On April 24, 2026, FERC issued a Final Rule establishing a Producer Price Index for Finished Goods (PPI-FG) minus 0.55% for oil pipelines. The Commission set the revised PPI-FG for a five-year period, July 1, 2026 through June 30, 2031. In setting the revised index, FERC “trimmed” the utilized cost data to the middle 80% of cost changes, declined to incorporate certain Form 6 cost data that was resubmitted in 2025, and adjusted the page 700 data set to reflect the Commission’s return on equity (ROE) policy changes based on the 2020 index review. The Final Rule is effective June 29, 2026.
On November 20, 2025, FERC issued a Notice of Proposed Rulemaking (NOPR), initiating the five-year review and seeking industry comment on FERC’s proposal to adopt a revised index level of PPI-FG minus 1.42% for the July 1, 2026, through June 30, 2031 time period. The NOPR also requested comments on (i) how FERC should adjust cost data to address the Commission’s policy changes for determining an oil pipeline’s ROE based on the 2020 index review, (ii) the incorporation of revised pipeline cost data, submitted in April-June 2025, into the index calculation alongside the original cost data submitted in 2019, and (iii) the Commission’s proposal to trim the applicable cost data to the middle 80%.
FERC’s Final Rule adopted an index level of PPI-FG minus 0.55% for July 1, 2026, through June 31, 2031. FERC first decided to adjust the cost data to account for recent changes in the Commission’s ROE policies, by averaging each pipeline’s originally reported 2019 ROE with an 8.30% CAPM ROE and recalculating the pipeline’s 2019 return on rate base, income tax allowance, and total cost of service (except for pipelines that reported identical ROEs throughout 2019–2024). FERC found such adjustments are consistent with the Commission’s 2020 index review. Next, FERC decided to calculate the index level utilizing the pipelines’ originally filed 2019 Form No. 6 cost data as the starting point and to reject the 2019 data that certain pipelines resubmitted in April–June 2025. In reaching this determination, FERC relied upon its observation that the data was submitted late without supporting explanations for the late filings, even if the revised data would reflect the Commission’s ROE policy changes.
Finally, FERC trimmed the data set to the middle 80%, finding such calculation best accounted for typical cost changes and included a wide spectrum of industry data. FERC further declined to calculate the central tendency of the trimmed cost data. FERC also declined to alter the index calculation based on general arguments regarding higher costs for the 2019-2024 period.
All commissioners also wrote separately. Commissioner Chang dissented, and the Chairman and the other three Commissioners concurred.
Commissioner Chang issued a dissent, opining that the pipeline index should have been set at PPI-FG minus 1.68%. Commissioner Chang also took the position that the Final Rule should have trimmed the data set to the middle 50% instead of 80%, which she contends better reflects “normal” cost changes under the Kahn methodology. Finally, Commissioner Chang disagreed with the majority’s decision to apply an ROE modification to the cost data to account for the Commission’s ROE policy changes, opining that the adjustment is conceptually flawed, inconsistent with prior ROE precedent, and creates a “stitching problem” between this and the prior five-year index period.
Chairman Swett concurred in the result but wrote separately to emphasize that the index review is a technical exercise in tracking industry cost changes under the Interstate Commerce Act, not a broader policy judgment about fuel prices. Chairman Swett notes that the majority’s decisions on the 2019 ROE adjustment and trimming to the middle 80% are intended to keep the index aligned with observed cost trends while preserving the simplified, generally applicable indexing framework Congress endorsed in the Energy Policy Act of 1992. Commissioners Rosner, See, and LaCerte each filed short concurrences that do not alter the core analysis: Commissioner Rosner notes that, although he might have preferred different methodological choices, he supports the rule to provide regulatory certainty after prior fractured decisions and litigation; Commissioner See emphasizes indexing’s transparency and the record based rationale for using the middle 80% data set; and Commissioner LaCerte observes that some imprecision is inherent in an index based regime but believes the rule appropriately promotes stability within that framework.
FERC’s Final Rule, issued in Docket No. RM26-6-000, is available here.