Energy Panel Delays Action on Price Cut : U.S. to Hold More Hearings on Gas Billing Proposal

Government energy regulators today postponed for six months a decision on a controversial proposal that would have dropped average homeowner natural gas bills by $75 a year.

Federal Energy Regulatory Commission Chairman Raymond O’Connor called the decision to hold more hearings on so-called “block billing,” which both consumer groups and producers agreed would have the biggest impact on cutting prices, “a continuation of the process.”

The proposal would cost producers up to $5 billion in annual revenues.

Commissioner Charles Stalon, the chief architect of the block billing scheme, reluctantly agreed that there were still several questions that need to be answered.

Broad Package Adopted

“I see block billing as an integral part of the proposal, but some of the concerns raised recently do deserve to be addressed by the commission,” he said.

The delay came as the energy regulators adopted a broad-ranging package overturning the rules by which natural gas is traded.

Some of the other changes will start taking effect as early as Nov. 1, but energy commission officials said they doubt that they will affect what the 45 million American families who heat their homes with natural gas will pay for the fuel this winter.

Ed Rothchild of the liberal Citizen-Labor Energy Coalition said the commission decision to postpone any decision on block billing was a victory for the 10,000 producers of natural gas in the United States.

Victory for Producers

“The producers won with the help of political pressure from some members of Congress,” Rothchild charged. “There will be very little if any price reduction this winter and there may be no block billing ever if public pressure for it is not maintained.”

The $50-billion-a-year natural gas industry, including producers, pipeline companies and local distributors, now provides slightly more than one-fourth of the nation’s energy.

Basically, the new regulations would force the nation’s 30 major gas pipeline companies to abandon their traditional middleman role as wholesalers who buy natural gas from drillers and then resell it to industrial plants and local utilities.

Pipelines as Carriers

Instead, the pipelines over a transition period of several years would come more to resemble carriers--transporting gas from producers to users for a fee without ever owning the commodity itself, much like railroads, barge lines, truckers and air freight companies.

Though not mandating such “carriage,” the Federal Energy Regulatory Commission would provide such strong financial incentives for it that any pipeline which refused would risk being crippled by both existing and potentially new competitors, according to analysts.

While that carriage provision has drawn opposition from pipeline companies, the most controversial measure in the package would end their practice of “rolling in” or averaging their purchases of cheap and high-priced gas supplies into one bill.