Attachment page 2 of 4 contract relating thereto, except after [] sixty days' notice to the Commission and to the public. Such notice shall be given by filing with the Commission and keeping open for public inspection new schedules stating plainly the change or changes to be made in the schedule or schedules then in force and the time when the change or changes will go into effect. The Commission, for good cause shown, may allow changes to take effect without requiring the [] sixty days' notice herein provided for by an order specifying the changes so to be made and the time when they shall effect and the manner in which they shall be filed and published. (0) Authority of Commission to hold hearings concerning new schedule of rates. Whenever any such new schedule is filed the Commission shall have authority, either upon complaint of any State, municipality, State commission, or gas distributing company, or upon its own initiative without complaint, at once, and if it so orders, without answer or formal pleading by the natural-gas company, but upon reasonable notice, to enter upon a hearing concerning the lawfulness of such rate, charge, classification, or service; and, pending such hearing and the decision thereon, the Commission, upon filing with such schedules and delivering to the natural-gas company affected thereby a statement in writing of its reasons for such suspension, may suspend the operation of such schedule and defer the use of such rate, charge, classification, or service, but not for a longer period than five months beyond the time when it would otherwise go into effect; and after full hearings, either completed before or after the rate, charge, classification, or service goes in effect, the Commission may make such orders with reference thereto as would be proper in a proceeding initiated after it had become effective. If the proceeding has not been concluded and an order made at the expiration of the suspension period, on motion of the natural-gas company making the filing, the proposed change of rate, charge, classification, or service shall go into effect; provided, however, that any restatement of a rate filed with the Commission by a natural-gas company shall be deemed to be a proposed change of rate for purposes of this section. Where [] rates or charges are thus made effective, the Commission may, by order, require the naturalgas company to furnish a bond, to be approved by the Commission, to refund any amounts ordered by the Commission to keep accurate accounts in detail of all amounts receiv [], specifying by whom and in whose behalf such amounts w paid and, upon completion of the hearing and decision. order such natural-gas company to refund, with interest portion of such [] rates or charges by its decision fou’ justified. At any hearing involving a rate or charge to be [] changed, the burden of proof to show that the or charge is just and reasonable shall be upon the Attachment page 3 of 4 gas company, and the Commission shall give to the hearing and decision of such questions preference over other questions pending before it and decide the same as speedily as possible. $ 7174. Power of Commission to fix rates and charges; determination of cost of production or transportation. (a) Decreases in rates. Whenever the Commission, after a hearing had upon its own motion or upon complaint of any State, municipality, State commission, or gas distributing company, shall find that any rate, charge, or classification, demanded, observed, charged, or collected by any [] naturalgas company for any [] transportation or sale of natural gas subject to the jurisdiction of the Commission, or that any rule, regulation, practice, or contract affecting such rate, charge, or classification is unjust, unreasonable, unduly discriminatory or preferential, the Commission shall determine the just and reasonable rate, charge, classification, rule, regulation, practice, or contract to be thereafter observed and in force, and shall fix the same by order: Provided however, That the Commission shall have no power to order any increase in any rate contained in the currently effective schedule of such natural-gas company on file with the Commission, unless such increase is in accordance with a new schedule filed by such natural-gas company; but the Commission may order a decrease where existing rates are unjust, unduly discriminatory, preferential, otherwise unlawful, or are not the lowest reasonable rates. Any complaint or motion of the Commission to initiate a proceeding under this section shall state the change or changes to be made in the rate, charge, classification, rule, regulation, practice, or contract then in force, and the reasons for any proposed change or changes therein. If, after review of any motion or complaint and answer, the Commission shall decide to hold a hearing, it shall fix by order the time and place of such hearing and shall specify the issues to be adjudicated. The Commission shall render its decision. including therein its reasons for such decision, on whether to hold a hearing upon a complaint within 60 days after the filing of such complaint. (b) Refund authority. Wherever the Commission institutes a proceeding under this section, the Commission shall establish a refund effective date. In the case of a proceeding instituted on complaint, the refund effective date shall not be earlier than the date 60 days after the filing of such complaint nor later than 5 months after the expiration of such 60-day period. In the case of a proceeding instituted by the Commission on its own motion, the refund effective date shall not be earlier than the date 60 days after the publication by the Commission of notice of its intention to initiate such proceeding nor later than 5 months after the expiration of such 60-day period. Upon institution of a proceeding under Attachment page 4 of 4 this section, the Commission shall give to the decision of such proceeding the same preference as provided under Section [] 4 of this Act and otherwise act as speedily as possible. If no final decision is rendered by the refund effective date or by the conclusion of the 180-day period commencing upon initiation of a proceeding pursuant to this section, whichever is earlier, the Commission shall state the reasons why it has failed to do so and shall state its best estimate as to when it reasonably expects to make such decision. In any proceeding under this section, the burden of proof to show that any rate, charge, classification, rule, regulation, practice, or contract is unjust, unreasonable, unduly discriminatory, or preferential shall be upon the