Share this story
Close X
Switch to Desktop Site

...but why should customers pay for the pipeline in advance?

Whether deregulated or not, natural gas will have to be produced in sufficient quantity to play its part in the energy equation. But gas customers should not be expected to bear the risks of expensive new ventures by having to pay for them even if never completed.

This view was supported by Congress and the Carter administration when clearance was given for John McMillian's pipeline firm to build a line bringing Alaska's plentiful natural gas to the rest of the country. Now Mr. McMillian is seeking various waivers, including one that would permit customers to be billed if a single segment is constructed even though no gas flows and the project remains unfinished. The Reagan administration is going along with this proposed inequity, and so far three congressional committees have done so, too.

About these ads

Congress as a whole ought to stand firm against the reported strenuous lobbying and stay with the original terms for private financing without consumer risk-sharing. Otherwise it is not hard to imagine the burden gradually being shifted to all taxpayers with requests for federal loan guarantees and then perhaps loans themselves.

For estimates on the costliest private construction project in history have already risen from $10 billion in 1977 to $40 billion or $50 billion now. Interest rates are high. Bankers are reluctant to take the risk of financing. Thus the effort to spread it to consumers, who can hardly help wondering if the pipeline is such a good idea when apparently it does not sell itself in the financial marketplace.

Ironically, the prospect of total decontrol of gas prices has been cited as a threat to the pipeline's economics. Even at $10 billion it was supposed to deliver gas at such high cost that it would be allowed to be blended for pricing purposes with low-priced controlled gas. That low-priced pool and its cushioning effect would presumably be eliminated if gas prices shoot up as expected under decontrol.

An acceptable environmental plan was eventually arrived at for the pipeline. Its economics must continue to be carefully scrutinized.

Electricity consumers in various states are all too familiar with being asked to pay costs of work in progress - or even canceled. The pipeline should not ask customers to pay until they can turn on the gas.

Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.