[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] ----------------------------------------------------------------------- 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\ --------------------------------------------------------------------------- \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. --------------------------------------------------------------------------- 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. --------------------------------------------------------------------------- \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