GAO predicts higher 636 transition costs than FERC
The Federal Energy Regulatory Commission may have underestimated the size of Order 636-mandated changes in rate design, according to a draft report by the US General Accounting Office (GAO) obtained by the Fortnightly. The report estimates that the change could shift $1.2 billion per year in pipeline companies fixed costs to local distribution companies (LDCs) and end users, particularly those in the residential sector. The FERC earlier estimated the shift could be as large as $800 million. The long-awaited, soon-to-be-released Report to Congress on the Costs, Benefits, and Concerns Related to FERC's Order 636 was prompted by concerns over the potential effect of the FERC order on residential end users, who may see natural gas prices increase. The report cautions that the amount of fixed costs likely to shift to LDCs and their end users cannot be determined with precision until after Order 636 is implemented. The GAO estimate exceeds the FERC's in part because the GAO used what it called more appropriate assumptions about purchases of interruptible service by LDCs and discounts on the same services by pipelines. The GAO also reviewed five pipeline companies and found that, depending on how LDCs allocate changes in costs to end users, residential end users may see increases of up to 9 percent, while nonresidential end users may see decreases as large as 7 percent.
- OSTI ID:
- 5695322
- Journal Information:
- Public Utilities Fortnightly; (United States), Journal Name: Public Utilities Fortnightly; (United States) Vol. 131:16; ISSN PUFNAV; ISSN 0033-3808
- Country of Publication:
- United States
- Language:
- English
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