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more time to consider whether a filed rate increase is just and reasonable applies only to increases.

If a rate

filing calls for a decrease, there is no reason to extend the time for it to go into effect. Indeed, it would seem appropriate for a rate reduction to go into effect immediately, even though later review may suggest that even lower rates should be placed into effect. supports a 60-day notice period for rate increases, and a one-day notice period for rate decreases.

Accordingly, NGSA

Refund Obligations and Mandatory Periodic Rate Filings

Under Title X, the Commission would be authorized to impose refund obligations as of the date a pipeline files for any rate change, whether an increase or decrease. This is a change from the present statute, which arguably permits refunds only for rate increase filings.

NGSA agrees that potential refunds should accrue from the date of a rate filing, and that this refund obligation should extend down to whatever new level the Commission finds to be just and reasonable, regardless of what the previous rate approved by the Commission was. NGSA is concerned, however, that the present proposal would discourage pipelines from filing for rate decreases, since such a filing would expose a pipeline to unlimited rate reductions and retroactive refunds.

NGSA therefore recommends that pipelines be required to file new rate cases at some reasonably regular period, such

as three years.

Refunds should be available effective to

the date of the required filing. These refunds should

return all amounts collected in excess of that authorized

reasonable

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under rates finally judged by the Commission to be just and even if those approved rates are lower than previously approved rates, or the rates filed for by the pipeline.

The Commission's Rulemaking Authority.

NGSA has always believed that the Commission possesses adequate power under the Natural Gas Act to establish rates and charges, or to issue certificates of convenience and necessity or to abandon any facilities or services, by rulemaking. It further believes that the recent opinion of the United States Supreme Court in Mobil Oil Exploration and Producing Southeast, Inc., et al v United Distribution Companies, et al confirms this. NGSA believes this is a sound and necessary approach to the Commission's responsibilities and would not oppose the Senate bill

proposal.

We would only express a small concern that the legislative proposal could be seen as a suggestion that the Commission's rulemaking authority in this area is

inadequate. To the extent the proposal is an expression of

the sentiments expressed in the Mobil case, NGSA shares this

sentiment and recommends that a conference report or floor debate clarify that Congress is merely explicitly confirming what it believes to be the current state of the law, as interpreted by the Supreme Court. If, on the other hand, this proposal is intended as a procedural device to expand the Commission's substantive authority, NGSA submits that extensive study is warranted before any definitive action.

4. VEHICULAR NATURAL GAS

NGSA strongly opposes any reservation of state regulatory authority to impose price or other economic regulation on the sale of vehicular natural gas (VNG). Instead, NGSA recommends that legislation declare VNG sales shall be unregulated, and that the states are pre-empted from imposing any form of economic regulation.

State regulation of VNG sales will impede the use of VNG, a result directly contrary to the goal of encouraging domestic gas use as a substitute for imported oil.

Regulation of VNG prices by state public utility commissions will lead to the same types of inefficiencies and distortions that previously existed in the interstate gas markets. In addition, state regulations will inevitably vary across the map, making it more burdensome for potential sellers of VNG to operate in a nationwide market. Finally, some states are likely to establish substantial barriers to entry in the VNG sales business. For example, a seller of VNG in some States may need to qualify as a "public utility." Such high barriers to entry will restrict competition in VNG markets and contribute to the creation of monopoly power. In short, the best way to ensure that consumers can purchase VNG at the lowest possible price is through a competitive market, and NGSA supports efforts to promote and maintain that market free of regulatory

intervention.

5. PIPELINE SALES DEREGULATION

NGSA opposes the immediate statutory deregulation of both sales and transportation services as set forth in S. 570. NGSA believes that for the foreseeable future most interstate pipelines will continue to possess both monopoly and monopsony power, and that continued FERC oversight is appropriate and necessary. Unlike the "at-risk" pipelines that would be built under the proposed legislation, most existing interstate pipelines were built on an exclusionary basis (i.e., a monopoly) conditioned upon utility-style regulation as provided under the Natural Gas Act. The quid pro quo behind this regulatory "pact" remains to this day and should not be swept aside by deregulation. not mean that a lighter handed regulation of the pipelines' services is not appropriate in some circumstances.

This does

In the case of pipeline sales, NGSA has supported negotiated rates where the pipeline has achieved

comparability of service on its system.

Comparability,

however, is a very complex issue on which the Commission is developing policy and guidelines. Other inter-related issues, such as the pipeline's service obligation to its customers and customer conversion rights, also remain unresolved on many pipelines. Moreover, in some situations purely negotiated rates may be appropriate for some but not all of the pipeline's customers. In sum, the degree of regulation of the pipelines' sales service remains subject

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