Commission or the complainant. At the conclusion, of any proceeding under this section, the Commission may order the [] naturalgas_company to make refunds of any amounts paid, for the period subsequent to the refund effective date through a date fifteen months after such refund effective date, in excess of those which would have been paid under the just and reasonable rate, charge, classification, rule, regulation, practice, or contract which the Commission orders to be thereafter observed and in force: Provided, That if the proceeding is not concluded within fifteen months after the refund effective date and if the Commission determines at the conclusion of the proceeding that the proceeding was not resolved within the fifteen-month period primarily because of dilatory behavior by the [] natural-gas company, the Commission may order refunds of any or all amounts paid for the period subsequent to the refund effective date and prior to the conclusion of the proceeding. The refunds shall be made, with interest, to those persons who have paid those rates or charges which are the subject of the proceeding. [] (0) [] The Costs of production and transportation. Commission upon its own motion, or upon the request of any State commission whenever it can do so without prejudice to the efficient and proper conduct of its affairs, may investigate and determine the cost of the production or [] transportation of natural gas by a natural-gas company in cases where the Commission has no authority to establish a rate governing the sale of such [] natural gas. OFFICERS JACK M. HILLIARD Florence. Alabama First Vice President Palo Alto, California JOHN M DÉMENT Second Vice President Huntsville, Alabama D. CHRIS ORTEGO Treasurer Los Alamos, New Mexico PAST PRESIDENT SANDY NOVICK Memphis, Tennessee EXECUTIVE DIRECTOR ROBERT S. CAVE GENERAL COUNSEL WILLIAM T. MILLER BOARD OF DIRECTORS WILLIS ALBERDA Sioux Center, lowa JOHN T. BRISCOE. JA. Monroe, Georgia KENNETH L. CRAIG Ft Defiance. Arizona CHARLES W. CROCKARELL Jackson, Tennessee SAMUEL DAVIS, JR. Tallahassee, Florida JOHN W. DUNFEY Middleborough, Massachusetts WM. JEFF ENGLISH Wrens, Georgia LARRY L. GROCE Smithville, Tennessee K. WAYNE HILL Nashville, Tennessee Cairo, Illinois JOHN W. LIVER Hamilton, Ohio Sevierville, Tennessee ANDY J. MASSICOTT SANDRA L. ROSS Amencus, Georgia CLAUDE M. THOMAS Brewton, Alabama GERALD D. TOLER Springfield, Missouri FRANK B. TURNER Covington, Georgia K. CHANNING VERBECK Franklin Park, Illinois BERNARD J. WEBER Philadelphia, Pennsylvania HARRY ZEHENDER Sunrise, Flonda April 12, 1991 VIA HAND DELIVERY Donald F. Santa, Jr., Counsel Re: Senator Wirth's "Gas Policy Reform Act," S.662, and "National Energy Efficiency and Development Act," S.741 and S.742; and the Administration's "National Energy Strategy Act," S.570. Dear Mr. Santa: On March 19, 1991, the American Public Gas Association (APGA) submitted a prepared statement for the Committee's hearing record regarding Title X of S.341 (the "National Energy Security Act of 1991"), certain amendments proposed by Senator Bingaman 'thereto, and the Administration's proposal to abolish the Federal Energy Regulatory Commission (FERC). In that statement, the APGA reserved the right to make further comment as the need arose. This supplemental statement provides the APGA's views on the regulatory issues and "accelerated pipeline construction" provisions of S.662, S.741 and S.742 (hereinafter collectively referred to as S.662) and the natural gas title of S.570. I. S.662, the "Gas Policy Reform Act" APGA shares the concerns regarding S.662 expressed by Mr. Ronald J. Binz, on behalf of the National Association of State Utility Consumer Advocates (NASUCA), in his testimony before the Committee. It is not clear to APGA that the provisions of this bill will meet its stated goal, to "increase the use of Donald F. Santa, Jr., Counsel April 12, 1991 natural gas in the United States," but may in fact decrease the use of natural gas because it will lead to increased rates for small customers, arbitrary abandonment of service, and the shifting of the risk to natural gas customers of cost responsibility for uneconomic pipeline facilities. Mr. Wirth was quoted in the "Gas Daily" on March 15, 1991, and in "The Energy Report" on March 18, 1991, as saying that past attempts to reform gas regulation have been stymied by "controversy between segments of the gas industry, each looking after its own interests." S.662 certainly would resolve a number of controversies, but all in favor of the pipelines! Controversies concerning pipeline monopoly service should be left to resolution before the appropriate regulatory body, FERC, where all segments of the natural gas industry and consuming public can make their interests known. Mr. Wirth was also quoted in those same articles as having said that "[t]he complicated adversarial regulatory system we have built up for regulating gas over the years has, in effect, kept gas from the people who need it." In truth, though, this regulatory the system has required pipelines to provide and maintain service to numerous small customers in many circumstances where the pipelines were otherwise unwilling to initiate or continue such service. Provisions of S.662 would unfairly shift costs and risks to customers through changes in rate design and would mandate the automatic "as-billed" flowthrough of producer demand charges to customers. Monopoly pipeline companies would be permitted to extract higher rates of return from firm services, and would be able to arbitrarily abandon sales service. Moreover, rather than increasing competition by encouraging new investors to construct pipelines, S.662 provides unfair advantages for existing pipeline companies. Thus, pipeline companies will be protected from both competition from new entrants and the risk of their investments. The captive natural gas customer, unlike the long distance telephone customer, does not have the physical capability to chose among a plethora of long distance interstate pipelines. Even if the construction of new pipelines is encouraged by this proposed legislation, these pipelines would be located in the production area and would not extend to the city gates of the great majority of natural gas distribution systems. Small distributor-customers have one, and only one, source of pipeline capacity to obtain their required gas supplies the pipeline that was required by the FERC (and before it, by the FPC) to serve their respective communities with firm sales service. Small customers do not have bargaining power, or storage facilities, or true market access. The pipelines |