FERC Releases New 5 Year Index

On Friday, April 24^th, the Federal Energy Regulatory Commission (FERC) released its 5 Year Index Order, providing index levels for the 5 years beginning July 1, 2026. The 5 Year Index caps the increase in rates oil pipelines (and pipelines serving propane) may charge on an annual basis, unless a pipeline engages in market-based rates, cost-based ratemaking, or settlement rates (all of which are rare in propane pipelines). FERC adopted an index level of the Producer Price Index for Finished Goods (PPI-FG) – 0.55%. This is less than the prior 5 Year Index, which was PPI-FG +0.78%. Shippers on the pipeline prefer a lower index as it will cap the annual increase in tariffs. 

NPGA had advocated for an index of PPI-FG – 1.63%, while the most aggressive pipeline interest had advocated for PPI-FG + 0.83%. The PPI-FG – 0.55% index for the upcoming 5 years will save the propane industry $7 Billion versus the prior 5 year index level and approximately $14 Billion compared to the aggressive position posited by the pipelines.

NPGA is reviewing the Order and will take appropriate action as necessary. The Supply and Logistics Committee will be discussing the Order and its implications in detail during its Zoom on May 21^st. Further, NPGA will be hosting the Chairman of the Federal Energy Regulatory Commission at Propane Days on June 8^th. For further information, please contact NPGA General Counsel Benjamin Nussdorf.