Association agreed that funding for GRI core programs should be funded through a mandatory, non-discountable surcharge on all volumes transported by interstate gas pipelines.
AGA said, "In the current environment of gas-to-gas competition, where margins are slim and competitive pressures are increasing, AGA believes that a surcharge that collects equally on every cubic foot of gas moved through the interstate transportation system may be the only approach at the present time that assures funding for important core research."
The Interstate Natural Gas Association of America said the pipeline industry supports only voluntary research, because the competitiveness of the transportation market prevents pipelines from passing through a mandatory charge in all cases.
It said, "We oppose mandatory funding that reallocates shareholder money."
The Natural Gas Supply Association had no comment on the proposed rule but said, "GRI-related actions taken by FERC since December have led to fruitful discussions within companies and within the industry that have helped us better assess the role of cooperative research in our changing industry."
Copyright 1997 Oil & Gas Journal. All Rights Reserved.
