Natural gas municipal entities and industrial gas consumers have called on Congress to reject efforts to allow the interstate pipelines to collect a tracker fee — or tax — on top of the existing user fees from customers as part of pipeline safety reauthorization legislation.
Local distribution companies and other customers pay user fees in their base rates to interstate pipelines, which go toward funding Pipeline Hazardous Materials and Safety Administration (PHMSA) pipeline safety inspections and other programs, such as one-call notification. A tracker mechanism would allow an interstate pipeline to recover increased user fees without undergoing the scrutiny of the Federal Energy Regulatory Commission, said a spokesman for the American Public Gas Association (APGA).
“We express our strong opposition to any provision as part of pipeline safety legislation that would permit pipelines to bypass the Natural Gas Act just and reasonable standard through a tracker mechanism,” wrote the APGA and the Industrial Energy Consumers of America in a letter Tuesday to Rep. John Mica (R-FL), chairman of the House Transportation and Infrastructure Committee.
“The ‘tracker’ approach is unsound both because it virtually guarantees double recovery of user fees by pipelines and double payment of such fees by customers and because it permits pipelines that are already overrecovering their cost-of-service to nevertheless pass on such user fees without having their rates scrutinized by the agency charged with ensuring that pipeline rates are just and reasonable, the Federal Energy Regulatory Commission,” the two gas groups said.
In the current fiscal year, interstate gas pipeline have been assessed a user fee of $234.62 per mile based on 299,894 miles of pipeline. The fees are collected from their downstream customers and paid directly to PHMSA.
As far as the two groups are aware, a tracker mechanism has not yet been included in the pipeline safety legislation that is either pending or has emerged from the House Energy and Commerce Committee or the Senate Commerce Committee, the APGA spokesman said (see Daily GPI, July 28; May 6). However, the group noted that efforts are under way to include such a mechanism in the House Transportation measure.
“While no legislation has been proposed to authorize the recovery of PHMSA user fees via a FERC pipeline tracker, it is important to note that PHMSA user fees have risen significantly in recent years and that the lion’s share of this increase is attributable to distribution pipeline regulation and grants to the states that largely are intended to fund the regulation of distribution pipeline safety,” said the Interstate Natural Gas Association of America (INGAA), which represents interstate gas pipelines.
“Given the impetus for expanded pipeline safety regulation that will come with reauthorization of the Pipeline Safety Act, PHMSA user fees are likely to increase even more. Consequently, it makes sense to consider and be open to discussing ways to recover these costs that would be administratively efficient and equitable,” INGAA said.
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