El Paso, Edison Dispute Decision on Turnback Accord
El Paso Natural Gas has asked FERC to overturn a July ALJ
initial decision that found it failed to "seriously confront the
potential impact of...turned-back capacity on the remaining
customers on its system and take adequate steps to remarket the
capacity" when it first learned that Southern California Gas (SoCal
Gas) planned to step down its capacity commitment effective January
1996. If upheld by the Commission, El Paso would be required to
shoulder the costs for half of the 300 MMcf/d of capacity that the
LDC turned back.
The ALJ decision was issued in response to Southern California
Edison's challenge to a turned-back capacity settlement between El
Paso and the majority of its customers, which was approved by FERC
in April 1997. Edison, a contesting party, was severed from the
agreement and allowed to litigate its case separately. The
California utility challenged the settlement on a number of fronts,
but particularly focused on El Paso's efforts to remarket
turned-back capacity on its system in the mid-1990s.
If affirmed by FERC, the initial ruling of ALJ Michel Levant
would pertain solely to Edison. The California utility would
receive rate savings due to El Paso being required to include 150
MMcf/d of additional billing determinants in the calculation of its
rates [RP95-363-002]. However, concerns have been raised that other
El Paso customers that were parties to the 1997 settlement might be
In El Paso's Aug. 17th filing complying with the Levant
decision, Edison said that El Paso allocated the costs associated
with the 150 MMcf/d to its California customers rather than to
itself, as was required. "Thus, El Paso again proposes that its
California customers bear the costs associated with its failure to
remarket its turnback capacity."
Although Levant ruled in its favor on several points, Edison
took issue with the finding that the costs associated with
turned-back capacity would be shared equally between the pipeline
and its customers. Given its alleged failure to actively remarket
turned-back capacity, El Paso - not its customers - should foot the
entire bill for the associated costs, the utility argued.
"To allow El Paso...to shift 50% of the turnback costs into its
calculation of Edison's costs is inequitable and ill-advised.
Contrary to the Commission's established policy, which requires a
pipeline to bear its 'fair share' of turnback capacity costs even
when it diligently attempts to remarket the capacity, the initial
decision imposes no penalty on El Paso for its failure to actively
engage in any meaningful remarketing effort," Edison noted.
In contrast, El Paso said its efforts to remarket the
unsubscribed capacity on its system in the mid-1990s were
"exhaustive," and that, as a result, it should be allowed to
recover all prudently incurred costs associated with that capacity.
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