โ Scribed by Smith, William H.
No coin nor oath required. For personal study only.
B proposal to modify the Federal Energy Regulatory Commission's (FERC's) ratemaking methods. the proposal's objective is to improve pipeline efficiency through automatic rate adjustments and incentive rate-of-return sharing. Elsewhere in this issue is a pipeline reaction to the proposal (see Richard G. Smead's "Pipelines & Rates" column).
From a state regulatory perspective, there is much to think about in the proposal, but two questions stand out. First, anything that promises lower transportation rates for consumers deserves consideration. The proposal is unclear about whether its sponsors believe savings in pipeline transportation costs would find their way back to producers or be passed forward to consumers. The most likely answer is that market forces, sometimes falling upstream and sometimes downstream, would allocate any savings. Lower transportation costs are something that producers and consumers should both find attractive.
Second, anything that improves the efficiency of rate-setting procedures could offer benefits to state ratemaking agencies. State commissions are eager to find ways to get away from the traditional rate-case process. Thus state
regulators would do well to look at the proposal to see if it any of its concepts can be applied to setting distribution rates at the state level.
๐ SIMILAR VOLUMES
## is a senior vice president of Colorado lnterstate Gas Company, a subsidiary of The Coastal Corporation. He is past chairman of the Rate Committee of the American Gas Association.
This article starts from the fundamental proposition that the federal government has not preempted the state's role with respect to the issue of natural gas bypass-that the state's role in matters of local concern involving energy policy has been left to the state. If that is not true, and, in fact,