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FERC initiates pipeline rate investigation

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World Pipelines,

The Federal Energy Regulatory Commission (FERC) has opened an investigation and ordered a hearing to determine if Southwest Gas Storage Co. may be substantially over-recovering its cost of service, resulting in unjust and unreasonable rates. FERC also found that twenty gas companies have complied with the filing requirements of Order No. 849 and terminated their FERC Form 501-G proceedings without any further action.

These actions stem from FERC Order No. 849, issued in July 2018, which required each interstate natural gas pipeline to file a one-time report called FERC Form No. 501-G. In this form, each pipeline company provided a rough estimate of its return on equity before and after passage of the Tax Cuts & Jobs Act of 2017 and changes to the Commission’s income tax allowance policies in response to rulings by the D.C. Circuit.

The order initiating the investigation follows the Commission’s review of the FERC Form No. 501-G and other filings submitted by Southwest Gas Storage Co. (RP19-257-000). The Commission is concerned that the level of earnings for the company may exceed its actual cost of service, including a reasonable rate of return on equity.

The investigation and hearing will determine whether the existing rates are just and reasonable in accordance with section 5 of the Natural Gas Act (NGA). The Commission has not yet determined a just and reasonable return on equity for Southwest Gas Storage, and therefore set this issue, among others, for hearing before FERC’s administrative law judges. FERC directed the company to file a cost and revenue study for the latest available 12 month period within 75 days of the issuance of its order.

The 20 companies whose FERC Form 501-G proceedings were terminated without further action (RP19-274-000 et al.) are: American Midstream (AlaTenn); Big Sandy Pipeline, LLC; Bison Pipeline LLC; Black Hills Shoshone Pipeline, LLC; Centra Pipelines Minnesota Inc.; Central Kentucky Transmission Company; Chandeleur Pipe Line, LLC; Discovery Gas Transmission LLC; Dominion Energy Questar Pipeline; Elba Express Company, L.L.C.; Fayetteville Express Pipeline LLC; Garden Banks Gas Pipeline, LLC; Gulf Shore Energy Partners, LP; Gulf States Transmission LLC; KPC Pipeline, LLC; Lake Charles LNG Company, LLC; MarkWest New Mexico, L.L.C.; PGPipeline LLC; Southern LNG Company, L.L.C.; and Western Gas Interstate Company.

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