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Trailblazer Settlement Triggers Policy Changes

Trailblazer Settlement Triggers Policy Changes

In a major clarification of policy, FERC decided it wasn't necessary to address the merits of each objection before approving contested pipeline rate settlements. Instead, it said settlements could be ratified based on the reasonableness of the overall package. The policy adjustment was reflected in a rehearing order that approved a rate settlement between Trailblazer Pipeline and its customers as being "reasonable as a package" for consenting parties, yet at the same time severed contesting parties, Amoco Production and Amoco Energy. The action cleared the way for consenting parties to maintain the benefits of their settlement bargain while giving the Amoco affiliates a chance to litigate the "complex factual issues" that they raised [RP97-408-006].

"...I believe that [this] order reflects a change in policy with regard to several important issues involving settlements. [It] clarifies that the Commission does not have to make a determination on all the issues contested in a rate case in order to approve the overall settlement. Rather, the Commission is making a merits determination in approving Trailblazer's settlement as just and reasonable as a whole," Commissioner Linda Breathitt said.

In short, the Commission found that the "overall benefits" of the Trailblazer settlement outweigh the alternative of "litigation for all parties," she said. "This...approach is one that makes sense to me and [is] one that I support." INGAA praised FERC for its decision, noting that a ruling to the contrary would have been a deterrent to pipeline-customer settlements.

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