A federal appeals court in Washington, DC, Friday upheld FERC's decision rejecting Transcontinental Gas Pipe Line's (Transco) request to roll in certain costs associated with a Southeast expansion that went into service in late 1998.

Transco challenged the Federal Energy Regulatory Commission (FERC) order, which had denied the pipeline's bid to spread increased electricity costs associated with its mostly compression expansion to all of its pipeline shippers, not just those served by the new project.

In denying Transco's request, the Commission affirmed a ruling by an administrative law judge (ALJ) who held that rolling in the costs increased non-expansion shippers' rates and resulted in few, if any, system-wide benefits. Granting Transco's request to roll in the costs in a Section 4 rate case would have required all of its shippers to foot the bill for Transco's Cherokee expansion, whether they used it or not. FERC ordered that the costs be borne only by those shippers who would benefit from the expansion project.

"Transco offers several reasons why it thinks FERC acted arbitrarily and capriciously when it directed that the Cherokee electricity costs be priced incrementally. All lack merit," said the U.S. Court of Appeals for the District of Columbia Circuit.

The Cherokee looping and compression expansion added about 87 MMDth/d of annual firm transportation capacity to Transco's pipeline system to serve markets in Georgia (see NGI, Nov. 9, 1998).

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