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Liquefied natural gas rates refer to the fees charged for transporting natural gas that has been converted into a liquid form. These rates are regulated by a government agency called the Federal Energy Regulatory Commission (FERC). The FERC makes sure that the rates are fair and that they don't harm existing customers. This means that the costs of the service are assigned properly and that new customers pay for the service they receive without subsidies from existing customers.
Definition: Liquefied natural gas (LNG) rates refer to the fees charged for transporting LNG from one place to another. These rates are regulated by the Federal Energy Regulatory Commission (FERC) and must comply with the requirements of the Natural Gas Act (NGA).
The NGA imposes certain requirements on FERC-approved projects to ensure that they do not harm existing customers. For example, the rates should not result in:
When reviewing rate design, it is important to ensure that costs are properly assigned and that each shipper pays for the service they receive. This helps to ensure that the project can proceed without subsidies from the pipeline's existing customers.
Example: Imagine that a company wants to transport LNG from a production facility to a port for export. The company would need to pay a fee to the pipeline operator for using their infrastructure to transport the LNG. The rate charged by the pipeline operator would need to comply with the requirements of the NGA to ensure that existing customers are not harmed by the project.
Example: Another example of LNG rates is when a company wants to import LNG from another country. The company would need to pay a fee to the terminal operator for using their facilities to receive the LNG. The rate charged by the terminal operator would need to comply with the requirements of the NGA to ensure that existing customers are not harmed by the project.
These examples illustrate how LNG rates are regulated by the FERC and must comply with the requirements of the NGA to ensure that existing customers are not harmed by new projects.