[Federal Register Volume 61, Number 87 (Friday, May 3, 1996)]
[Notices]
[Pages 19930-19931]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11047]



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DEPARTMENT OF ENERGY
[Docket No. PL94-4-001]


Pricing Policy For New and Existing Facilities Constructed by 
Interstate Natural Gas Pipelines; Order Denying Rehearing

Issued: April 29, 1996.
    On May 31, 1995, the Commission issued a Statement of Policy 
(Policy Statement) on the approach the Commission intended to follow in 
establishing rates for new construction of pipeline facilities.\1\ The 
Policy Statement focused on whether projects would be priced on a 
rolled-in basis (rolling-in the expansion costs with the existing 
facilities) or an incremental basis (establishing separate cost-of-
services and separate rates for the existing and expansion facilities). 
The Policy Statement provided that a preliminary determination of rate 
design would be made when the pipeline filed its certificate 
application for the project. Fourteen parties seek rehearing and 
clarification of the Policy Statement.\2\
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    \1\ Pricing Policy For New And Existing Facilities Constructed 
By Interstate Natural Gas Pipelines, 71 FERC para. 61,241 (1995).
    \2\ Alberta Department of Energy; American Forest and Paper 
Association; Fuel Managers Association; Great Lakes Gas Transmission 
Limited Partnership; JMC Power Projects; Midland Cogeneration 
Venture Limited Partnership; Natural Gas Supply Association; 
Northern Illinois Gas Company; Public Service Electric and Gas 
Company; Selkirk Cogen Partners, L.P.; UGI Utilities, Inc.; United 
Distribution Companies; Viking Gas Transmission Company; Washington 
Natural Gas Company.
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Summary of the Requests for Rehearing and Clarification

    Some parties contended the Policy Statement did not adopt a 
sufficiently strong presumption in favor of rolled-in rates. Others 
raised questions about how the presumption will operate, i.e., is it a 
bright-line test, how will the rate impact be determined in specific 
cases, and how thoroughly will the Commission review projects that meet 
the presumption? The parties also raised questions about how the 
Commission will weigh the system-wide benefits against the rate impact. 
In particular, some parties suggested the Commission should not 
consider several of the types of system-wide benefits which the 
Commission identified in the Policy Statement.
    The parties similarly raised questions about how the Commission 
will

[[Page 19931]]

determine whether mitigation of rate impact is needed and how the 
mitigation will be done. Some argued that no mitigation is needed when 
the benefits are proportionate to the rate impact, while others argued 
mitigation should apply in every instance when the rate impact exceeds 
5%.
    Finally, the parties raised questions about the procedures for 
addressing rate design questions in certificate proceedings. They 
requested clarification as to the role of shippers in the certificate 
proceedings, such as whether the shippers will be able to present 
evidence opposing the pipelines' proposed rate design. They also raised 
questions about how the declaratory order will be applied in subsequent 
rate cases under section 4 of the Natural Gas Act when pipelines 
propose rolled-in pricing.

Discussion

    The purpose of the Policy Statement was to provide the industry 
with guidance on the criteria the Commission would apply when 
evaluating rate design for new pipeline construction and to establish 
the procedures for making this analysis. In the Policy Statement, the 
Commission contemplated that the resolution of pricing methodology 
would take place in individual proceedings based on the facts and 
circumstances of the project at issue.\3\ The Commission finds that the 
issues raised in the rehearing requests generally are not susceptible 
to a generic resolution, but need to be considered in the context of a 
specific filing. Indeed, since issuing the Policy Statement, the 
Commission has addressed some of these issues in individual cases.\4\ 
Accordingly, the Commission declines to consider the issues raised in 
the requests for rehearing and/or clarification in this docket, but 
will consider such issues and arguments in the specific cases in which 
they apply.
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    \3\ 71 FERC at 61,915.
    \4\ See, e.g., CNG Transmission Company, 74 FERC para. 61,073 
(1996); Paiute Pipeline Company, 74 FERC para. 61,049 (1996); 
Northwest Pipeline Company, 73 FERC para. 61,353 (1995), reh'g 
denied, 75 FERC para. 61,008 (1996); El Paso Natural Gas Company, 73 
FERC para. 61,352 (1995); Southern Natural Gas Company, 73 FERC 
para. 61,085 (1995); Texas Eastern Transmission Corporation, 73 FERC 
para. 61,012 (1995).

    By the Commission.
Linwood A. Watson, Jr.,
Acting Secretary.
[FR Doc. 96-11047 Filed 5-2-96; 8:45 am]
BILLING CODE 6717-01-M