Championing Section 5 Reform: Refund Authority for FERC

The Natural Gas Act (NGA) and the Federal Power Act (FPA) establish the Federal Energy Regulatory Commission’s (FERC’s) authority to regulate natural gas and electric transmission entities, respectively. Both statutes allow individuals to file complaints that ask FERC to determine whether a given interstate transmission entity is charging a fair rate. If FERC determines a rate is unjust or unreasonable, the FPA allows FERC to order an electric transmission entity to refund any overcharges from the time the complaint was filed. The NGA, however, does not grant FERC refund authority in natural gas rate cases, creating .no incentive for transmission entities to timely finalize a rate case.

Interstate pipeline over-recoveries ultimately affect the prices that American households and businesses pay for energy. In 2022 alone, 20 of the most profitable interstate natural gas pipelines over-recovered a net $1.3 billion above a reasonable 12% rate of return1. Of the 20 pipelines surveyed, 70% over-recovered costs from their customers1. Public natural gas systems are not-for-profit, and FERC’s lack of refund authority for these over-recoveries is a significant challenge to keeping rates low for the communities they serve.

APGA supports legislation to amend the NGA and grant FERC the same refund authority in natural gas rate cases that it already has in electric rate cases under the FPA.

1. Natural Gas Supply Association (NGSA), NGSA 2023 Pipeline Cost Recovery Report: