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FERC And Natural Gas Pipeline Regulation — 2017 Update

The following post was written by Regulatory Research Associates, a group within S&P Global Market Intelligence. For further information on the full reports, please request a call.

According to a new report from RRA, Texas Eastern Transmission, a unit of Enbridge, Inc., retained the top spot in 2016 as the largest gas pipeline in the U.S. based on newly available data from annual filings at the Federal Energy Regulatory Commission. Texas Eastern's net gas transmission plant in service reached $6.30 billion in 2016, up from $6.14 billion in 2015, an increase of 2.57%. In February 2017, Enbridge completed the acquisition of Spectra Energy, the parent company of Texas Eastern. 

Algonquin Gas Transmission, also a unit of Enbridge, showed the highest year-on-year growth in net gas transmission plant in service among gas pipeline companies, with plant in service rising to $2.43 billion in 2016 from $1.41 billion in 2015, an increase of 72.73%. Algonquin's rapid growth elevated the company from the 16th largest pipeline in 2015 to seventh place among pipelines in 2016.

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The new report from RRA is an update of FERC and Natural Gas Pipeline Regulation – A Primer, a report published by RRA on May 27, 2016. The report includes a brief history of gas pipeline regulation, a description of how gas pipeline rates are set and how the authorized ROE is established for gas pipelines. The report also analyzes available data for 30 of the largest gas pipeline companies in the U.S. and ranks operating and parent companies by various metrics, including net gas transmission plant in service and growth rates. Unlike formula transmission rates for electric utilities, gas pipelines do not utilize a mechanism to update pipeline rates, rate base and other cost-of-service items on an annual basis. In lieu of annual rate base data, we used data on gas transmission plant from the pipelines' annual filing of the FERC Form 2 for both this report and the 2016 report.

Since RRA's 2016 report, there have been at least three major acquisitions involving interstate gas pipeline companies included in this report. In February 2017, Enbridge completed the acquisition of Spectra Energy and Spectra's Algonquin and Texas Eastern subsidiaries. In September 2016, Dominion Resources completed the acquisition of Questar Corporation and its subsidiary Questar Pipeline. In July 2016, TransCanada Corporation completed the acquisition of Columbia Pipeline Group and its subsidiaries Columbia Gas Transmission and Columbia Gulf Transmission.

The acquisitions reshuffled last year's ranking of parent companies as measured by total net gas transmission plant in service, with this year's ranking moving TransCanada from eighth place to third place. TransCanada follows Kinder Morgan and Enbridge, which retained the top two positions from last year's ranking of parent companies. 

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Feb 13, 2017
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