FERC's new-pipeline pricing policy unclear about past reliance
✍ Scribed by Wiliams, George H. ;Nguyen, Phi H. D.
- Publisher
- John Wiley and Sons
- Year
- 2007
- Weight
- 670 KB
- Volume
- 16
- Category
- Article
- ISSN
- 0743-5665
No coin nor oath required. For personal study only.
✦ Synopsis
the Federal Energy 0 Regulatory Commission issued a statement of policy, Certification of New Interstate Natural Gas Pipeline Faci1ities.l It announced that the commission now favors "incremental" pricing for new pipeline expansion facilities (i.e., the costs of the new facilities are paid exclusively by the customers using those new facilities).' This prefere n c e for incremental pricing marks a significant change in the commission's policy regarding the pricing of new pipeline expansion facilities. Under its immediately prior p ~l i c y , ~ the commission permitted the costs of new expansion facilities to be included as part of the cost of the existing system (i.e., "rolled-in") if it could be shown that (1) the new facilities would benefit the existing system and (2) the rate impact o n existing customers is less than 5 percent. The purpose of this article is not to discuss the merits of the commission's policy shift, but rather to comment o n the timing of its implementation. While the commission articulates a "bright line" date for implementation of the new policy statement, the rationale for that date is untenable. This situation could lead to inequitable treatment for the cost of pipeline expansions already undertaken.