NPGA, Airlines for America seek equal treatment for pipeline shippers

The National Propane Gas Association (NPGA) and Airlines for America (A4A), the industry trade organization for the leading U.S. airlines, filed a petition for rulemaking at the Federal Energy Regulatory Commission (FERC), requesting the agency extend its affiliate standards of conduct regulations to the multiproduct pipeline industry.

According to the Energy Information Administration, the development of new technologies over the last several years has increased the production of crude oil and associated petroleum products, including propane, with estimated production of crude oil rising to a record 10.3 million barrels per day in 2018. There has also been an increase in domestic natural gas liquid (NGL) production due to advances in shale oil and gas development.

Additionally, the multiproduct pipeline industry has gone through restructuring, spinning off midstream transportation and storage assets and engaging in the marketing of these products through companies affiliated with the pipelines, according to NPGA and A4A.

Public information indicates that crude oil, NGL and petroleum pipelines appear to have been engaged in offering preferential, discriminatory rates to their marketing affiliates not offered to nonaffiliated shippers, the trade groups say. According to NPGA and A4A, the pipelines have also shared non-public transmission information with affiliated marketing entities, and such abuses violate the Interstate Commerce Act. This law intends to ensure that common carriers, including crude oil, NGL and petroleum product pipelines, treat all shippers equally in terms of transportation access and price.

This filing is asking FERC to establish rules about affiliate relationships that will increase transparency, says Jeff Petrash, vice president and general counsel at NPGA. NPGA and A4A would like to ensure that the pipelines are charging proper rates. This action is another step in trying to hold wholesale and retail prices down for retailers and consumers, Petrash adds.

 Applying FERC’s standards of conduct, currently applicable to electric power and natural gas industries, to crude oil, NGL and petroleum product pipelines is a solution to limit these abuses that harm nonaffiliated shippers and distort the market for pipeline transportation of refined products used daily by consumers and members of NPGA and A4A, say the organizations.

“Propane marketers and consumers rely upon liquid pipelines as an essential part of a supply chain that heats homes, businesses and farms,” Petrash says. “A fair, efficient and transparent market requires that there be no improper exchanges of information between pipelines and their affiliates that are market participants. Propane marketers and the customers they serve will have increased confidence that markets are operating freely and efficiently if our proposals are adopted by the commission.”

The FERC will review the petition and decide whether to initiate procedures for a rulemaking, the groups say.