On February 19, the Federal Energy Regulatory Commission (FERC) found that 20 gas companies have complied with the filing requirements of Order No. 849 and terminated their FERC Form 501-G proceedings without any further action. Last year, FERC moved to address the impact of the lower corporate tax rate—The Tax Cuts and Jobs Act of 2017 lowered the corporate tax rate from 35 percent to 21 percent—by approving Order No. 849, which requires interstate pipelines to file a one-time report, called FERC Form No. 501-G, on the rate effect of the new tax law and changes to FERC’s income tax allowance policies.
APGA was one of the first—if not the first—groups of pipeline customers to request that FERC take prompt action so that ratepayers would justly receive the rate benefit from lower federal income tax payments owed by the pipelines. APGA also filed comments in April in response to the proposed rule which, among other things, communicated that the vast amount of public natural gas systems are recourse rate shippers that rely on FERC to ensure that their rates are just and reasonable under the Natural Gas Act.
On February 19, FERC also opened an investigation under Section 5 of the Natural Gas Act to determine if Southwest Gas Storage Co. may be substantially over-recovering its cost of service, resulting in unjust and unreasonable rates. Southwest Gas Storage’s FERC Form No. 501-G shows a Total Estimated Return on Equity of 18.8 percent after adjustment of its tax allowance.
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.
APGA’s comments to FERC 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.