Has rate regulation become obsolete for natural gas pipelines?
On Jan. 30, FERC will hold a public conference to review the financial health of the pipeline industry. It will ask whether its regulatory framework still works; whether pipelines can still attract new capital for investment. Does rate policy threaten the financial integrity of the pipeline industry? That very question may come before the Commission. Nevertheless, FERC need not look far for an answer. If the pipeline industry should lie at risk, the cause may go no farther than the Commission itself. In fact, FERC ratemaking policy for gas transportation service now appears to jeopardize the ability of pipelines to recover costs.