US gas-pipeline earnings examined

More interstate pipeline regulation could mean higher gas prices for consumers, write Lisa M Tonery, Tania S Perez and Rabeha Kamaluddin, Fulbright & Jaworski LLP

THE US Federal Energy Regulatory Commission (Ferc) made several attempts to improve transparency and competition in energy markets over the past five years. Most recently, in November, Ferc started investigations to determine whether three gas-pipeline companies may be earning unreasonably high profits. It said data filed by the three firms (in response to the new reporting requirements) indicated they may have collected returns on equity of up to 25%, or around twice the industry average of 12%. However, investor perceptions about the stability and predictability of the regulatory regime greatly affect the industry's ability to attract capital for new construction, expansions, maintenance