The Ohio Public Utilities Commission (PUC) has proposed regulations to allow electric utilities to use fuel-cost clauses to recover gains or losses from trading Clean Air Act emission allowances....
Pipeline Asks for Market-Based Rates
The Federal Energy Regulatory Commission (FERC) has set for hearing a request by Koch Gateway Pipeline Co. (KGP) to charge market-based rates for firm and interruptible natural gas transportation services (Docket No. RP95-362-000). First, however, the FERC must conclude Docket No. RM95-6-000, which will delineate the circumstances under which it may approve market-based rates. Alternatives to Traditional Cost-of-Service Ratemaking for Natural Gas Pipelines, 70 FERC 61,385 (1995).Koch asked that its firm and interruptible customers be divided into two classes: those with
alternatives, and those without alternatives. The former would purchase firm and interruptible transportation services at market-based rates; the latter would purchase at cost-based rates, but would enjoy a number of other options as well.
KGP's analysis in support of market-based rates focused on 1,588 individual station location numbers (SLNs), or meter stations, across its system. If a third-party pipeline was located within a five-mile radius of an SLN, the SLN was considered a point with an alternative. Of the 1,588 SLNs examined, KGP stated that 1,325 had alternatives.
To determine KGP's right to implement market-based rates, the FERC will evaluate the pipeline's market power. (A staff paper issued in Docket No. RM95-6-000 stated that the FERC has flexibility under the Natural Gas Act in selecting ratemaking methods.) The FERC accepted the filing as a request for a declaratory order and will set the matter for hearing no later than October 1, 1996, when Docket No. RM95-6-000 should be completed.
Commissioner James J. Hoecker said that
market-based rates for firm and interruptible service constitute new territory, which the FERC is investigating on a generic basis. But Hoecker found it appropriate to examine the issue case by case, because KGP had done good investigative work, and he believes the FERC could learn from the proceeding.
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