FERC's Proposed 1983 Budget for the Trans-Alaska Pipeline System Case

GAO reviewed the Federal Energy Regulatory Commission's (FERC) participation in the Trans-Alaska Pipeline System (TAPS) rate case and the need for continued FERC participation in the hearing process at the funding level proposed for fiscal year (FY) 1983.

GAO found that the need for continued FERC participation in the TAPS case in FY 1983 is not clear cut and that the effects of terminating its participation at this time are uncertain. The direct benefits of reduced pipeline company tariffs to the public outside of Alaska are minimal, since transportation costs do not affect the prices charged to consumers. However, there may be an indirect benefit to the general public in the potential for increased windfall profits tax revenues if the tariffs are reduced. That potential could be enhanced if FERC is allowed to present its testimony supporting reduced TAPS costs. The impact of additional Alaskan oil on exploration and development is judgmental. Since ratemaking precedents are certain to be set in both Phase I and II decisions, the assumed FERC role as a balancing third-party element that provides a complete hearing record on which Phase II decisions will be made could be justified, because it undertook the development of relevant issues in lieu of the intervenors' developing them. GAO believes that, if FERC participation in the case is determined to be beneficial, the need for all of the requested funds is questionable. Contractor costs appear to be high given the current status of the case and the extensive contractor efforts already funded in prior years. FERC staff costs also appear to be high given the amount of work that will be complete by the end of FY 1982 and the potential for completing the FERC cross-examination by early 1983, which should ensure that their findings are included in the hearing record.