Revisions to Oil Pipeline Regulations: FERC Publishes Index Factor for 2025-2026 Period

Strategic Insights -

Pursuant to the Energy Policy Act of 1992, the Federal Energy Regulatory Commission (FERC) has issued a formal notice revising the oil pipeline regulations. The update involves the Producer Price Index for Finished Goods (PPI-FG), which serves as a basis for oil pipelines to adjust their rates. The Commission has determined that the PPI-FG, adjusted by 0.78%, is the appropriate pricing factor for pipelines to use over the next five years, commencing July 1, 2021. This index factor is used to calculate ceiling levels for oil pipeline rates.

Key Takeaways:

  • The FERC has revised the oil pipeline regulations to base rate adjustments on the Producer Price Index for Finished Goods (PPI-FG) plus 0.78% for the period commencing July 1, 2021, and continuing through June 30, 2026.
  • The annual average PPI-FG index figures for 2023 and 2024 were 254.6 and 257.7, respectively, with a corresponding increase of 1.019976 in the index ceiling levels for 2025-2026.
  • Oil pipelines must multiply their July 1, 2025, through June 30, 2026, index ceiling levels by 1.019976 to compute their index ceiling levels for that period.
  • The Commission provides guidance on calculating ceiling levels for each 12-month period beginning January 1, 1995, in its document Explorer Pipeline Company, 71 FERC P 61,416.
  • The FERC offers user assistance for its website and eLibrary, including toll-free phone support at 1-866-208-3676 and email support at FERCOnlineSupport@ferc.gov.

Statistics:

  • The annual average PPI-FG index figures were 254.6 for 2023 and 257.7 for 2024.
  • The percent change in the annual average PPI-FG from 2023 to 2024 was 1.012176%, resulting in a new index factor of 0.019976.
  • The new index ceiling levels for 2025-2026 must be multiplied by 1.019976 to compute the correct ceiling levels.

Sources:

  • Decennial of the Oil Pipeline Index, 173 FERC P 61,245 (2020)
  • Revisions to Oil Pipeline Regulations Pursuant to the Energy Policy Act of 1992, 188 FERC P 61,173 (2024)
  • Bureau of Labor Statistics (BLS) publishes the final PPI-FG figure in mid-May of each year at http://www.bls.gov/ppi/home.htm.