Natural gas consumers led by the Industrial Energy Consumers of America (IECA) have begun a campaign to encourage the Federal Energy Regulatory Commission (FERC) to get tough on pipeline rates. It is a two-pronged attack. One path seeks to persuade FERC to resume mandatory three-year reviews of interstate natural gas pipeline rates. The other aims to persuade Congress to amend Section 5 of the Natural Gas Act to provide FERC with refund authority.
The letter sent to Congress states that FERC Chairman Norman Bay and past Chairs Cheryl LaFleur, Jon Wellinghoff and Joseph Kelliher openly acknowledged the problem of pipeline overcharges and the need for Congress to pass legislation to address it. Wellinghoff, in an email, acknowledges the accuracy of that statement.
Tamara Young-Alien, FERC spokesperson, said the commission, which must ensure that pipeline rates are "just and reasonable," has made no decision on whether it will respond to the letter. The agency has authority to file rate cases independently and has done so in the past. In a letter former FERC Chairman Wellinghoff sent leaders of the Senate Energy Committee in 2013, he said the agency had done 10 rate reviews between 2009 and 2013. In seven of those instances pipelines signed consent decrees committing to lower rates.
"At that rate, pipeline rates would get reviewed every 10 years," complained Paul Cicio, IECA president. Shippers can file rate cases themselves but that can be a costly process, and FERC's inability to order refunds for past overcharges serves as a double disincentive, he added.
Cathy Landry, spokeswoman for the Interstate Natural Gas Association of America (INGAA), said if FERC were able to order refunds, a pipeline could be punished for charging the rate FERC had previously approved.
"Such a change in long-standing law would introduce significant financial uncertainty for regulated pipelines," she said. "From the start of a Section 5 proceeding until its completion at some undetermined date, a pipeline would no longer know its FERC-approved rate, and would be unable to calculate its revenues with certainty. This significant level of business risk and uncertainly would ultimately be reflected in the cost of capital across the entire pipeline sector, leading ironically to higher rates for service."
There seems little groundswell in Congress favoring pro-refund legislation. No bill has been introduced. Dan Schneider, press secretary to the House Energy and Commerce...