FERC will review costs and revenues for Maritimes & Northeast Pipeline in hearings initiated under Section 5 of the Natural Gas Act, according to an order voted out at the Commission’s meeting Wednesday.

Chairman Pat Wood called the case a “first.” Normally pipelines file Section 4 rate cases on their own. Section 5 authorizes FERC to initiate its own rate case for the pipeline and begin hearings if it believes the pipeline’s rates might not be “just and reasonable.”

The Maritimes order said the Commission had issues with a cost and revenue study that the pipeline filed in May. Maritimes & Northeast, which had its certificate and initial rates approved in 1997 before construction, filed new rates based on operations last December. FERC found the initial underlying cost and revenue study to be deficient.

There “are issues of material fact regarding the justness and reasonableness of Maritimes’ rates that require further investigation,” the FERC order said [RP02-134-001]. The Commission action was in response to protests filed by Mobil Natural Gas Inc. and the Province of Nova Scotia to Martimes’ cost-and-revenue filing. It directed an administrative law judge to convene a prehearing conference on the matter within 20 days.

Wood said he wanted staff to move the case rapidly, noting he was familiar with one rate case that went on for 38 months. Rate cases can typically take two years.

The chairman also said he had been pressed by shippers not to wait for complaints, but to initiate more investigations of pipeline rates. He said his “general thought” on that subject was that “as long as the pipelines are investing in expanding their pipeline plant and making investments to broaden and increase the needed transmission highway for natural gas, even if they’re over-earning, I’m less inclined to support initiating action — unless it’s way out of line.” For pipelines that are not investing in their systems “that certainly might be an issue we would take a look at. There’s certainly a need for expansion in our pipeline grid.”

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