FERC requests comments regarding changes to oil pipeline policy and data reporting
The Federal Energy Regulatory Commission (FERC) recently requested initial comments regarding potential changes to how it calculates its oil pipeline rate index and conducts data reporting.
By seeking comments on the proposed changes, FERC said it aims to ensure pipeline rates remain fair and reasonable.
FERC’s method of indexing permits oil pipelines to change rates subject to particular ceiling levels, as opposed to making cost-of-service filings. The ceiling levels change every July 1, with the index based upon industry-wide cost changes.
FERC currently utilizes Form No. 6 page 700, which provides a straight-forward presentation of oil pipeline jurisdictional costs and revenues. In a review of protests and complaints, a pipeline’s indexed rate change was alleged to be substantially higher than the pipeline’s cost changes.
The commission is considering whether it should deny index increases to any pipeline filing a Form No. 6 page 700 where revenues exceed costs by approximately 15 percent for each of the prior two years. FERC is also weighing if it should deny index increases that exceed the change in cost reported on page 700 by 5 percent.
FERC also may potentially apply the new criteria to costs directly associated with a pipeline’s proposed rates, in comparison to overall company costs and revenues currently reported.
