Court Upholds El Paso Capacity-Release Rulings
The D.C. Court of Appeals last week rejected a challenge by
Southwest Gas Corp. to the capacity-release program of El Paso
Specifically, the court found the capacity rights of the Las
Vegas, NV-based LDC, a customer on El Paso prior to 1991, did not
have priority over the capacity rights of the expansion shippers,
which were added to the pipeline's system post-1991, at Southwest's
designated delivery points on the pipeline at Topock, NV.
Southwest raised this argument in response to FERC orders in
1992 that gave the expansion shippers the authority to sell their
rights to capacity at the Topock delivery points to other shippers
on the secondary market. In deference to the LDC, however, the
Commission ruled then that expansion shippers wanting to use the
delivery points would have to first make arrangements with
Southwest, the sole owner of the facilities at the points.
"Insofar as the petition rehashes the issue previously
litigated" by Southwest in 1992 "we already ruled in [that case]
that Southwest has not demonstrated that the Commission's decision
injured it in fact and thus made it an aggrieved party...," wrote
Circuit Judge David Sentelle in the June 2nd court opinion [Nos.
93-1627, 94-1310]. "The present petition adds nothing new, nor does
it change our view," he said, adding that Southwest's arguments
were "rather confused and confusing."
Further upholding the Commission, the court rejected Southwest's
arguments that it had "historic" or "vested" rights at the Topock
delivery points. FERC "not only reasonably but correctly points out
that Southwest had no such rights because the flexibility available
under El Paso's [capacity-release] proposal did not exist before
Order 636 restructuring," the court noted.
Moreover, the appellate judges agreed with FERC's decision to
deny Southwest the use - at no extra charge - of the California
Topock delivery points as receipt points, a move that would have
enabled the LDC to deliver gas to its system in southern Nevada by
backhaul. The Commission said the delivery points were downstream
from Southwest's contract zone, requiring the LDC to pay an
additional zonal charge.
The court also let stand FERC's ruling requiring
full-requirements customers, such as Southwest, to limit their
capacity releases on El Paso to a specific level, and to designate
in advance the amount of capacity they plan to release at each
delivery point. The Commission said it took this action to prevent
full-requirements customers from being able to tie up capacity on
all delivery points and gain an unfair competitive advantage.
Southwest argued that FERC's ruling was "arbitrary and capricious,"
but the court found it to be neither.
©Copyright 1998 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.