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FERC's GulfTerra Orders: Chnages in the Pipeline

A new FERC decision veers away from congressional intent not to burden intrastate pipelines with interstate policies.
Fortnightly Magazine - May 2004
  • unusual circumstances to prove anomalously high risk.
  • Support depreciation rates. Intrastate pipelines may be ordered to use their intrastate depreciation rates when FERC finds NGPA depreciation proposals inadequately supported.
  • Remove charitable contributions. Intrastate policy notwithstanding, charitable donations are not valid operating costs for NGPA interstate service.

Rate Design Issues

  • State gathering separately. FERC's lodestar is to avoid disadvantaging customers wanting to buy gas off-system that only need to pay the transmission service rate.
  • Reflect cost variations for distance of haul. Previous mileage-sensitive intrastate ratemaking can create a presumption for NGPA interstate service rates.
  • Meet the heavier burden to justify affiliate discounts. Identify service alternatives for affiliates. Compare rates at affiliate and non-affiliate receipt and delivery points. Show that basis differentials determine contract rates.

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