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.