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Koch Denied Market-Based Rates
FERC yesterday ruled that Koch Gateway Pipeline failed to meetthe burden of proof in its request for market-based rate fortransportation services, causing it to reverse a 1997 initialdecision by an administrative law judge.
Commissioner Curt Hebert Jr. noted that while he agreed Koch didnot show it lacked market power as required by FERC’s policystatement on market-based transportation rates, he was “concernedthat the policy statement may present too impenetrable a standard”for pipelines seeking such authority.
“I am troubled that if a pipeline such as Koch, which heavilydiscounts many of its services in order to meet the competition,cannot be found under the policy statement to be lacking marketpower, [then] under what circumstances will it be possible for thepolicy statement to encourage market-based rates.” He asked theCommission to revisit its policy statement.
Commissioner Breathitt also believes another look at the policystatement is warranted. “In my view, this is an appropriate time tosee if our current standards are appropriate in today’s natural gasmarket,” she noted. She believes the notice of proposed rulemakingon short-term transportation capacity, which FERC issued in lateJuly, will provide an opportunity for the Commission to rethink itspolicy on market-based rates.
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