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NATIONAL ASSOCIATION OF STATE UTILITY CONSUMER ADVOCATES
RESOLUTION
Opposing Federal Legislation to Establish a Mandatory Surcharge
for Natural Gas Research and Development
WHEREAS, The Gas Research Institute (GRI) was established to manage
cooperative research and development programs in the natural gas
industry,
WHEREAS, GRI has historically been funded through assessments on
interstate pipelines approved by the Federal Energy Regulatory Commission
(FERC) and recovered through mandatory surcharges on interstate
pipeline customers,
WHEREAS, In Resolutions 1989-13, 1991-20 and 1997-01, NASUCA has
opposed the funding mechanism for GRI as discriminatory against
residential customers and as contrary to efforts to promote the
use of competitive market forces to determine natural gas rates,
WHEREAS, In 1998, the FERC approved a settlement that called for
the phase out of the GRI surcharge by 2004 in favor of voluntary
funding mechanisms,
WHEREAS, The 1998 settlement was supported or not opposed by a
wide variety of natural gas industry segments, including representatives
of residential natural gas customers,
WHEREAS, The American Gas Association (AGA) is promoting legislation
to establish a federally mandated surcharge to be levied at the
retail level on customers natural gas utilities for the purpose
of funding natural gas research and development,
WHEREAS, The AGA has proposed that a governing body comprised primarily
of natural gas utilities be formed to determine the level of the
surcharge and the research and development projects to be funded,
WHEREAS, The AGA has proposed that the initial amount to be collected
through the mandatory surcharge should be approximately $65 million,
WHEREAS, The level of surcharge funding could increase from the
$65 million level since the entities that will be voting on the
level of the surcharge will not bear the cost of the surcharge,
WHEREAS, A mandatory surcharge would preempt state ratemaking authority
to determine how research and development expenses should be handled
in natural gas utility rate proceedings,
WHEREAS, A mandatory surcharge would impose an increase in natural
gas rates even if the utility’s earnings are in excess of
the commission’s authorized rate of return,
WHEREAS, Research and development activities in the electricity
industry are funded through voluntary contributions by electric
utilities to the Electric Power Research Institute (EPRI),
WHEREAS, State utility commissions review the level of EPRI expenses
for electric utilities and determine the amount to be recovered
from ratepayers through traditional ratemaking procedures,
WHEREAS, The majority of state commissions that allow recovery
of EPRI contributions treat the expense in the same manner as other
operating and maintenance expenses of the electric utility,
WHEREAS, There is no reason why the funding of research and development
in the natural gas industry should not also be recovered through
the same traditional ratemaking procedures that are used for the
recovery of research and development funding in the electricity
industry.
THEREFORE BE IT RESOLVED, that NASUCA opposes any legislation that
would establish a mandatory surcharge to be levied on natural gas
utility customers for the funding of research and development,
BE IT FURTHER RESOLVED, that NASUCA authorizes the Executive Committee
to develop positions and take further actions consistent with the
contents of this resolution. The Executive Committee shall inform
the membership of such positions and actions prior to proceeding
with them, if at all possible. In any event, the Executive Committee
will advise the membership of any actions taken consistent with
the recommendations contained herein.
Approved by NASUCA: Submitted by:
March 31, 2002 NASUCA Gas Committee
National Association of State Utility Consumer Advocates
8380 Colesville Road, Suite 101, Silver Spring, MD 20910
Phone: (301) 589-6313 Fax: 589-6380
e-mail: nasuca@nasuca.org |