The chairman of the Federal Energy Regulatory Commission, C. M. (Mike) Butler III, yesterday pulled back a proposal that opponents said would ultimately double or triple natural gas prices.
Butler announced in a packed FERC hearing room that a proposed "notice of inquiry" into raising the prices of so-called old gas would not be brought up as scheduled because he did not have a majority of the commission's four votes.
Opponents of raising natural gas prices by administrative means--they call it "backdoor deregulation" to distinguish it from an act of Congress--quickly claimed victory. But Butler said that the proposal will come up again in three weeks and that he will not be swayed by political pressure.
Butler wants to study whether prices of old gas--that discovered before April, 1977, which represents more than half of all gas in the U.S. system--should be raised. The chairman has indicated he thinks they should. Such a step could add about $10 billion to the nation's gas bills each year, by some estimates.
Butler said yesterday that he was holding off because two commissioners, both Carter-administration appointees, said they wanted more time to discuss the proposal's wording.
Those two commissioners, Georgiana Sheldon and John David Hughes, agreed yesterday that the proposed inquiry was not dead. But both also indicated unhappiness with the way Butler's draft had been worded and emphasized that, even if FERC does launch an inquiry, further deregulation is not a sure thing.
"I thought that on an issue this important that we should have the best work product possible and it ought to be evenly balanced," said Sheldon. Hughes said the draft was too narrow, focusing primarily on the issue of "market ordering."
"Market ordering" is a term that Butler and others who favor speedier decontrol have used to argue for raising prices now to avoid what they say will otherwise be great distortions of the market in 1985, when price controls come off new gas, but not old, under current law.
"That is a question to be asked, but not the only one," said Hughes.
Butler, a Reagan administration appointee, began exploring the possibility of administrative deregulation after President Reagan backed away earlier this election year from plans to ask Congress to speed up decontrol.
Decontrol opponents in Congress have since begun circulating a resolution warning FERC that it is the sense of Congress that prices ought not to be raised.
Shortly before yesterday's meeting, the FERC commissioners were given copies of a statement by Rep. John Dingell (D-Mich.), chairman of the House Energy and Commerce Committee, and House Ways and Means Chairman Dan Rostenkowski (D-Ill.), announcing that 221 members of the House, a majority, have now put their names on the resolution.
Dingell said yesterday, "I'm delighted to hear the action was postponed. It indicates extraordinary good judgment."
"We are glad to see a majority of Congress finally stand up to the oil company lobby on behalf of their constituents," said William W. Winpisinger, president of the International Association of Machinists and Aerospace Workers and of the Citizen/Labor Energy Coalition. That coalition has organized widespread opposition to raising natural gas prices.
"We are glad that this action has forced the Federal Energy Regulatory Commission to abandon its reckless and economically disastrous push to decontrol gas prices," Winpisinger said.
Butler issued a statement yesterday noting that the proposed inquiry is aimed at determining "whether current gas pricing statutes benefit some consumers at the expense of other consumers. That is an important issue of public policy."
"For those who think the chairman of this commission is going to be dissuaded by political pressure from pursuing his public responsibility, there is only one message," said Butler. "They are wrong. The matter will be on the agenda for the next commission meeting."