Pipelines

By David Cay Johnston for the Daily Beast. By law FERC must balance the interests of pipeline owners and pipeline customers using the “just and reasonable” theory that owners are entitled to reasonable profits and customers to reasonable prices. Instead, it favors pipelines (and other monopolies it regulates) because most of the commissioners come from—and later go back to—the industries they regulate. In Judge Sentelle’s most recent previous decision in the matter he allowed the fake tax to be imposed by the pipelines using reasoning I think is specious. Sentelle made clear that he was deeply vexed by the idea of making shippers pay a tax that is not imposed by Congress. However, he ruled that, since FERC had explained its rationale, it was beyond the court’s authority to challenge the regulatory decision. In his latest ruling Sentelle seems to recognize his error, but unfortunately he did not block the fake tax from being collected. Instead he told FERC to undertake yet another rule-making proceeding. Based on past history you will keep being dinged for this fake tax. There is an easy solution to this and the man to solve it is Norman C. Bay, current FERC chairman. Bay can ask commissioners to vote on ending the inclusion of the corporate income tax in the rates that pipelines charge customers like United Airlines. But I doubt he will unless the public demands action to make sure that pipelines charge only for actual expenses.