Natural Gas Competition Act of 1985

Natural Gas Competition Act of 1985 - Amends the Natural Gas Policy Act of 1978 to require pipelines, distribution companies, and gathering systems to transport natural gas on a non-discriminatory basis, according to available capacity and publicly filed tariffs. Exempts from this Act natural gas transporters under jurisdiction of a State commission which has certified to the Federal Energy Regulatory Commission (FERC) that: (1) its regulations are comparable to those of FERC; or (2) that such natural gas transporters are indeed providing non-discriminatory gas transportation service.

Directs FERC to require each pipeline to file semi-annual reports regarding its transportation capacities.

Grants FERC authority to require a pipeline or distribution company to comply with gas transportation requests if the Commission has determined that available capacity for such transportation exists, or to desist from transportation if capacity is lacking.

Directs FERC to: (1) establish a methodology to determine pipeline capacity to transport the natural gas requested; and (2) prescribe regulations to allocate pipeline capacity when such pipeline is insufficient to satisfy all transportation obligations. States that such allocation regulations shall be based upon certain priorities applicable under the Natural Gas Act and this Act for curtailed deliveries.

Establishes guidelines under which the Commission shall employ methodologies for cost allocation and rate design.

Requires FERC's non-discriminatory transportation guidelines to encourage gas buyers' cooperatives.

Permits pipelines or local distribution companies that voluntarily agree to transport natural gas to charge a nondiscriminatory incentive allowance.

Prescribes guidelines under which FERC is directed to initiate rulemaking procedures to establish a new interstate pipeline rate design which will encourage voluntary transportation of natural gas.

Retains State regulatory authority over natural gas purchase costs and purchasing practices of utilities. Prohibits any State agency from establishing presumptions regarding the prudence of natural gas purchase prices paid by a local distribution company.

Requires FERC to gather and monitor data regarding natural gas transportation, and to submit to the Congress within a specified time an evaluation and an analysis of whether it would be in the public interest to require interstate pipelines to operate as common carriers.