Fortnightly Magazine - November 2005

Focus on LNG Siting: A State Perspective

Congress revamps LNG and storage, giving broad new powers to FERC. Why the Feds still must consult with local authorities.

A major objective of the Energy Policy Act of 2005 (EPACT) is to counter the worsened conditions in the natural-gas market that began in 2000 and are expected to continue over the next several years—namely, tight natural-gas supplies and high, volatile gas prices caused by a distinct shift in the supply-demand balance. Any noticeable reductions in gas prices that might be effectuated by the act will have little impact on natural-gas prices for a number of years.

The Gas Storage Conundrum

Congress allows market-based rates. How will FERC respond?

As a rare amendment to a venerable statute, EPACT05 § 312, New Natural Gas Storage Facilities, made headlines, adding an option for interstate, market-based storage rate making. It would encourage new storage facilities by permitting FERC to authorize market-based storage rates, even when the applicant is unable to demonstrate it lacks market power. After authorizing such rates, FERC periodically must review them.The problem with the new law is that it does not specify those review periods.

Return on Equity: Gen Sector Issues

Ratemaking Special: A survey of recent retail rate cases for electric and gas utilities.

(November 2005) The results of annual survey of rates of return on equity authorized for major electric and natural-gas utilities—based on a sample of the retail rate cases conducted by state public utility commissions—show a vibrant and perhaps growing interest in traditional rate-of-return regulation.

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