[Federal Register Volume 61, Number 87 (Friday, May 3, 1996)]
[Notices]
[Pages 19930-19931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11047]
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DEPARTMENT OF ENERGY
[Docket No. PL94-4-001]
Pricing Policy For New and Existing Facilities Constructed by
Interstate Natural Gas Pipelines; Order Denying Rehearing
Issued: April 29, 1996.
On May 31, 1995, the Commission issued a Statement of Policy
(Policy Statement) on the approach the Commission intended to follow in
establishing rates for new construction of pipeline facilities.\1\ The
Policy Statement focused on whether projects would be priced on a
rolled-in basis (rolling-in the expansion costs with the existing
facilities) or an incremental basis (establishing separate cost-of-
services and separate rates for the existing and expansion facilities).
The Policy Statement provided that a preliminary determination of rate
design would be made when the pipeline filed its certificate
application for the project. Fourteen parties seek rehearing and
clarification of the Policy Statement.\2\
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\1\ Pricing Policy For New And Existing Facilities Constructed
By Interstate Natural Gas Pipelines, 71 FERC para. 61,241 (1995).
\2\ Alberta Department of Energy; American Forest and Paper
Association; Fuel Managers Association; Great Lakes Gas Transmission
Limited Partnership; JMC Power Projects; Midland Cogeneration
Venture Limited Partnership; Natural Gas Supply Association;
Northern Illinois Gas Company; Public Service Electric and Gas
Company; Selkirk Cogen Partners, L.P.; UGI Utilities, Inc.; United
Distribution Companies; Viking Gas Transmission Company; Washington
Natural Gas Company.
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Summary of the Requests for Rehearing and Clarification
Some parties contended the Policy Statement did not adopt a
sufficiently strong presumption in favor of rolled-in rates. Others
raised questions about how the presumption will operate, i.e., is it a
bright-line test, how will the rate impact be determined in specific
cases, and how thoroughly will the Commission review projects that meet
the presumption? The parties also raised questions about how the
Commission will weigh the system-wide benefits against the rate impact.
In particular, some parties suggested the Commission should not
consider several of the types of system-wide benefits which the
Commission identified in the Policy Statement.
The parties similarly raised questions about how the Commission
will
[[Page 19931]]
determine whether mitigation of rate impact is needed and how the
mitigation will be done. Some argued that no mitigation is needed when
the benefits are proportionate to the rate impact, while others argued
mitigation should apply in every instance when the rate impact exceeds
5%.
Finally, the parties raised questions about the procedures for
addressing rate design questions in certificate proceedings. They
requested clarification as to the role of shippers in the certificate
proceedings, such as whether the shippers will be able to present
evidence opposing the pipelines' proposed rate design. They also raised
questions about how the declaratory order will be applied in subsequent
rate cases under section 4 of the Natural Gas Act when pipelines
propose rolled-in pricing.
Discussion
The purpose of the Policy Statement was to provide the industry
with guidance on the criteria the Commission would apply when
evaluating rate design for new pipeline construction and to establish
the procedures for making this analysis. In the Policy Statement, the
Commission contemplated that the resolution of pricing methodology
would take place in individual proceedings based on the facts and
circumstances of the project at issue.\3\ The Commission finds that the
issues raised in the rehearing requests generally are not susceptible
to a generic resolution, but need to be considered in the context of a
specific filing. Indeed, since issuing the Policy Statement, the
Commission has addressed some of these issues in individual cases.\4\
Accordingly, the Commission declines to consider the issues raised in
the requests for rehearing and/or clarification in this docket, but
will consider such issues and arguments in the specific cases in which
they apply.
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\3\ 71 FERC at 61,915.
\4\ See, e.g., CNG Transmission Company, 74 FERC para. 61,073
(1996); Paiute Pipeline Company, 74 FERC para. 61,049 (1996);
Northwest Pipeline Company, 73 FERC para. 61,353 (1995), reh'g
denied, 75 FERC para. 61,008 (1996); El Paso Natural Gas Company, 73
FERC para. 61,352 (1995); Southern Natural Gas Company, 73 FERC
para. 61,085 (1995); Texas Eastern Transmission Corporation, 73 FERC
para. 61,012 (1995).
By the Commission.
Linwood A. Watson, Jr.,
Acting Secretary.
[FR Doc. 96-11047 Filed 5-2-96; 8:45 am]
BILLING CODE 6717-01-M
