FERC lowers the bar for obtaining market- based rates for natural-gas storage.
Kenneth Culotta is a partner at King & Spalding. Contact him at kculotta@kslaw.com.
The first regulatory changes following the passage of the Energy Policy Act of 2005 (EPACT) are starting to pick up steam—and encountering multi-faceted criticism—as the gas industry reacts.
On Dec. 22, 2005, the Federal Energy Regulatory Commission (FERC) issued a notice of proposed rulemaking (NOPR) related to the granting of market-based rates for natural-gas storage service. Its purpose: to amend FERC regulations to make it easier for storage providers to obtain market-based rate treatment, thereby encouraging the development of new storage facilities. Most market observers, including FERC, believe that additional underground gas storage infrastructure is necessary in the United States to mitigate the volatility of natural-gas prices and to help the United States compete in the worldwide market for imported liquefied natural gas (LNG). Yet at an open meeting held on June 15, 2006, FERC staff noted that there is currently only one natural-gas storage facility application pending at FERC.