FERC to Examine Gas Pipeline Rates and Clarify Electric Grid Queues
The Federal Energy Regulatory Commission (FERC) has set its sights on investigating the practices of interstate natural gas pipelines, particularly examining the bundling of gas pipeline capacity contracts with less-desirable, non-contiguous capacity. This practice has been criticized for possibly leading to unfair price increases for consumers. The inquiry comes in response to a petition filed by several associations including the American Gas Association (AGA), the American Public Gas Association (APGA), the Process Gas Consumers Group (PGCG), and the Natural Gas Supply Association (NGSA) in June 2022, which labeled the bundling practice as “unjust, unreasonable, and discriminatory”.
Despite the interstate gas pipelines’ defense, arguing the legality and appropriateness of the practice, FERC has decided to issue a “notice of inquiry” to further explore the issue without reaching an immediate conclusion. Casey Hollers, senior director of regulatory affairs and policy for NGSA, commended FERC’s decision, highlighting the negative impacts of such practices on pipeline service prices which ultimately affect a wide range of customers.
On the other side, a spokesperson for the Interstate Natural Gas Association of America defended the current policy, underlining the benefits of allowing pipelines to maximize revenue and usage of pipeline capacity. They warned that changes to the policy might require future rate increases to cover the cost of service for un- or underutilized capacity, disproportionately affecting captive customers.
Clarification on Electric Grid Access for New Generations
Parallel to addressing gas pipeline rate practices, FERC has also agreed to provide clarifications on its July 2023 order aimed at improving the process for new generation access to the transmission grid. This step comes in response to various requests for clarification on the initial order. FERC’s clarification will cover a broad range of topics including the roles of transmission providers and interconnection customers, the cluster study process, withdrawal and study delay penalties, and the consideration of alternative transmission technologies.
Fulfilling these clarifications, the commission has extended the deadline for transmission providers to submit compliance filings, acknowledging partially compliant filings by several energy companies and requiring further submissions to comply fully with the order.
Strengthening Federal-State Collaboration
In a move to foster cooperation and coordination on energy matters, FERC announced a new collaborative effort with the National Association of Regulatory Commissioners (NARUC). This initiative aims to address a variety of crucial topics including reliability, resource adequacy, gas-electric coordination, and the rapid evolution of energy sector technologies and infrastructure. FERC Chairman Willie Phillips emphasized the significance of this collaboration for enhancing the electric grid’s reliability, resilience, and affordability.
The newfound FERC-NARUC collaborative will hold its first meeting in the fall, continuing through to fall 2027. With participation from all sitting FERC commissioners and nominated representatives from state commissions, this group is poised to tackle the challenging and evolving landscape of the electricity sector together, indicating a concerted effort towards a more integrated and efficient energy infrastructure for the nation.
As both FERC and the energy sector at large move forward, these initiatives represent crucial steps towards addressing longstanding issues and paving the way for a more robust, fair, and efficient energy delivery system across the United States.
