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IECA: Customers Should Get Refunds for Overcharges by Gas Pipelines

October 14, 2015 By Cheryl Kaften

The Industrial Energy Consumers of America (IECA) and a roll call of companies and advocacy organizations sent out a letter on October 6 urging two influential Congressional committees –  the Senate Committee on Energy and Natural Resources and the House Committee on Energy and Commerce – to support legislation that would give the Federal Energy Regulatory Commission (FERC) the tools it needs to provide consumers with refunds when interstate natural gas pipeline companies overcharge consumers.

The refunds are badly needed, according to the findings of a 2015 study released by the Natural Gas Supply Association (NGSA). The researchers analyzed the cost recovery of 32 major pipelines, which represent 80 percent of the market. What they discovered is that, from 2009 through 2013, pipelines over-collected approximately $3.0 billion more than they would have collected on an assumed (and extremely generous) average 12 percent return on equity – allowed by FERC.

“FERC Chairman Norman Bay and past Chair[persons] Cheryl LaFleur, Jon Wellinghoff, and Joseph Kelliher have all openly acknowledged the problem and the need for Congress to pass legislation to address it,” the IECA correspondence said. “This is not a partisan issue. We urge you to amend Section 5 of the Natural Gas Act to provide FERC with refund authority.”

According to the letter, “Simply put, the current system is broken. Today, when a pipeline is found to be overcharging the consumers, it is allowed to keep the past, post-complaint overcharges – rather than giving consumers their money back. This is because FERC lacks the authority to make the corrected rates effective any sooner than the date of its final Order. This is not the case with electricity. Since 1988, the Federal Power Act has provided FERC with the authority to require reimbursement of electricity overcharges effective as early as the date of the initial complaint.”

“Refunding overcharges to customers is a fundamental right that is being denied because FERC does not have refund authority,” said IECA President Paul N. Cicio.

If the legislation were amended by Congress, refunds would take effect retroactively from the date that the Section 5 complaint is filed.

More than 30 companies and organizations signed the letter – among them, Association of Businesses Advocating Tariff Equity , American Forest & Paper Association, American Foundry Society, American Public Gas Association (APGA), Blair Rubber , Dow Corning, Eastman Chemical, Evonik, Georgia Association of Manufacturers., Glass Packaging Institute (GPI), Glass Manufacturing Industry Council, Guardian Industries, Indiana Industrial Energy Consumers (INDIEC), Industrial Energy Consumers of America (IECA), Industrial Minerals Association – North America, Kimberly-Clark, Lehigh Hanson, Linde, National Industrial Sand Association, Northwest Industrial Gas Users, Olin, Steel Manufacturers Association, USG, and Wisconsin Industrial Energy.

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