The Federal Energy Regulatory Commission denied Panhandle Eastern Pipe Line Co. LP's motion to drop a rate investigation against it, and the commission accepted and suspended tariff records proposed by the company for its natural gas transmission and storage services.
In a Sept. 30 order, FERC denied the company's motion to terminate the Natural Gas Act Section 5 rate investigation into pipeline rates and left it up to the commission's chief administrative law judge to determine whether to consolidate the Section 5 proceeding with the company's own Natural Gas Act Section 4 proceeding. Section 5 gives the commission authority to require changes in pipeline rates that are not "just and reasonable" under the Natural Gas Act. Section 4 allows a pipeline company to increase its rates by proving that such an increase is just and reasonable.
Customers of Panhandle, including Ameren Illinois Co., Consumers Energy Co., DTE Gas Co. and Archer Daniels Midland Co., had opposed the motion.
Panhandle had supported the motion by arguing that the rates in its Section 4 proceeding would become effective before the initial decision in the Section 5 proceeding. But FERC said the Section 5 proceeding could result in a ruling before the Section 4 rates become effective, "and thus the [Natural Gas Act] Section 5 finding may reset the refund floor for the NGA Section 4 proceeding." The commission also said the record in the Section 5 proceeding could apply to the Section 4 proceeding.
FERC also accepted and denied tariff records to be effective March 1, 2020, subject to a refund and the outcome of a hearing and technical conference, and it rejected a tariff proposal. FERC said some of the proposed tariff records did not prove to be just and reasonable, something claimed by the customers of Panhandle, a subsidiary of Energy Transfer LP. The commission called for a public hearing on the Panhandle filing and directed its staff to hold a technical conference to explore issues in the order, including
Panhandle had proposed increases and decreases in parts of its transmission and storage rates to become effective Oct. 1. The company proposed to base the rates on an overall annual cost of service of about $408 million and a rate base of over $1.1 billion. Panhandle said its cost of service was based on a return on equity of 14.67%, a cost of debt of 6.17%, and a capital structure of 36.71% debt and 63.29% equity. Based on these numbers, Panhandle said its overall rate of return would be 11.55%.
The company also proposed to eliminate some transportation and storage schedules and suggested tariff changes to its general terms and conditions.
On Jan. 16, FERC announced Section 5 rate investigations into Panhandle Eastern, Bear Creek Storage Co. and Northern Natural Gas Co. to determine if the companies had charged unreasonable rates. FERC Chairman Neil Chatterjee said in March that the agency had nearly completed its reviews of rate information for 129 pipeline companies to ensure that customers had benefited from changes in federal tax law. (FERC dockets RP19-78, RP19-257, RP19-1523)
