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Court Chides FERC for Ignoring Wellinghoff Dissent

FERC Chairman Jon Wellinghoff and the American Gas Association (AGA) scored a victory Friday when the D.C. appellate court remanded a prior order denying AGA's request for expanded reporting of natural gas that shippers provide to interstate pipelines.

The AGA argued that the Federal Energy Regulatory Commission (FERC) "failed to engage in reasoned decision making, offering only conclusory and unsupported explanations," when it denied its plea for more detailed reporting requirements for "shipper-supplied" natural gas for interstate pipeline operations. Wellinghoff dissented from the order at the time.

"Because the Commission failed to respond to the reasonable concerns of a dissenting Commissioner, we granted the petition for review," said the three-judge panel for the U.S. Court of Appeals for the District of Columbia Circuit. "While FERC is not required to agree with arguments raised by a dissenting Commissioner...it must, at a minimum, acknowledge and consider them. The Commission failed to do so here...The points raised by Commissioner Wellinghoff were 'neither frivolous nor out of bounds,' yet the Commission provided no direct response," the court noted.

The court case stems from an inquiry that FERC opened in 2007 to determine whether pipelines' annual and quarterly financial forms provided sufficient information to the public to permit an evaluation of a filer's jurisdictional rates, and whether the forms should be modified. The Commission proposed adding a new schedule to Forms 2, 2-A and 3-Q (new pages 521a and 521b) requiring pipelines to report detailed information regarding the acquisition and disposition of shipper-supplied gas.

AGA called on FERC to require that the information on the new fuel schedule be broken out by function -- transportation, storage and gathering -- and that pipelines be required to include, by function, the amount of fuel waived or reduced as part of a discounted or negotiated rate agreement, but the agency denied its plea.

Wellinghoff agreed with AGA. "Without the additional functionalized data, customers cannot determine whether pipelines are over-recovering their fuel costs for particular functions and whether their rates are just and reasonable," he argued in his dissent.

In the end, "the Commission apparently concluded the objections of some pipelines to the burdens of additional reporting were enough to justify rejecting petitioner's [AGA's] requests without further explanation," the court said.

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