The Natural Gas Act (NGA) governs the relationship between interstate natural gas pipelines and their customers. The NGA dictates that the rates interstate pipelines charge their customers must be “just and reasonable.”
However, interstate pipelines are monopolies in their service areas and have over-recovered beyond a just and reasonable rate for natural gas transportation. In fact, 95 percent of APGA’s city- and community-owned utility members are served by one pipeline, which means there are no market forces to constrain customers’ rates. Watch APGA's video explaining the Section 5 issue.
The NGA gives the Federal Energy Regulatory Commission (FERC) authority to order pipelines to lower the rates going forward if they are found overcharging; however, FERC cannot order the pipeline to refund overcharged customers. Without the threat of refunding overcharged customers, pipelines have the incentive to delay the complaint proceedings as long as possible since they will keep every penny of over-recovery.
According to a 2015 Natural Gas Supply Association study, pipelines over-collected $3 billion beyond a just and reasonable rate. This means that homeowners and businesses paid an extra $600 million per year more than they should have.
Congress must amend Section 5 of the Natural Gas Act to provide FERC with the authority to refund overcharged pipeline customers back to the date of the filing of the initial complaint at FERC. This same refund authority already exists for electric customers under Section 206 of the Federal Power Act.
Every sitting FERC Chairman and Commissioner has supported Section 5 reform regardless of party affiliation, proving this is a bipartisan issue.
What can you do?
APGA urges locally-owned natural gas utilities to contact their members of Congress and ask them to pass legislation to reform Section 5. This will protect businesses’ competitiveness and homeowners’ family budgets from artificially inflated energy costs due to over-charging by interstate pipelines.
To contact your senator, click here.
To contact your representative, click here.