FERC allows recovery of security related costs

By the OGJ Online Staff

HOUSTON, Sept. 14, 2001 – Federal regulators said pipeline and electric transmission companies could recover in rates expenditures for security upgrades to safeguard the electric power grid and gas and oil pipeline systems.

Filings would be processed under the “highest priority,” the Federal Energy Regulatory Commission said. FERC issued a policy statement Friday that companies could recover “prudently” incurred expenditures used to safeguard the reliability and security of the energy supply.

The policy was intended to clear up any uncertainty that companies under frozen rates might not be able to recover such costs, according to the agency. FERC also said any filings to recover these costs would be treated on an expedited basis. The agency did not spell out what types of security measures would be covered.

Normally a gas rate filing takes 30 days to be completely processed, and filings for electric transmission rate changes require 60 days, said FERC spokeswoman Tamara Young-Allen.

“The commission will give its highest priority to processing any filing made for the recovery of extraordinary expenditures to safeguard the reliability of our energy transportation system and energy supply infrastructure,” the commission said.

Companies could propose a separate rate recovery mechanism, such as a surcharge to currently existing rates or some other cost recovery method.

“We wanted to send a message to the energy companies that quick recovery was possible,” Young-Allen said. “The policy statement was ‘proactive’ and was not a reaction to any requests from energy companies.”

No filings had been received from any company yet, she said.

Three companies operating interstate pipelines did not return requests for comment by deadline.

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