On January 31, APGA joined several individual producers—the American Forest and Paper Association, Independent Petroleum Association of America, Natural Gas Supply Association, and Process Gas Consumers Group—in filing a petition asking the Federal Energy Regulatory Commission (FERC) to issue show cause orders requiring interstate natural gas pipeline and storage companies to file cost/revenue studies, including current costs/revenues and the new tax rates, to determine if they are over-recovering as a result of the new tax law, and if so, order a reduction. The Tax Cuts and Jobs Act of 2017, which was signed into law in December, lowered the corporate tax rate from 35 percent to 21 percent. However, all pipeline rates continue to recover from ratepayers an income tax allowance assuming a 35 percent rate.
In the petition, APGA and the other groups communicate that “tax rates for regulated pipeline and storage companies have been reduced significantly, and there should be no reasonable legal dispute that their income tax allowances should be reduced accordingly. Long, drawn-out administrative proceedings are not required and serve only to allow pipelines or storage companies to retain cost over-recoveries that are not allowed under the NGA in the interim.” The groups also states that “Section 5 relief is prospective only; thus, an expedited ruling on the merits is required to afford consumers the rate relief to which they are due as soon as possible.”
APGA also raised this issue on January 3 in a letter to FERC Chairman McIntyre urging the Commission to act promptly to ensure that the recourse rates paid by customers of natural gas pipelines are reduced to reflect the lower corporate tax rate. A copy of APGA’s letter to Chairman McIntyre and the petition referenced in this article are available on the APGA website. For questions on this article, please contact Dave Schryver of APGA staff by phone at 202-464-2742 or by email at
dschryver@apga.org.