The Federal Energy Regulatory Commission (FERC) has completed its five-year review of the oil pipeline index, which is used to adjust annual oil pipeline rate ceilings. The new index, effective July 1, 2021, will be the Producer Price Index for Finished Goods plus 0.78%. This decision follows a Notice of Inquiry issued in 2020 and includes considerations like trimming data to the middle 80% of cost changes and removing the effects of an income tax policy change from calculations. The Commission's decision aims to ensure rates reflect typical industry-wide cost trends, but it has faced criticism from Commissioner Richard Glick, who argues that the new methodology unduly favors pipeline companies at the expense of consumers.
Simple Explanation
The Federal Energy Regulatory Commission decided to change how they set the prices for using oil pipelines, so from July 2021, they will use a formula that adds 0.78% to the cost of goods like toys and clothes, even though some people think this might be unfair to customers.