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ALJ Designated for Expedited Tuscarora Complaint Hearing

FERC Administrative Law Judge (ALJ) Michael J. Cianci Jr. has been tapped to hear the Section 5 complaint case in which Tuscarora Gas Transmission is accused of significantly overrecovering its cost of service, thus making its current transportation rates "unjust and unreasonable."

"Due to the potential for continued overrecovery of revenue, this proceeding must be expedited to the maximum extent possible," wrote Chief Judge Curtis L. Wagner Jr. in the Federal Energy Regulatory Commission (FERC) order designating Cianci as the ALJ [RP11-1823].

The proceeding will be subject to Track Two procedural standards -- of an expedited deadline for complex cases -- requiring an initial ALJ decision to be issued within 47 weeks or by April 27, 2012. The Commission typically has 90 days to either approve or reject the ALJ's initial decision in full or in part.

The complaint was filed by the Public Utilities Commission of Nevada (PUC) and Sierra Pacific Power Co., a subsidiary of the Las Vegas, NV-based holding company NV Energy Inc., earlier this year. FERC has begun an investigation of Tuscarora's rates under Section 5 of the Natural Gas Act, and has ordered the pipeline, which is owned by TransCanada subsidiary TC Pipelines LP, to file a full cost and revenue study within 75 days of the order. In the May order setting the case for hearing, the Commission declined to act on complainants' request for interim relief until after Tuscarora has filed its cost and revenue study (see Daily GPI, May 26).

The Nevada PUC and Sierra Pacific contend that, based on the pipeline's last two Form 2-A filings, Tuscarora's return on equity (ROE) was 22.2% for 2008 and 27.2 % for 2009 -- far above what the Commission typically allows for interstate gas pipelines. Tuscarora is a 229-mile pipeline that serves Nevada and southwestern California.

In its defense, Tuscarora pointed out that FERC did not include it in the Section 5 investigations of pipelines that were initiated during the past two years. In late 2009 FERC initiated a Section 5 investigations of three interstate pipelines -- Natural Gas Pipeline Co. of America, Northern Natural Gas and Great Lakes Gas Transmission Ltd. -- for potentially overrecovering their rates (see Daily GPI, Nov. 20, 2009). And in November 2010 it launched similar investigations of Kinder Morgan Interstate Gas Transmission LLC and Ozark Gas Transmission LLC (see Daily GPI, Nov. 24, 2010).

But the Commission found no merit in Tuscarora's argument. "The fact that the Commission initiated investigations of other pipelines based upon their 2008 or 2009 Form 2s [data], but did not initiate an investigation of Tuscarora based on Tuscarora's filings in those years, is irrelevant to the issues presented by the complainants here," the order said.

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