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FERC Must Reconsider Pipeline Reporting Rules

(CN) - The D.C. Circuit ordered the Federal Energy Regulatory Commission to reconsider its reporting requirements for interstate natural gas pipelines, saying the agency "failed to respond to the reasonable concerns of a dissenting commissioner."

In 2008 FERC adopted new reporting requirements that called for greater clarity, so users could better determine if pipelines were charging too much for operating costs.

The agency took action after discovering that pipelines were carrying over enormous fuel costs beyond what was consumed - $711 million in 2005, for example. This meant higher "fuel charges" for customers, who were billed a percentage of the retained fuel costs to offset the pipelines' costs.

FERC required pipelines to break down their costs, including showing the difference between the amount of gas received from shippers and the volume of gas consumed each month.

"In the commission's view, customers should only pay for the services they use," Judge Janice Rogers Brown explained.

The American Gas Association, a national trade group of gas utilities, agreed that reporting revisions were needed, but argued that "greater clarity regarding gas purchase and sales activities can be achieved."

The group wanted the reported information to be further broken down by function, such as transportation, storage or gathering. It also wanted pipelines "to include, by function, the amount of fuel waived or reduced as part of a discounted or negotiated rate agreement," the ruling states.

"This information, petitioner argued, was necessary to help customers determine whether pipelines were engaging in any inappropriate cross-subsidization," Brown wrote.

But FERC rejected the association's suggestions and stuck with its original proposal, despite a commissioner's dissent.

"While FERC is not required to agree with arguments raised by a dissenting commissioner, it must, at minimum, acknowledge and consider them," Brown wrote. "The commission failed to do so here."

The court granted the petition for review and remanded.


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