Certified Energy Manager Practice Exam

What did Order 500 allow pipeline companies to do?

1. Charge consumers for transportation only

2. Pass long-term costs to producers and consumers

3. Limit the amount of natural gas they could sell

4. Control pricing for all natural gas suppliers

The correct answer is: Pass long-term costs to producers and consumers

Order 500 allowed pipeline companies to pass long-term costs to producers and consumers, which reflects a significant aspect of regulatory policy governing the natural gas market. By enabling pipeline companies to allocate long-term costs, the order aimed to enhance infrastructure investment while creating a more predictable economic environment for both producers and consumers. This provision is crucial because it ensures that the financial burdens associated with maintaining and expanding pipeline networks can be shared between those who produce the natural gas and the consumers who use it, rather than solely impacting pipeline operators. In contrast to the other options, this approach facilitates a more equitable distribution of costs associated with natural gas transportation. The other choices do not represent the main intention of Order 500. For instance, while limiting the amount of natural gas sold could restrict market dynamics, it does not relate to the objectives of Order 500. Similarly, the ability to charge consumers solely for transportation excludes the cost-sharing mechanism that Order 500 introduced. Lastly, controlling pricing for all natural gas suppliers would imply a level of market intervention that runs contrary to the nature of the regulatory reforms enacted in Order 500, which aimed to promote efficiency and investment in pipeline infrastructure rather than price controls.