Freeing the Rates

To the natural-gas industry, the news was so cheery that it sent gas stocks up as much as 5 1/4 points. In a 5-3 decision, the U.S. Supreme Court reversed the year-old "Memphis case'' ruling of a lower court, thus allowing gas companies to return to their longtime practice of raising rates while waiting for the Federal Power Commission to approve them--subject to refund if the request is turned down. The Memphis case, which was won by the city of Memphis against the United Gas Pipeline Co., was opposed by the FPC as well as the gas industry. It required companies to get customer approval to collect higher rates while the FPC was investigating.

The Memphis decision, said the FPC in its appeal, would "bar the pipelines from utilizing the means best calculated to give them the necessary rate flexibility" and "would ultimately hurt the consumer instead of protecting him." Since the FPC usually takes anywhere from six months to two years to make up its mind, the Memphis decision put a damper on the expansion plans of many gas companies; they feared it would take too long to get needed rate increases. In asking the Supreme Court to reaffirm the FPC's longstanding rate-fixing practice, the solicitor general noted that "a substantial portion" of the $283 million in planned pipeline projects had been suspended after the lower court's decision.

Now the companies are able to go ahead with their expansion, which has made gas the fastest-growing fuel. They are also relieved of the possibility that they might have to refund $225 million in already collected rate hikes, even though the FPC might later approve them.

This file is automatically generated by a robot program, so reader's discretion is required.