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FERC opened an investigation and ordered a hearing to determine if Southwest Gas Storage Co. may be substantially over-recovering its cost of service, resulting in unjust and unreasonable rates. FERC also found that twenty gas companies have complied with the filing requirements of Order No. 849 and terminated their FERC Form 501-G proceedings without any further action, finding their rates to be just and reasonable. In July 2018, FERC issued Order No. 849 which required each interstate natural gas pipeline to file a one-time report (Form No. 501-G) and provide a rough estimate of its return on equity before and after passage of the Tax Cuts & Jobs Act of 2017 and changes to the Commission’s income tax allowance policies in response to rulings by the D.C. Circuit.
The investigation and hearing on Southwest will determine whether the existing rates are just and reasonable in accordance with section 5 of the Natural Gas Act (NGA). The Commission has not yet determined a just and reasonable return on equity for Southwest Gas Storage, and therefore set this issue, among others, for hearing before FERC’s administrative law judges. FERC directed the company to file a cost and revenue study for the latest available 12-month period within 75 days of the issuance of its order. The 20 companies whose FERC Form 501-G proceedings were terminated without further action (RP19-274-000 et al.) are: American Midstream (AlaTenn); Big Sandy Pipeline, LLC; Bison Pipeline LLC; Black Hills Shoshone Pipeline, LLC; Centra Pipelines Minnesota Inc.; Central Kentucky Transmission Company; Chandeleur Pipe Line, LLC; Discovery Gas Transmission LLC; Dominion Energy Questar Pipeline; Elba Express Company, L.L.C.; Fayetteville Express Pipeline LLC; Garden Banks Gas Pipeline, LLC; Gulf Shore Energy Partners, LP; Gulf States Transmission LLC; KPC Pipeline, LLC; Lake Charles LNG Company, LLC; MarkWest New Mexico, L.L.C.; PGPipeline LLC; Southern LNG Company, L.L.C.; and Western Gas Interstate Company.
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On January 16, 2019, FERC initiated rate cases for three natural gas pipeline entities - Bear Creek Storage Company (RP19-51-000), Northern Natural Gas Company (RP19-59-000) and Panhandle Eastern Pipe Line Company, LP (RP19-78-000). FERC’s action stems from Order No. 849 (July 2018) which required each interstate natural gas pipeline to file a one-time report, called FERC Form No. 501-G, that called for a rough estimate of its return on equity before and after the passage of the Tax Cuts & Jobs Act of 2017 and changes to the Commission’s income tax allowance policies for Master Limited Partnerships in response to rulings by the D.C. Circuit. For these three pipeline entities, after review of the respective filings, FERC is concerned that the level of earnings for each company may exceed their actual costs of service, including a reasonable rate of return on equity. The investigations and hearings will determine whether the existing rates are just and reasonable in accordance with section 5 of the Natural Gas Act (NGA). FERC directed each pipeline to file a cost and revenue study for the latest available 12-month period (test period) within 75 days of the issuance of its order. They permitted the natural gas pipeline entities to include a six-month projected analysis of changes to the test period. For more information, click on the following link:
https://www.ferc.gov/media/news-releases/2019/2019-1/01-16-19.asp?csrt=15543445796620684994#.XEYETFxKgdU |
Dr. Paul DumaisCEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more. Archives
May 2024
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