Opinion ID: 328553
Heading Depth: 1
Heading Rank: 1

Heading: introduction

Text: 2 This appeal grows out of a series of orders of the Federal Power Commission (Commission) which date from October 2, 1970, in which the Commission, as part of its efforts to alleviate the natural gas shortage, has authorized and encouraged natural gas pipeline companies to enter into advance payment agreements with natural gas producers. The Commission authorized that pipeline companies may, under certain conditions, make advance payments to producers for gas to be delivered at a future date. These advance payments may be included in the rate base which the pipeline companies use to calculate the prices which consumers will be charged for gas. The Commission authorized advance payments in order to provide gas producers with the necessary investment capital to finance development and production of natural gas. From an economic standpoint, pipeline companies are induced to make such advance payments since inclusion of the payment in their rate base shifts the cost of the payments to the pipeline's customers, the natural gas consumers.