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Court Says California Shippers Due Refunds

Court Says California Shippers Due Refunds

The Federal Energy Regulatory Commission got it right, finding an access fee charged to interstate shippers by Southern California Gas was illegal - but then dropped the ball in failing to order $800,000 in refunds, the D.C. Court of Appeals said in a decision handed down May 22 (No. 97-1028).

The charge to shippers on Kern/Mojave Pipeline (the only interstate pipeline that has successfully penetrated state boundaries and jurisdiction) to access SoCal's distribution facilities through a new connection at Wheeler Ridge, CA, originally was approved by the California Public Utility Commission. The access charge for interstate shippers was separate from distribution charges which were levied on end users. The charge and the CPUC authorization were challenged before the CPUC and the FERC as being outside state jurisdiction, and the CPUC subsequently annulled the tariff. The state commission, however, ruled that a refund was inappropriate.

Shippers appealed to FERC and the Commission found the CPUC never had the authority to make the tariff applicable to interstate shippers. But the federal agency also declined to order the refunds, saying that because SoCal was an intrastate pipeline subject to the Hinshaw Amendment FERC lacked authority to require a refund. FERC Commissioner (now Chairman) James Hoecker dissented on the issue saying the Commission in the past had ordered intrastates to make refunds.

On rehearing, FERC changed its explanation to say it would let the state agency deal with the refund issue. The three -judge panel led by Chief Judge Harry Edwards found FERC "failed to provide a logically coherent, reasonable explanation for delaying the refund; furthermore, the delay itself was clearly inequitable." The court said SoCal had "collected a windfall profit" from an illegal charge and remanded the refund issue to the Commission.

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