FERC SLATES GAS PIPELINE RATEMAKING HEARING

The Federal Energy Regulatory Commission has scheduled a Jan. 8 public conference to discuss current issues in gas pipeline rate reform. On May 30, 1989, FERC issued a pipeline rate policy statement that did not endorse specific methods but stressed rates should promote economic efficiency, ensure nondiscriminatory rates for all customers, and prevent cross-subsidization between sales and transportation services.

Dec. 17, 1990

2 min read

The Federal Energy Regulatory Commission has scheduled a Jan. 8 public conference to discuss current issues in gas pipeline rate reform.

On May 30, 1989, FERC issued a pipeline rate policy statement that did not endorse specific methods but stressed rates should promote economic efficiency, ensure nondiscriminatory rates for all customers, and prevent cross-subsidization between sales and transportation services.

FERC said the gas industry has gained more experience with transportation rate issues since then, noting parties to rate proceedings have developed records and written briefs. FERC has ruled on a number of settlements with respect to whether a pipeline's rates concur with the policy statement.

FERC CONCERNS

FERC said the hearing should focus on matters not discussed in the policy statement that have become important to the industry, such as design of rates for open access contract storage services, for incremental facilities of existing pipelines, and for new pipelines.

It also is concerned over whether or not its rate designs result in a level playing field.

FERC also said various groups have suggested certain procedural recommendations.

An example is whether it is appropriate for rate design cases to be consolidated with other proceedings where terms and conditions for pipeline services are at issue-such as natural gas inventory charge proceedings. Thus, a pipeline's rates for services and terms and conditions for those services may be considered by the parties at the same time.

The commission said the hearing will help it "to determine whether to stay the course with individualized rate designs or to in whole or in part consider rate design in a generic fashion."

But it stressed parties in current proceedings should not assume that the commission is abandoning its policy or that cases should be delayed.

INGAA'S RESPONSE

John Daly, executive vice president of Columbia Gas System Inc. and chairman of Interstate Natural Gas Association of America, said Ingaa is seeking a 30 day delay in the hearing.

"We are pleased that they are going to look at it again, but we feel we need a little more time to prepare."

Daly said cost of service ratemaking "is too rigid and is simply outdated."

Pipelines are facing increased risk in the marketplace and should be given incentive ratemaking, he added.