Growing gas storage depends on fair regulatory treatment.
Michel Marcoux is a partner in Bruder, Gentile & Marcoux LLP, a law firm in Washington, D.C. Contact him at email@example.com.</bio>
Customers of natural gas storage facilities use them to stockpile a lower-cost gas supply inventory when demand weakens. Later, they draw down the inventory to avoid higher, spot-market gas commodity prices when demand strengthens. That mitigation of gas commodity price volatility by storage facilities and storage-related services confers a vital macroeconomic benefit on the nation.
The Federal Energy Regulatory Commission (FERC) seeks to promote more storage facility construction by offering storage providers the carrot of what-the-market-will-bear, market-based rates in appropriate circumstances. The important role of market-based rates in the development of new storage infrastructure and related capacity and services has been obvious for years. For example, interstate natural gas pipeline companies have declared that new gas markets are attracted and retained by the ratemaking flexibility provided by market-based storage rates.1