The concept of an interim gas inventory charge (GIC) may be the most recent phenomenon challenging the entire gas industry. The idea of an interim is continually evolving and has been discussed by the Federal Regulatory Commission, proposed by one pipeline, and questioned by members of Congress. Review of those sources indicates that the new concept may go substantially beyond the commission's original notion of a GIC and may pose additional problems for the entire natural gas industry.
Birth of the GIC
FERC Order 500 largely readopted the provisions of Order 436. but included three provisions intended to address the Court's concerns regarding pipelines' take-orpay problems. Two provisions, the transportation crediting mechanism and the recovery mechanism for buyout and buydown costs, were intended to assist pipelines in resolving existing take-or-pay problems. The third mechanism, the GIC, was intended to help pipelines avoid recurrence of future take-or-pay problems.
Under Order 500, pipelines could use the crediting mechanism to reduce existing take-or-pay liabilities and would then use the recovery mechanism to recover on an equitable basis the take-or-pay costs actually incurred or which might arise as the result of litigation initiated as of a date certain. Under Order 5WG, issued by the commission on February 8, 1989, the last date to m v e r take-or-pay costs using the recovery mechanism was March31,1989. In an ideal world, the majority of open-access pipelines by this time would have buyout and buydown plans in place. Likewise, pipelines would have proposed and accepted FERC-approved GIC certificates, and the future effects of take-or-pay would be more certain. But the