Emergency Natural Gas Purchases:
Actions Needed to Correct Program Abuses and Consumer Inequities
EMD-78-10: Published: Jan 6, 1978. Publicly Released: Jan 6, 1978.
- Full Report:
Under the Natural Gas Act of 1938, as amended, the Federal Power Commission (FPC) is responsible for regulating the interstate commerce of natural gas, including the price producers receive for natural gas and the price that pipeline companies can charge for transporting it. FPC issued regulations for emergency natural gas purchases to help alleviate temporary shortages in the interstate market, and Congress provided the President with special powers to ensure adequate supplies for high-priority uses during the adverse 1976 through 1977 winter season.
The manner in which FPC regulated emergency purchase provisions resulted in intrastate pipeline companies avoiding regulations while dealing in the interstate market. Consequently, many interstate pipeline companies were allowed to use emergency purchases for sales to low-priority customers that had alternate fuel capabilities. This was contrary to national policy of attempting to shift high-volume industrial and utility gas users to coal and other energy sources. These actions were also inequitable because high-priority customers not affected by curtailment were forced to bear part of the higher cost of emergency purchases, thereby subsidizing low-priority users. Problems encountered emphasize the need for taking strong measures to curb low-priority uses of emergency natural gas and improving the administration of emergency natural gas purchase programs.