HIOS/Petal Gas Storage Reply Brief of Intervenor INGAA in Support of Petitioners 2-15-07

INGAA filed an intervener’s reply brief in the HIOS/Petal litigation in the Court of Appeals for the DC Circuit. INGAA argues that FERC’s new rate of return policy, by basing pipeline returns on the returns earned by lower-risk LDCs, disregards the increased competition FERC has successfully fostered in the pipeline industry, while discouraging the development of new pipeline infrastructure.  Moreover, FERC’s refusal to include gas pipeline MLPs in the proxy group is based on a standard that is both substantively and procedurally flawed.

FERC-regulated interstate natural gas pipelines need a set of clear, coherent standards for how to determine the allowed rate of return in pipeline rate proceedings, and a reasonable opportunity to submit evidence satisfying those standards.  FERC’s constantly changing pronouncements on this topic fail to provide the necessary clarity, coherence, or procedural safeguards.  Accordingly, INGAA submits that the Court should reverse and remand the orders under review to FERC, with clear instructions requiring FERC to establish a rate of return policy that fully reflects the higher risk profile of interstate natural gas pipelines.