On April 14, 2017, the United States Department of Transportation’s Pipeline and Hazardous Material Safety Administration (“PHMSA”) effectively amended its regulations regarding the installation of excess flow valves (“EFVs”) on natural gas distribution pipelines (the “EFV regulation”). EFVs are safety devices designed to minimize the flow of natural gas in distribution pipelines when the gas flow exceeds a certain rate. The EFV regulation requires natural gas local distribution companies (“LDCs”) to install EFVs upon the request of certain existing customers. Both public and private LDCs are required to notify customers of the option to receive a new EFV on existing lines. Notably, PHMSA deferred to the LDCs’ rate-setters to determine how and to whom the costs of the requested EFVs would be distributed.

The North Carolina Utilities Commission recently determined the cost recovery mechanism in North Carolina for the EFV regulation’s implementation. In advance of the April 14 effective date, several regulated LDCs, including Smith Moore Leatherwood’s client Frontier Natural Gas, filed applications to amend their service regulations to allow the recovery of the cost of EFV installation from requesting customers. On April 10, the Utilities Commission issued orders in several dockets approving the LDCs’ requested amendments to their service regulations. In doing so, the Utilities Commission permitted the companies to hold the requesting customer responsible for the full cost of installing an EFV under the new regulation.

Click here to read the EFV regulation in its entirety.