Natural Gas Plan Needed To Provide Greater Protection for High-Priority and Critical Uses

EMD-81-27: Published: Mar 23, 1981. Publicly Released: Mar 23, 1981.

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Conventional sources of natural gas supplies are being depleted. Federal natural gas legislation clearly shows Congress' intent to ensure the efficient use of natural gas over the long term. It has had very limited success in previous attempts to restrict consumption and growth in the natural gas market through means of a coal conversion program and an end-use curtailment policy. Natural gas policies and strategies have been implemented at the State and local levels and by interstate pipeline companies to meet their economic self-interests and local needs. GAO reviewed the natural gas policies in nine States.

Some of the States reviewed had no curtailment policy or controls. Some issued no curtailment guidelines for utility companies under their jurisdiction but approved end-use curtailment plans on a case by case basis. One State directed utilities to file curtailment plans and suggested they follow the Federal priority-of-service categories but approved the utilities' plans whether or not such priorities were followed. The other States had developed a single statewide curtailment plan that local utilities were required to adopt and follow. The final use of natural gas did not necessarily conform to the Federal prioritized system of curtailment. Federal authority to control or regulate natural gas did not extend beyond delivery to utility companies. Federal efforts to control the attachment of new customers has been jurisdictionally limited. Of the 22 utility companies included in the GAO review, 18 were seeking new customers. GAO found that 75 of the 78 large industrial end-users contacted had installed an alternate fuel capability as a result of prior natural gas shortages. Of the large industrial end-users, 22 believed that future natural gas supplies would be adequate. GAO reviewed the growth of new hookup policies of three interstate natural gas pipeline companies and noted that all three were permitting their distributers to attach new customers. Two of the companies were not promoting gas for industrial boiler use.

Recommendations for Executive Action

  1. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretary of Energy and the Chairman of FERC should clearly communicate that the gas-for-oil program is temporary and not to be interpreted as a departure from overall Federal efforts to encourage the efficient use of natural gas.

    Agency Affected: Department of Energy

  2. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretary of Energy and the Chairman of FERC should clearly communicate that the gas-for-oil program is temporary and not to be interpreted as a departure from overall Federal efforts to encourage the efficient use of natural gas.

    Agency Affected: Federal Energy Regulatory Commission

  3. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretary of Energy should take the lead and work with the Chairman of FERC to develop a plan to provide greater assurance that natural gas supplies will be available for high priority and critical uses in the mid- and long-terms until substitutes are developed or the transition to alternates is feasible. The plan should be built on an analysis of natural gas supply and demand scenarios and regulatory impacts, and their effect on end-users at the national, State, and regional levels. The plan should include a determination of Government actions and contingency measures needed which will assure the availability of natural gas for high priority and critical uses.

    Agency Affected: Department of Energy

  4. Status: Closed

    Comments: GAO has no information on the actions taken in response to this recommendation.

    Recommendation: The Secretary of Energy should take the lead and work with the Chairman of FERC to develop a plan to provide greater assurance that natural gas supplies will be available for high priority and critical uses in the mid- and long-terms until substitutes are developed or the transition to alternates is feasible. The plan should be built on an analysis of natural gas supply and demand scenarios and regulatory impacts, and their effect on end-users at the national, State, and regional levels. The plan should include a determination of Government actions and contingency measures needed which will assure the availability of natural gas for high priority and critical uses.

    Agency Affected: Federal Energy Regulatory Commission

 

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