Five associations representing major shippers of natural gas have called on FERC to issue a generic order requiring pipelines to amend their tariffs to comply with the Commission's policy on the crediting of reservation charges during service outages -- both planned and unplanned.
Federal Energy Regulatory Commission (FERC) policy requires that the full reservation charges be credited to a shipper when scheduled gas is not delivered due to a non-force majeure or planned maintenance event, since the failure was due to the pipeline's conduct and was within its control. But FERC has determined that when a pipeline's failure to deliver gas is due to a force majeure or unplanned maintenance event, all parties should share the financial burden. A pipeline in this case is required to provide a partial reservation charge credit to an affected firm shipper.
"In recent years, a number of cases have come before the Commission in which pipeline shippers have urged the Commission to require pipelines to comply with its clear policy on crediting during times of service interruptions. In those instances, the Commission has stood by its policy and has required that pipelines amend their tariffs in compliance thereof. However, after examining some 33 pipeline tariffs, the associations have determined that a lack of compliance with this crediting policy is prevalent and requires generic Commission action," the coalition of gas shippers said.
The coalition petitioning FERC includes the Process Gas Consumers Group (PGC), American Public Gas Association (APGA), Natural Gas Supply Association, the Independent Petroleum Association of America and the American Forest & Paper Association.
"The associations' submission...serves to make the Commission aware that the problem of nonconforming tariff provisions is widespread and that generic action is needed," the groups said. They also asked FERC to ensure that pipeline tariffs include a force majeure definition that is not overly broad, since outages attributed to force majeure do not require full crediting of shippers' reservation charges.
"The Commission has established very clear policies requiring pipelines to credit shippers in the event that pipeline service is interrupted -- whether for force majeure or other reasons," said Dena Wiggins, PGC general counsel.
"Lack of conformance with FERC's outage credit policy creates unnecessary conflicts between pipelines and shippers," said Dave Schryver, executive vice president of APGA. "These conflicts can be avoided by simply requiring pipeline tariffs to conform to long-standing Commission policy by incorporating clear outage crediting provisions."
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