FERC has rejected a request by associations representing major gas shippers to exercise its Section 5 authority requiring pipelines to amend their tariffs to comply with the Commission's policy on the crediting of reservation charges during service outages -- both planned and unplanned. But the association did not walk away empty handed.
Federal Energy Regulatory Commission (FERC) policy requires that the full reservation charges be credited to a shipper when scheduled gas is not delivered due to a nonforce majeure or planned maintenance event, since the failure was due to the pipeline's conduct and was within its control. But FERC determined that when a pipeline's failure to deliver gas is due to a force majeure or unplanned maintenance event, all parties should share the financial burden. A pipeline in this case is required to provide a partial reservation charge credit to an affected firm shipper.
After reviewing the tariffs of 33 interstate natural gas pipelines, five associations determined that the lack of compliance with this crediting policy was prevalent and required generic Commission action. They petitioned FERC to take action in late 2010 (see Daily GPI, Nov. 19, 2010).
Although it did not grant their request for generic action, FERC met the five associations -- Process Gas Consumers Group, American Public Gas Association, Natural Gas Supply Association, Independent Petroleum Association of America and American Forest & Paper Association -- half way [RP11-1538].
In an order issued last Thursday, the Commission said it "expects pipelines to maintain tariffs that conform in all respects to the Commission's reservation charge crediting policy...Therefore the Commission urges pipelines to review their tariffs to determine whether their individual tariff is in compliance, and if not, make an appropriate filing to come into compliance."
Moreover, FERC directed the Division of Audits in the Office of Enforcement that "future audits of interstate pipelines ...should include whether the tariffs comply with the Commission's reservation charge crediting policy. [And] if any shipper or shippers believe that a pipeline's tariff does not comply with Commission policy and the pipeline is not taking appropriate action to bring its tariff into compliance, they can file a complaint alleging noncompliance and seek Section 5 relief, or raise the issue in any Section 4 filing by that pipeline."
According to the order, "the Commission believes that this procedure provides a more flexible approach to ensure compliance with Commission policy than instituting the requested Section 5 action. However, if additional actions are require to obtain compliance, the Commission will consider them."
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