FERC Bows to Court on Hinshaw
After much nudging from the courts, state regulators and
industry, the Federal Energy Regulatory Commission last week
conceded defeat in its battle to justify jurisdiction over a small
lateral in Colorado.
The Commission vacated its 1997 orders that authorized KN
Wattenberg Transmission LLC to construct a lateral in Colorado to
serve two in-state industrial customers. In a complete turnabout,
FERC last week bowed to the Tenth Circuit Court of Appeals, which
reversed and remanded the orders citing the Commission's failure to
adequately justify its assertion of jurisdiction over the lateral.
The state and the municipal LDC bypassed by the lateral insisted
the KN Wattenberg line was exempt from Commission jurisdiction
under the Hinshaw amendment.
FERC all along had argued the Hinshaw exemption didn't apply
separately to "discrete" facilities owned by a jurisdictional
pipeline, as in this case. The lateral, which was completed in June
1998, is located 57 miles away from KN Wattenberg's jurisdictional
mainline. But the court found that FERC's justification for
asserting jurisdiction over the lateral appeared to be
"inconsistent" with the "plain language of the Hinshaw amendment."
The decision touched off a stir at the Commission, and launched a
close review of the Hinshaw qualifications.
Upon a second glance, however, the Commission last Wednesday
noted the lateral met the qualifications for a Hinshaw line.
"...[W]hen viewed on a stand-alone basis, this lateral meets all
the criteria for a Hinshaw exemption," the order said [CP97-256].
KN Wattenberg urged the Commission to continue exercising
oversight over its lateral until the issues surrounding the
Colorado Public Utilities Commission's (PUC) jurisdiction are
resolved. FERC flatly rejected the request.
However, should the Colorado PUC decline to assert jurisdiction
over the lateral, KN must notify FERC of the lack of state
regulation. "This Commission would then step in and exercise its
jurisdiction, filing in the regulatory gas," the order said.
HL&P Facing Hefty Jury Awards
Reliant Energy's Houston Lighting & Power (HL&P) could
be on the hook for millions depending upon punitive damages
assessed in a case that has hit the utility with $4.2 million in
actual damages awarded to three Texas cities. Lawyers for the
plaintiffs last week suggested a punitive award in the range of $40
million would be appropriate.
A Texas district court jury found that over decades HL&P
intentionally underpaid the cities for its exclusive right to sell
electricity. Not only does HL&P face millions in punitive
damages after the jury reconvenes Tuesday, the utility could be
liable for significantly more as 47 cities, including Houston, are
suing in a class-action case that accuses HL&P of underpaying
them by $113 million. The jury's findings in last week's case could
be applied to the other cities as well.
"I would like to think that the jury would give us everything
that we asked for," said Elizabeth Hawkins, an attorney with
Houston law firm O'quinn & Laminack, which represents the
cities. She noted the fact the jury asked to come back after the
weekend to assess punitive damages does not bode well for HL&P.
"I think that's sending a message right there to HL&P."
A Reliant Energy spokeswoman said the company could not comment
on the verdict as the jury is still out to assess the punitive
damages. She added there have been "some inappropriate comments put
out there by the opposing counsel."
With regard to the other plaintiffs in the class action suit,
Hawkins said it remains to be seen what the implications of last
week's verdict will be. "We wanted the whole class to go, and the
judge made a decision not to. I think the dust has to settle."
Joe Fisher, Houston