What’s the issue?
As Halloween approaches, it's only appropriate to highlight a fear most pipelines share, Section 5 rate investigations like the one just initiated into Vector Pipeline L.P.'s (Vector) rates. Meanwhile, moratoria and comeback dates are approaching for some pipelines, while others are in settlement negotiations, and initial briefs have been filed in the consolidated GTN XPress litigation.
Why does it matter?
Rate modifications are important signals for potential revenue changes, and how the Commission handles them can impact tariff adjustment negotiations and industry dynamics. Rates litigation provides critical precedential value to inform risk assessments, particularly when consolidated with environmental and market needs challenges as in the GTN XPress litigation.
What’s our view?
Vector looks to be substantially over-recovering based on its estimated return on equity. How the Fifth Circuit approaches the issues in the GTN XPress case regarding rolled-in rates, market need, and NEPA will be instructive with regard to differences in venue and potential developing splits, and FERC’s reply brief could demonstrate any evolution in its analysis.
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