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APGA Testifies to Support Protecting Consumers from Pipeline Overcollections

By Dave Schryver posted 02-06-2020 11:31 AM

  
On February 5, Rich Worsinger, Director of the municipal utility Wilson Energy located in Wilson, N.C., testified on behalf of the American Public Gas Association (APGA) before the House Energy and Commerce Committee’s Subcommittee on Energy at a hearing titled, "Modernizing the Natural Gas Act to Ensure it Works for Everyone." Mr. Worsinger strongly supported amending the Natural Gas Act to make it consistent with the Federal Power Act, ensuring that the Federal Energy Regulatory Commission (FERC) may order refunds when it has been proven that consumers were overcharged for the regulated transportation of energy to their homes and businesses. A copy of APGA’s testimony can be viewed here.

Under the Federal Power Act, if a rate complaint is filed and FERC later rules that the rates paid by the customers were unjust and unreasonable, FERC has the authority to make a just and reasonable rate effective from when the complaint case began. This means customers receive refunds, including interest, of the overcharges that persisted throughout the lengthy rate inquiry. This is not only fair but tempers the tendency of transmission providers to overcharge in the first place.

However, FERC does not have the same authority under Section 5 of the Natural Gas Act. A finding that interstate pipeline rates are too high and must be lowered can be made effective only after that determination, prospectively. There is no good reason to treat these energy consumers differently. Congress’ failure to amend the Natural Gas Act, in the same manner in which it amended the Federal Power Act in 1988 and 2005, has resulted in natural gas consumers being overcharged hundreds of millions of dollars by regulated interstate pipelines annually.

This is particularly concerning for public natural gas systems because about 95 percent are served by just one pipeline. Such a so-called ‘captive customer’ must rely on FERC regulation to determine that its monopoly pipeline is not overcharging. But the current system allows the pipelines to keep overcharges rather than refunding ratepayers.
APGA supports the passage of legislation, such as the “Protecting Natural Gas Consumers from Overcharges Act of 2020,” which was recently introduced in the House of Representatives by Congressmen Butterfield (D-N.C.) and Long (R-Mo.), and which would provide FERC with the ability to protect natural gas consumers from being overcharged by interstate pipelines.

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.
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