hether new facilities should be "rolled-W in" or priced "incremencally," has been one of the most hotiy contested and most confusing of the ordinary rate issues left to resolve for pipelines. In 1991, it was probably the most significant issue causing Order 555 to be put on hold.
Recently, the debate has escalated. In June, the D.C. Circuit remanded a Great Lakes Transmission case to FERC, one in which the cornmission had required incremental treatment of new mainline facilities. The court found that the commission had not adequately justified its departure from what the court found was longstanding FERC precedent in favor of rolled-in treatment. Before that court decision, the commission had already made the facility-pricing issue a high priority. However, now the Great Lakes decision has added some urgency to getting the issue resolved.
Neither Answer Always Right
It is difficult to just@ one hard-and-fast rule as to whether a facility should be rolled-in or incremental. FERC has been trying to craft quantitative tests that would weigh new-facility cost against the benefits derived by the existing customers of the pipeline. Often, however, this quantitative approach does not work very well, because the benefits that existing customers receive from a new facility can be qualitative. They take the form of enhanced reliability, expanded supply access, additional marketability of released capac-Richard G. Smead IS vice PA~S/-ity, or other dent, regulatory afiairs, of Colo-rado Interstate Gas, a subsldiaryof Coastal Cop, He Is a past chairmerits in serman of the Rate Committee of the vice that American Gas Association.