Intervention at the FERC is one of the most critical functions of a state regulatory agency in its gas program. Many states have recognized this, and keep an effective presence on North Capitol Street. Others are ineffective or don't try. Why is state intervention important? How much should it cost? What's the best way to do it? State regulators frequently have to justify or rejustify the costs of their interventions in FERC proceedings. Other state commissions that have not been active in FERC cases wonder whether they should get active. New commissioners sometimes wonder why FERC cases are such a big deal.
If the gas business is headed towards deregulation at the federal level, why should a state agency spend five-, six-, or seven-digit amounts to take part in the deregulatory process?
Tails and Dogs
The first basic truth in gas regulation is that direct state regulation only wags the tail. The bulk of the dog is regulated by the FERC. Just as an example, gas customers in Iowa pay their utilities just about $700 million every year for gas service. Fully 75 percent of that amount represents purchased gas cost. State rate cases only deal with the remaining 25 percent. The actual percentage would be different in other states, but it would be significantly lower @ states with their own gas production or with extremely high distribution costs.