At FERC’s April open meeting, the Commission announced that it was launching investigations of the rates charged by two natural gas pipelines, Guardian and El Paso Natural Gas.
Why does it matter?
It has been over four years since FERC acted on its own initiative to launch an investigation of a pipeline’s rates. During the middle of the last decade this was an annual occurrence, with investigations being announced at one of the first three open meetings in each year. Following the passage of the Tax Cuts and Jobs Act of 2017 in late December 2017, FERC was focused on the filings it required for review of every pipeline’s implementation of the Act and so the annual announcement of rate investigations faded into the background.
What’s our view?
The announcement at April’s meeting is both normal and surprising. Normal, since ensuring just and reasonable rates is one of the key functions FERC performs under the Natural Gas Act, and which has been mentioned by both Commissioners Phillips and Christie as one of the key roles FERC should be playing. Surprising, because it has been more than four years since FERC has taken this step and because the investigation against El Paso Natural Gas was also partially premised on a cost and revenue study it was required to file under a prior rate settlement. The renewed interest by the Commission and the reliance on a cost and revenue study may mean that other pipelines are at risk for such investigations either this year or in the not too distant future.