Go-Ahead for El Paso

For nearly two months, gas pipeline rate increases have been held up because of an appellate court decision in a case involving the city of Memphis and the United Gas Pipe Line Co. of Shreveport, La. (TIME, Dec. 23). Last week FPC decided to grant boosts despite the ruling that pipelines may not raise their rates unless their customers agree, a decision that cast doubts on the legality of $200 million in recent increases. FPC now authorized the El Paso Natural Gas Co. to put into effect a $16.5 million rate increase, provided that it posts a bond for that amount in case the increase is later invalidated. Not to have allowed El Paso to go ahead, said FPC Chairman Jerome K. Kuykendall, would have brought on a "mass of litigation clearly not in the public interest."

Before 500 securities analysts in New York, Chairman Kuykendall tried to reassure the pipeline industry. He pointed out that the Memphis decision has been appealed to the U.S. Supreme Court by FPC and that there is plenty of time for the industry to go to Congress for corrective legislation, or to revise their procedures to get around the court's objections.

The present uncertainty in the industry may well turn out to be a blessing in disguise, said Kuykendall, if it brings about some sense in controversies over higher rates. Some people in the gas industry itself and some politicians, said Kuykendall, have habitually oversimplified rate cases. On the theory that any rate increase is inherently evil, they have acted as if the only issue involved is "whom are you for--the consumer or the industry?" Now, said Kuykendall, "the Memphis decision is forcing such persons to face reality and to admit that, after all, a pipeline company must remain solvent if it is to render service."

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