The Federal Energy Regulatory Commission (FERC) starts evaluating the Five-Year Index Level for Interstate Oil Pipeline rates; What does that mean to Midstream Investors?
What is this about?
Every five years, FERC will review and set a new rate to calculate annual changes to the interstate oil pipeline rate. Last time FERC set the rate for 2016-2021, and the rate decision was made at the end of 2015 for the rate to be active on July 1, 2016.
The rate FERC used to calculate annual changes to the interstate oil pipeline rate is based on the Producer Price Index for Finished Goods (PPI-FG) with some adjustments to reflect industry cost changes. For July 1, 2016, through mid-2021, the index is based on PPI-FG +1.23%, with a multiplier provided each year based on the annual percent change in the PPI-FG.
In its 2020 review, FERC is expected to evaluate the index based on how costs changed from 2014 through 2019…