Special Rate Treatment Allowed Natural Gas Pipeline Production Programs

A study examined rulings by the Federal Energy Regulatory Commission (FERC) and its predecessor, the Federal Power Commission (FPC), which afforded certain natural gas pipeline companies financial assistance to conduct natural gas exploration and production programs by allowing such companies to charge special prices for the gas they produced. The rulings, initially made by the FPC, were designed to permit special rate treatment of some interstate pipeline companies in the sale of gas produced from bases acquired on or after October 8, 1969, to offset the cost of exploration not incurred by intrastate pipeline companies. Prior to the Natural Gas Policy Act, enacted November 8, 1978, intrastate natural gas prices were substantially higher than interstate gas prices; the act will eventually eliminate this price disparity. Careful examination was made of the largest two of the four companies given special rate treatment, while limited information was gathered on the remaining two companies. The report addressed the FPC rulings which permitted the companies special rate treatment and FPC/FERC administration and monitoring of the programs.