After compelling 129 pipeline companies to submit rate information for review, the Federal Energy Regulatory Commission has nearly wrapped up its efforts to ensure natural gas consumers are benefiting appropriately from changes in federal tax law.
Commission Chairman Neil Chatterjee on March 21 said the agency has completed reviews for 102 out of 129 pipeline companies required to submit rate information, and it will soon finish the rest.
FERC finished the latest round of reviews on the evening of March 20, opening a Natural Gas Act Section 5 investigation against Stagecoach Pipeline & Storage Co. LLC to check for unreasonable rates. It halted action against 38 other pipelines that FERC staff found to be in compliance. (FERC docket RP19-439, et al.) In January and February, FERC also launched rate investigations from a batch of reviews.
The investigations followed a July 2018 ruling from the commission requiring each interstate natural gas pipeline to file a one-time report, FERC Form 501-G, providing a rough estimate of its return on equity. Among other things, FERC required pipelines to show how a reduction in the corporate tax rate from 35% to 21%, part of a federal tax overhaul, affected their cost-of-service rates.
The progress through the pool of pipeline companies demonstrates FERC's commitment to the task, Chatterjee said in his opening remarks at the March 21 commission meeting. He said he was "pleased at the progress we've made," and he promised "prompt action" on the remaining pipelines.
After the meeting Chatterjee declined to comment when asked if the commission expected targeted rate investigations to serve as a warning to other companies. Height Securities LLC energy analysts said in a January report that FERC, in going after prominent companies with return on equity just above the normal range, was trying to produce the largest amount of customer savings with the fewest Section 5 proceedings.
On Feb. 19, it launched a Section 5 rate investigation against Southwest Gas Storage Co. and released 20 companies from further action. (FERC docket RP19-257, et al.)
In January, FERC opened a Section 5 rate investigation against three companies, Bear Creek Storage Co., Northern Natural Gas Co. and Panhandle Eastern Pipe Line Co. LP, and released nine companies. After this round, energy research firm ClearView Energy Partners LLC said more pipelines could be investigated as FERC staff moved through its review of rate information from other companies. (FERC dockets RP19-51, RP19-59, RP19-78, et al.)
FERC has reviewed 30 more rate cases and they are pending commission action.