The Federal Energy Regulatory Commission (FERC) Jan. 16 opened investigations and ordered hearings into three interstate natural gas companies to determine if the companies may be substantially over-recovering their costs of service, resulting in unjust and unreasonable rates. FERC also found that nine gas companies have complied with the filing requirements of Order No. 849 and terminated their FERC Form 501-G proceedings without any further action.
The actions stem from July 2018, when the commission issued Order No. 849, requiring each interstate natural gas pipeline to file a one-time report, called FERC Form No. 501-G. Specifically, the form calls for each company to provide a rough estimate of its return on equity before and after the passage of the Tax Cuts & Jobs Act of 2017 and changes to the commission’s income tax allowance policies in response to rulings by the D.C. Circuit.
The Jan. 16 orders initiating the investigations follow the commission’s review of the FERC Form No. 501-G and other filings submitted by Bear Creek Storage Co. (RP19-51-000), Northern Natural Gas Co. (RP19-59-000) and Panhandle Eastern Pipe Line Co. LP (RP19-78-000, RP19-78-001).
FERC is concerned that the level of earnings for each company may exceed their actual costs of service, including a reasonable rate of return on equity.
The investigations and hearings will determine whether the existing rates are just and reasonable in accordance with section 5 of the Natural Gas Act (NGA). The commission has not yet determined a just and reasonable return on equity for each company, and therefore set this issue, among others, for hearings before FERC’s administrative law judges. FERC directed each pipeline to file a cost and revenue study for the latest available 12-month period within 75 days of the issuance of its order.
The nine companies whose FERC Form 501-G proceedings were terminated without further action are: ETC Tiger Pipeline (RP19-80-000), Gulfstream Natural Gas System LLC. (RP19-52-000), Horizon Pipeline Co. LLC (RP19-68-000), MIGC Inc. (RP19-69-000), Millennium Pipeline Co. LLC (RP19-65-000), North Baja Pipeline LLC (RP19-71-000), Portland Natural Gas Transmission System (RP19-70-000), Vector Pipeline LP (RP19-60-000) and White River Hub LLC (RP19-50-000).
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