Support Sought for Weakened Controls on Natural Gas Prices

Reagan Administration officials sought support from Congress and federal agencies Thursday for proposals that would weaken or eliminate natural gas price controls.

Energy Secretary John S. Herrington spent the morning urging the Federal Energy Regulatory Commission to approve raising the price ceiling on natural gas from varying levels to $2.56 per 1,000 cubic feet. He then told Congress that complete decontrol would lower by $25 to $40 average home heating costs during the first year.

Herrington is seeking support for legislation that would eliminate price controls on about 40% of the gas now under regulation and effectively remove the commission’s price control authority.

‘Insecure Oil Supplies’

“It is completely unacceptable for government regulations to prevent full utilization of low-cost, old gas supplies at a time when our nation is still dependent on possibly insecure oil supplies for a significant portion of its energy needs,” Herrington said.

The Administration lost on previous attempts to gain congressional support for gas deregulation but Herrington said that Senate hearings on gas pricing scheduled for next week will show that there are sufficient votes for full decontrol.

However, California utility regulators say deregulation will result in an average 18% increase to Southern California consumers and cost the state $464 million in increased costs during the first year. They vowed to ask a federal court to block implementation of the proposal if it is approved.

“Any proposal that would substantially change the primary pricing structure of natural gas should address both old gas prices below market value and new gas, which is priced much higher than the current market,” said Michael Day, California Public Utilities Commission general counsel.