"The Basics" of FERC Ratemaking for the Natural Gas Pipeline Industry • May 12-16, 2025 • Sheraton Uptown ABQ.

COURSE AGENDA

Click on the day below for a detailed description of the day.

Monday • Tuesday • Wednesday • Thursday • Friday

Monday, May 12

6:30 am • REGISTRATION BEGINS

  • Registration begins on the first floor of the hotel. Breakfast is available in the ABQ Grill from 6:30 - 8:30 am.

8:30-10:00 am • OVERVIEW OF THE NATURAL GAS INDUSTRY: Instructor, Rick Smead

  • MOVING GAS FROM THE WELLHEAD TO THE BURNER TIP
  • SEGMENTS OF THE NATURAL GAS INDUSTRY
    • Production
    • Transportation
    • Gathering
    • Storage and Distribution
    • Processing
  • HOW DID FERC ORDERS AND RULINGS, INCLUDING ORDER 636, AFFECT THE NATURAL GAS PIPELINE INDUSTRY?
  • DISCOVERY OF GAS SHALE PLAY AND ITS IMPACT ON THE GAS PIPELINE INDUSTRY

10:30 am – 12:00 pm • FERC RATEMAKING UNDER THE NATURAL GAS ACT: Instructor, Michael Diamond

  • OVERVIEW OF THE NATURAL GAS ACT
  • PURPOSE AND SCOPE OF THE NATURAL GAS ACT
    • FERC’s Ratemaking Authorities
    • Key Concepts Under the NGA
    • Alternative Ratemaking: Negotiated Rates
  • SECTION 5 OF THE NATURAL GAS ACT
    • Burden of Proof
    • FERC’s Exercise of Section 5 Authority
    • Available Remedies
    • Customers’ Use of Section 5
  • SECTION 4 OF THE NATURAL GAS ACT
    • Mechanics of a “Typical” Section 4 Rate Case
    • Burdens of Proof
    • Settlement v. Litigation
    • Common Rate Case Issues
    • Potential Future Issues

12:00 -1:30 pm • Lunch

1:30-3:00 pm • FERC RATEMAKING UNDER THE NATURAL GAS ACT (continued): Instructor, Michael Diamond

3:00 – 5:00 pm • FERC REGULATION OF PIPELINE CONSTRUCTION UNDER THE NGA: Instructor, Michael Pincus

  • EXEMPTIONS
  • CERTIFYING PIPELINE CONSTRUCTION PROJECTS
    • Holding Open Season
    • Post Certification Compliance
    • Role of Foundation Shippers
    • Development of Initial Rates for
    • New Pipeline Construction
    • Pre-Filing Procedures
    • Application Process
Welcome Reception

Tuesday, May 13 

8:30 am – 9:30 am • BASE PERIOD VS. TEST PERIOD: Instructor, David Haag

9:30 am – 12:00 pm • DETERMINATION OF A PIPELINE’S COST OF SERVICE: Instructor, David Haag

  • COST OF SERVICE COMPONENTS
  • WHAT ARE THE “BIG TICKET” COMPONENTS IN THE COST-OF-SERVICE?
  • OPERATING EXPENSES
  • A&G EXPENSES
  • RATE BASE — ESTABLISHING THE COMPANY’S INVESTMENT
    • Working Capital
    • Accumulated Depreciation
    • Deferred Income Taxes
    • Materials and Supplies
  • RATE OF RETURN — RETURN ON INVESTMENT
    • Capital Structure
    • Weighted Cost of Debt
    • Weighted Cost of Preferred Stock
    • FERC’s Cost of Equity Model
    • Weighted Cost of Equity
    • Overall Rate of Return
    • Federal and State Income Taxes
    • Adjusting Return for Income Tax Effect
    • Depreciation Expense
    • Non-Income Taxes (Other Taxes)
    • Revenue Credits
    • How are the cost-of-service components interrelated?

12:00 -1:30 pm • Lunch

1:30 – 5:00 pm • COST-OF-SERVICE PROBLEM: Instructor, David Haag

  • ASSIGNMENT OF COST-OF-SERVICE PROBLEM
    • Presentation of Group Solutions

Wednesday, May 14 

8:30 am – 12:00 pm • INTRODUCTION TO RATE DESIGN: Instructors, Sorana Linder & Katie Schiro

  • RELEVANCE OF TARIFF RATES V. MARKET VALUE OF CAPACITY
  • SEPARATING COST-OF-SERVICE BY FUNCTION
    • Kansas-Nebraska (“KN”) Methodology
  • CLASSIFYING COSTS
    • Between Fixed & Variable
    • Between Rate Components
    • Policy Changes Over Time
    • Impact of Load Factor
  • BASIC COST ALLOCATION AND RATE DESIGN PRINCIPLES

1:00-7:00 pm • TRIP TO NEW MEXICO’S STATE CAPITAL – SANTA FE, NM

Thursday, May 15 

8:30 am – 12:00 pm • DIFFERENT RATE DESIGNS FOR DIFFERENT PIPELINES – WHICH IS BEST? Instructors, Sorana Linder & Katie Schiro

  • TRANSPORTATION AND STORAGE RATE DESIGN

12:00 -1:30 pm • Lunch

1:30 – 5:00 pm • FILING A RATE CASE AT FERC: Instructors, Sorana Linder & Katie Schiro

  • SETTLEMENT
  • RATE CASE STRATEGIES
    • Discounted v. Negotiated Rates
    • Project Timing
    • Settlement v. Litigation
  • RATE DESIGN IN PRACTICE – BRINGING IT ALL TOGETHER
  • DISCOUNTED V. NEGOTIATED RATES
    • How Discounted Rates Impact Rate Design
Farewell Social

Friday, May 16 

8:30-11:00 am • NGPA SECTION 311 – INTERSTATE TRANSPORTATION BY AN INTRASTATE OR HINSHAW PIPELINE: Instructor, Jim Sarikas

  • INDUSTRY OVERVIEW
    • Intrastate pipelines (NGPA section 311 (a)(2))
    • Hinshaw pipelines (NGA sections 1(c) and 7(c))
  • JURISDICTIONAL BOUNDARIES
    • Section 7(f) – Service Area Determination
    • NGA vs. NGPA Transportation
  • SETTING RATES FOR TRANSPORTATION SERVICE
    • The basis for the rates: (1) State Rate Election or (2) Cost of Service rates
    • The business process – how does FERC conduct a rate case?
  • STATEMENT OF OPERATING CONDITIONS (SOC) E.G. THE PIPELINE’S TARIFF
    • Rate Schedule(s)
    • General Terms and Conditions
    • Consistency with NGA Tariff requirements.