Thank you for being one of our most loyal readers. Please consider supporting community journalism by subscribing.
The head of Wilson Energy testified earlier this month before a congressional committee in hopes of protecting natural gas customers across the country.
Director Rich Worsinger represented the American Public Gas Association for a hearing on the Protecting Natural Gas Consumers from Overcharges Act of 2020, which U.S. Reps. G.K. Butterfield of Wilson and Billy Long of Missouri introduced in January.
The act would amend the Natural Gas Act to give the Federal Energy Regulatory Commission the power to order pipeline operators to refund customers when officials find overcharges — mirroring FERC’s authority through the Federal Power Act for electricity suppliers.
“The Natural Gas Act and the Federal Power Act were created by Congress way back when to make sure the customers of both were treated fairly,” Worsinger said. “The Federal Power Act allows FERC refund authority if electric transmission companies are overcharging or the rates are no longer just and reasonable. The Natural Gas Act does not give FERC the same power to protect natural gas customers.”
The American Public Gas Association has fought for reform since 1988 when the disparity arose from legislators giving FERC the power to order refunds for electric customers but declining to modify the Natural Gas Act. Initially, Worsinger said the different treatment wasn’t as bad because natural gas pipeline operators were required to submit to a rate review every three years, but in 1992, that restriction was eliminated and Congress removed that oversight.
“When the rates are set, they are fair and just, but if their costs change, they usually aren’t coming in voluntarily for a rate reduction,” Worsinger explained.
According to a Natural Gas Supply Association study of charges from 32 pipelines between 2013 and 2017, 21 of the pipelines had been over-collecting to the tune of $4.6 billion. If the overcharges had come from an electric transmission companies, FERC could order a refund with interest dating back to when the complaint was filed, but if a pipeline is found to be overcharging, customers would only save money going forward.
“Lack of refund authority may have caused billions of dollars in overcharges to natural gas consumers in all these years,” Worsinger testified. “These are dollars that could have gone into local businesses in a community or into paying food bills and mortgages or into investing in a child’s education. Instead, they have flowed upstream to the pipelines’ coffers.”
The disparity became clearer when the Tax Cuts and Job Act of 2017 cut the watershed corporate tax rate from 35% to 21%.
“Duke (Energy) as an electric provider had a decrease in operation costs and passed it on to the power agency,” said Worsinger, noting the power agency is the provider of electricity for Wilson and other public power cities in North Carolina. “The pipelines did not because they took their time analyzing operation costs, and a year later, they reduced the rates but kept the money they had collected despite having unjust and unreasonable rates during that time.”
Worsinger said treating electric and natural gas providers the same would deter companies from overcharging in the first place.
“This issue is particularly important to public gas systems because about 95% of them, including my system, are served by just one pipeline,” Worsinger testified. “We must rely on FERC regulation to determine that our monopoly pipeline is not overcharging us. But the current system allows pipelines to keep overcharges rather than refunding them to ratepayers.”
The legislation was referred to the House Committee on Energy and Commerce on Jan. 30. A timeline for further action was not released.
“Natural gas customers across the country are being overcharged, and FERC does not have the recourse to refund their money,” Worsinger concluded. “Congressman Butterfield bringing forth this legislation is the first chance we’ve had in years to correct this. Since it has bipartisan support, I’m optimistic that this bill will move forward.”