Decontrol of Natural Gas OKd by Senate : Despite Warnings, Legislation Contains No Consumer Protection Against Price Hikes

The Senate today approved legislation removing price and other controls on natural gas still under federal regulations by Jan. 1, 1993, despite warnings that the cost to the consumers will increase.

The Senate passed the bill 82 to 17. The House previously approved a similar measure by voice vote, and negotiators will have to work out a compromise.

About 40% of domestic production is under federal regulation, but the bill primarily affects the 6% of natural gas sold at less than market prices. All other natural gas was deregulated under terms of a 1978 bill.

The American Gas Assn., which represents about 250 of the nation’s natural gas distribution and transmission companies, hailed the Senate action, saying it “will permit the marketplace to stimulate exploration and orderly development of America’s huge natural gas resource base.”

Consumer Amendments

The Senate approved the bill after rejecting an amendment by Sen. Bill Bradley (D-N.J.) that would have given the Federal Energy Regulatory Commission clear authority to require any interstate pipeline to transport natural gas. The vote was 55 to 44.

Earlier in the deliberations, the Senate killed a series of amendments by Sen. Howard M. Metzenbaum (D-Ohio) designed to guard consumers against price increases in natural gas.

Summing up, Metzenbaum conceded that prices have not increased since the 1978 legislation but said that was because of a period of less costly oil, which appears to be ending.

“Gas prices are going up,” Metzenbaum predicted. “You are going to be able to look back and say, ‘I helped prices go up.’ There is no cushion, no protection, no solace for the consumers.”

Under the bill, sales for which the contract has expired or terminated are decontrolled when President Bush signs the bill and sales made after the bill is enacted are not subject to controls.

Contract Specifications

Sales under current contracts are decontrolled when the contract expires or is terminated. Sales under current contracts voluntarily renegotiated after March 23, 1989, and including decontrol provisions, are decontrolled under the terms of the contract.

All gas that remains under regulation would be decontrolled Jan. 1, 1993.

The bill affects first sales, generally the price at the wellhead of the producing field.

Federal price controls on wellhead sales of “new gas”--those from wells drilled after 1976--were phased out under the 1978 bill. Federal price and other controls were left on the cheap “old gas” and the costly incentive price gas.