Mrs. Smith. Is it correct that FERC has determined that an old gas price of $2.56 is "just and reasonable"? Mr. Sousa. No, it is not correct that the FERC has determined that an old gas price of $2.56 is "just and reasonable." On December 20, 1985 the Commission issued a notice of procedural schedule establishing a timetable for public comment on a notice of proposed rulemaking issued by DOE for action by the Commission under section 403 of the Department of Energy Organization Act. Under the proposed rule, the Commission would exercise its authority: under sections 104 and 106 of the Natural Gas Policy Act of 1978 (NGPA), to establish just and reasonable rates for "flowing" old gas, and under section 107 of the NGPA to establish incentive prices for certain categories of old gas. Under the DOE proposal, the Commission would act to eliminate vintaging and replace the current myriad of old gas ceiling prices with a single ceiling price, the ceiling for post-1974 gas, currently $2.56 per MMBtu. In addition, the Commission would establish incentive prices for certain categories of old gas in order to increase significantly the production of old gas and to encourage long-term investment in natural gas exploration, development and production Initial comments on the DOE proposal were due February 25, 1986 and reply comments must be filed with the Commission by 4:30 p.m. on March 27, 1986. Also, any interested person may request to participate in a public conference that will convene at 9:00 a.m. on April 10 and 11, 1986, at the Commission's offices in Washington, D.C. Mrs. Smith. Is this $2.56 "just and reasonable" price above the current spot market price? How is that "just and reasonable" and how did you come up with the $2.56 figure? Mr. Sousa. Because the Commission is currently considering the DOE roposal and therefore has made no determination as to whether the roposed new rate is "just and reasonable," I am unable to respond to these questions at this time. However, I am providing for the record a opy of the DOE petition for rulemaking which discusses the Secretary of Energy's rationale for proposing a new just and reasonable rate for ld, flowing gas. DEPARTMENT OF ENERGY 18 CFR 271 AGENCY: Department of Energy ACTION: Notice of Proposed Rulemaking; Changes to the 01 Gas Pricing Structure Proposed Rule to Federal Energy Regulatory Commission - JON Nov 13 249 PH 85 SUMMARY: Pursuant to Section 403 of the Department of Energy Organization Act (DOE Act), the Secretary of Energy (Secretary) is proposing a rule for final action by the Federal Energy Regulatory Commission (Commission). The Secretary is proposing the Commission exercise its authority (1) under sections 104 and 106 of the Natural Gas Policy Act (NGPA), to establish just and reasonable prices for "flowing" old gas, and (2) under section 107 of the NGPA, to establish incentive prices for certain categories of old gas. Under the proposal, the Commission would act to eliminate vintaging and replace the current myriad of old gas ceiling prices with a single ceiling price (the ceiling price for post-1974 gas). In addition, the Commission would establish incentive prices for certain categories of old gas, in order to increase significantly the production of old gas and to encourage long-term investment in natural gas exploration, development, and production. Under both proposed actions, a producer would receive a price higher than the current price only if a purchaser agreed to the higher price. The Secretary is requesting the Commission take final action on this proposal by June 1, 1986. The Department of Energy (DOE) believes the proposed actions are necessary to mitigate the waste, economic inefficiency, and market distortions existing in the current natural gas market. DOE believes the proposal would result in about 34 trillion cubic feet (Tcf) of additional old gas production and benefit the American economy by more than $25 billion during the next decade. Commission to take final action by June 1, 1986. DATES: Dates for comments and public hearings to be published later by |