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EMD-80-10 1 (1979-10-26)

handle is hein.gao/gaobaazvr0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 205438~ d 9 ENERGY AND MINERALS DIVISION B-178205 OCTOBER 26.1979 The Honorable Charles B. Curtis 9 Chairman, Federal Energy Regulatory Commission 110699 Dear Mr. Curtis: Subject: The Special Rate.Treatment Allowed Natural Gas Pipeline Production Programs (EMD-80-10) We reviewed certain policies and practices of the Federal Energy Regulatory Commission and its predecessor, the Federal Power Commission, 1/ for regulating natural gas pipeline rates. The Natural Gas Act of 1938, as amended, requires that such rates and rules be just and reasonable. An important goal of the Commission is to assure compliance with the act and an adequate supply of natural gas to con- sumers. The Commission's general responsibility is to develop, manage, and direct energy regulatory programs and activities assigned to it by statute, executive orders, and the Secretary, Department of Energy. We centered our effort on the Commission rulings which afforded certain pipeline companies financial assistance to conduct natural gas exploration and production programs by allowing such companies to price the gas they produced at special rates. Commission Opinion Number 568 provides that for leases acquired after October 7, 1969, interstate pipeline com- panies should price their natural gas at area rates. 2/ This placed the pipeline companies (which previously had priced the gas they produced on a cost basis) on a parity with independent producers of natural gas sold interstate. The opinion also provides, however, that if a pipeline 1/As of Oct. 1, 1977, Federal Power Commission responsibili- ties were transferred to the Federal Energy Regulatory Commission. 2/Area rates--fixed by the Commission on the basis of ave- rage current production costs, as well as historical costs. (308460) 00 7S 37

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