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APGA Files Response to Pipeline Filing

By Dave Schryver posted 02-22-2018 10:51 AM

  
On February 16, APGA submitted an answer to the Federal Energy Regulatory Commission in response to a filing made by the Interstate Natural Gas Association of America (INGAA), which represents pipelines. INGAA submitted its filing in response to an Industry Petition for Initiation of Show Cause Proceedings Directed to Interstate Natural Gas Pipelines and Storage Companies that APGA and several pipeline shippers had submitted to the Federal Energy Regulatory Commission (FERC) on January 31. In that petition, APGA and the pipeline shippers are requesting 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 its response to the Commission, INGAA urges the Commission to “reject the Petitioners’ request to circumvent the requirements of Section 5 of the Natural Gas Act.” INGAA also stated that NGA Section 5 places the burden of justifying a change to an existing rate on the proponent of the change and that the proposed “one-size-fits-all” approach suggested by the petitioners is inconsistent with the applicable statutory framework and inappropriate for interstate natural gas pipelines. APGA’s response communicates that the vast majority of public natural gas systems receive service under recourse rates—fully regulated cost-of-service based maximum rates under tariff, which means that they are not impacted by previously negotiated settlements and rate contracts. APGA also states that Commission action to correct the recourse rates of pipelines is in the public interest. APGA’s filing communicates that Commission action is warranted given that many pipelines have not had rates restated for many years—some for more than a decade.

A copy of APGA’s response, as we as the original joint petition, is available on the APGA website. For questions on this article, please contact Dave Schryver of APGA’s staff by phone at 202-464-2742 or by email at dschryver@apga.org.

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