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All In A Day's FERC

Writer's picture: Floom Energy Law PLLCFloom Energy Law PLLC

If you or your team need a refresher course on FERC or any other energy industry or regulatory topics, Floom Energy Law can help!


At the start of 2025, John Paul and Kaci visited with some of our clients to discuss how the Federal Energy Regulatory Commission (FERC) regulates the interstate transportation of crude oil, natural gas liquids, and refined products under the Interstate Commerce Act. Knowing what FERC is and what it does is important to understanding how FERC affects our clients' interests.


Carriers can establish rates using several methods:  

  • Initial rates are set for new services or destinations, requiring shipper agreement, and are subject to potential challenges.  

  • Index-based rates adjust based on an annual "Ceiling Level" which caps the rate unless a substantial cost divergence is proven.   

  • Market-based rates are established when carriers demonstrate a lack of market power in specific regions.  Once approved, the carrier can file to adjust the rates without regard to cost levels or the index ceiling. 

  • Cost-based rates allow for adjustments above the index limits if there’s a clear revenue-cost disparity.   

  • A settlement rate requires unanimous agreement from current shippers on the day of the filing and it may exceed the established Ceiling Level.  


Shippers have avenues to dispute rates, including protesting annual index filings or filing complaints to contest the reasonableness of rates.  


Though this is a pared-down overview of what FERC oversees, understanding these mechanisms is key for industry participants navigating pipeline and shipper regulations. 

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