Although producers and pipelines have been fiercely at odds overhow to speed up the complaint process at FERC, they agreed on oneissue last week – that a generic process applied to both the gasand electric industries would be unwise and unfair. Rather, theybelieve each should have industry-specific complaint procedures.

At the same time, a major pipeline group took several potshotsat a recent plan proposed by the Electric Power Supply Association(EPSA) to expedite the complaint process, which many agree hassubstantially more “teeth” than the complaint-reform proposals ofthe natural gas industry. The ESPA proposal, which was presented atFERC’s complaint symposium last month, “is more concerned withpenalizing the ‘loser’ than with resolving complaints in a timelymanner,” said the Interstate Natural Gas Association of America incomments filed at FERC last Tuesday [PL98-4].

On the issue of uniformity, the pipeline group said the”numerous differences between the gas and electric industries mayrequire that different complaint procedures be adopted for the twoindustries.”

Both industries are at different stages of deregulation, and,therefore, demand different types of complaint remedies, INGAAsaid. The power industry is just beginning to confront “many of thedifficult transition pains that the gas industry faced followingOrder[s] 436 and 636.” As a result, it noted many electriccomplaints forwarded to the FERC’s Enforcement Hotline raise”issues of first impression and require policy calls by theCommission.” In contrast, “the natural gas industry’s restructuringprocess is far enough along that the Hotline is able to resolvemany of the natural gas complaints that arise today.”

While the same complaint procedural rule (Rule 206) applies toall formal complaints filed at FERC, INGAA also doubted that the”statutory differences” between the Natural Gas Act and the FederalPower Act would allow for a uniform complaint process.

The Pipeline Customer Coalition also raised the issue ofstatutory differences, noting that while FERC has the authority toorder refunds in complaints involving rates of utilities, thisauthority is conspicuously lacking in gas complaints againstpipelines.

The coalition, which represents producers, LDCs and industrialgas users, agreed that a generic complaint process would be unwise,mainly because it believes it would take two years or more for allthe industries – gas, electric and oil – to reach some kind ofaccord. If FERC should vote for a generic process, it believes “theprudent course” would be to put the coalition’s proposal forexpediting complaints into effect to gain “actual experience”during the interim while the regulated industries attempt to reacha uniform solution. The group’s proposal would subject theCommission to specific deadlines to resolve complaints involvinginterpretation and discrimination issues.

Specifically, it urged FERC to “resolve the few issues necessaryto fashion a gas pipeline industry expedited complaint procedure,even if that procedure proves to be useful only during the interimperiod before uniform, three-sector procedure agreements can beadopted.”

In a related issue, INGAA said it was “troubled” by many aspectsof EPSA’s proposal for expediting the complaint process. If FERCintends to use this as a “model or a starting point” for genericchanges to its complaint procedures, the pipeline group has askedthat it be allowed to participate in EPSA’s discussions withparticipants of the electric industry.

EPSA’s proposal calls for FERC to establish a new category ofcomplaints called “commercial practice complaints.” These wouldinclude issues for which “an immediate resolution is required inorder to the complainant to consummate or implement a transaction.”Once a complaint is received, the Commission, or an EnforcementCommissioner/Officer, would issue an informal advisory opinion andrecommendation as quickly as possible. If both sides agree with theopinion, the complaint proceeding would be concluded. But if one orboth sides object, the complaint would proceed to the second track,where the Commission would formally adjudicate the dispute on anexpedited basis.

Pipelines Oppose Penalties

Under EPSA’s proposal, the loser of a complaint would have topay the winner’s costs; an “appropriate” penalty would be assessedif a ruling favorable to the complainant isn’t issued in time topermit the proposed transaction to go forward; a series ofpotential escalating penalties could be adopted to discourageillegal commercial conduct while adequately compensating aggrievedparties; and the loser, particularly if it is a repeat offender,could be placed on a “Utility Watch List.”

INGAA took issue with the penalty-driven nature of EPSA’sproposal. As long as a complainant and the responding pipeline areacting in good faith, “the mandatory imposition of ‘winner’s costs’is inappropriate,” it said. In addition, INGAA doubts one aspect ofEPSA’s proposal, where the loser would be required to pay a penaltyin the event a ruling in favor of the complaint is not issued intime to permit a proposed transaction to go forward, would beworkable. It particularly was concerned by EPSA’s “Utility WatchList” concept. This could have “serious repercussions on theutility’s ability to finance projects and on Wall Street.”

At last month’s symposium, an electric co-op group raised theissue of why FERC doesn’t use the administrative equivalent of atemporary restraining order of a preliminary injunction to dealwith complaints. The Commission “may, in the most extreme andegregious complaint circumstances, wish to consider measures toprevent immediate and irreparable harm, [but it] should beextremely cautious before exercising such measures,” INGAAcautioned. It believes there’s the danger that complainants “wouldabuse the process and argue that, even before the facts of thecomplaint are adequately supported, that the Commission shouldissue a restraining order or a stay.”

INGAA proposed that FERC’s standard for issuing temporaryrestraining orders and stays should be the same as that used by thefederal courts.

Susan Parker

©Copyright 1998 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.