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GasMart 2010: End-User Still Waiting on NGA Reform
A lot has changed over the last year, but one thing that’s stayed the same is a disparity between the Natural Gas Act (NGA) and the Federal Power Act (FPA) that prevents gas end-users from recouping transmission overcharges the way their counterparts do on the power side, according to Dave Ciarlone, manager of global energy services for aluminum producer Alcoa Inc.
Under the FPA, the Federal Energy Regulatory Commission (FERC) has authority to order reimbursement of overcharges back to the date the overcharges began. FERC can only order reimbursement for overcharges from the date of its order finding the overcharges took place.
“If you’re an end-user you’re probably being overcharged,” Ciarlone told attendees at GasMart 2010 in Chicago last week. What’s needed is modification of Section 5 of the NGA, something for which Ciarlone has been banging the drum since at least the previous GasMart in 2009 (see NGI, May 25, 2009).
Ciarlone rejects the suggestion that what he is seeking is retroactive ratemaking. “That’s a term that I reject on its face. It’s designed to start with a Congress-person who’s already predisposed to regulation and make it sound like somebody’s trying to change the rules after the game has started,” he said. “No one is talking about going back and redoing the rules of what fuel costs are. We’re just talking about going back and making sure the revenues collected produce the rate of return allowed.”
He said he understands the pipelines’ position and their responsibility to generate the best returns possible for shareholders. In cases in which excess revenues are alleged, it makes sense for a pipeline to delay the case as long as possible to continue collecting as much money as possible, he said. This happened recently at FERC when a case was delayed on procedural issues raised by pipelines, he said.
“The end-users run out of the wherewithal to sustain the complaint. There are a lot of complaints that I know about that aren’t even brought” for this reason, he said. “The gap in the rules can influence behaviors along the entire value chain.”
A major Section 5 case is currently under way at FERC (see NGI, May 10). A group of Northern Natural Gas shippers has called on FERC to terminate later this month a Section 5 complaint proceeding against the pipeline for overrecovery of its cost of service if the pipeline agrees not to seek a rate increase prior to or on May 1, 2011 or put higher rates into effect prior to Nov. 1, 2011 (see related story).
Sen. Maria Cantwell (D-WA) last year sought to include in the broad energy bill a proposal to make gas pipeline customers eligible for retroactive refunds, but it was defeated in committee. She indicated that she plans to offer the amendment again (see NGI, June 22, 2009).
Ciarlone said Cantwell’s amendment simply would let the NGA catch up to where the FPA has been for 20 years. He said the amendment is now looking for a home attached to an energy bill or similar piece of legislation and called on his fellow end-users to support it.
“Get involved in this,” he said. “Your senators are very eager to keep manufacturing jobs in their states. I know if you identified yourselves as impacted constituents there would be ears to hear your complaint.”
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