Regulation: Workable competition substitutes for cost-based review

✍ Scribed by Hederman, William F. ;Reynolds, Robert J.

• Book ID: 102844580
• Publisher: John Wiley and Sons
• Year: 2008
• Weight: 502 KB
• Volume: 6
• Category: Article
• ISSN: 0743-5665
• DOI: 10.1002/gas.3410060609

✦ Synopsis

In Order 500, FERC proposed new rate options to deal with the need to have natural gas supplies on standby, to serve unpredictable, typically weather-sensitive loads. In FEiRC's discussion of the Gas Inventory Charge (GIC) it posed a new option for rate approval. If a pipeline could show that the markets it serves are "workably competitive," the GIC rates would not be subject to traditional costbased rate review.

The concept of workable competition is likely to increase in importance for a variety of natural gas issues. It should be helpful, therefore, to clarify what it means for a market to be workably competitive and to apply this meaning in the context of natural gas. This article is a summary of our testimony in one of the lead cases in the development of GICs.' It also discusses potential lessons for arguing workable competition in other natural gas pipeline matters.