Generic Complaint Proposal Rouses Opposition
Although producers and pipelines have been fiercely at odds over how to speed up the complaint process at FERC, they agreed on one issue last week - that a generic process applied to both the gas and electric industries would be unwise and unfair. Rather, they believe each should have industry-specific complaint procedures.
At the same time, a major pipeline group took several potshots at a recent plan proposed by the Electric Power Supply Association (EPSA) to expedite the complaint process, which many agree has substantially more "teeth" than the complaint-reform proposals of the natural gas industry. The ESPA proposal, which was presented at FERC's complaint symposium last month, "is more concerned with penalizing the 'loser' than with resolving complaints in a timely manner," said the Interstate Natural Gas Association of America in comments 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 may require that different complaint procedures be adopted for the two industries."
Both industries are at different stages of deregulation, and, therefore, demand different types of complaint remedies, INGAA said. The power industry is just beginning to confront "many of the difficult transition pains that the gas industry faced following Order[s] 436 and 636." As a result, it noted many electric complaints forwarded to the FERC's Enforcement Hotline raise "issues of first impression and require policy calls by the Commission." In contrast, "the natural gas industry's restructuring process is far enough along that the Hotline is able to resolve many of the natural gas complaints that arise today."
While the same complaint procedural rule (Rule 206) applies to all formal complaints filed at FERC, INGAA also doubted that the "statutory differences" between the Natural Gas Act and the Federal Power Act would allow for a uniform complaint process.
The Pipeline Customer Coalition also raised the issue of statutory differences, noting that while FERC has the authority to order refunds in complaints involving rates of utilities, this authority is conspicuously lacking in gas complaints against pipelines.
The coalition, which represents producers, LDCs and industrial gas users, agreed that a generic complaint process would be unwise, mainly because it believes it would take two years or more for all the industries - gas, electric and oil - to reach some kind of accord. If FERC should vote for a generic process, it believes "the prudent course" would be to put the coalition's proposal for expediting complaints into effect to gain "actual experience" during the interim while the regulated industries attempt to reach a uniform solution. The group's proposal would subject the Commission to specific deadlines to resolve complaints involving interpretation and discrimination issues.
Specifically, it urged FERC to "resolve the few issues necessary to fashion a gas pipeline industry expedited complaint procedure, even if that procedure proves to be useful only during the interim period before uniform, three-sector procedure agreements can be adopted."
In a related issue, INGAA said it was "troubled" by many aspects of EPSA's proposal for expediting the complaint process. If FERC intends to use this as a "model or a starting point" for generic changes to its complaint procedures, the pipeline group has asked that it be allowed to participate in EPSA's discussions with participants of the electric industry.
EPSA's proposal calls for FERC to establish a new category of complaints called "commercial practice complaints." These would include issues for which "an immediate resolution is required in order to the complainant to consummate or implement a transaction." Once a complaint is received, the Commission, or an Enforcement Commissioner/Officer, would issue an informal advisory opinion and recommendation as quickly as possible. If both sides agree with the opinion, the complaint proceeding would be concluded. But if one or both sides object, the complaint would proceed to the second track, where the Commission would formally adjudicate the dispute on an expedited basis.
Pipelines Oppose Penalties
Under EPSA's proposal, the loser of a complaint would have to pay the winner's costs; an "appropriate" penalty would be assessed if a ruling favorable to the complainant isn't issued in time to permit the proposed transaction to go forward; a series of potential escalating penalties could be adopted to discourage illegal commercial conduct while adequately compensating aggrieved parties; 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's proposal. As long as a complainant and the responding pipeline are acting in good faith, "the mandatory imposition of 'winner's costs' is inappropriate," it said. In addition, INGAA doubts one aspect of EPSA's proposal, where the loser would be required to pay a penalty in the event a ruling in favor of the complaint is not issued in time to permit a proposed transaction to go forward, would be workable. It particularly was concerned by EPSA's "Utility Watch List" concept. This could have "serious repercussions on the utility's ability to finance projects and on Wall Street."
At last month's symposium, an electric co-op group raised the issue of why FERC doesn't use the administrative equivalent of a temporary restraining order of a preliminary injunction to deal with complaints. The Commission "may, in the most extreme and egregious complaint circumstances, wish to consider measures to prevent immediate and irreparable harm, [but it] should be extremely cautious before exercising such measures," INGAA cautioned. It believes there's the danger that complainants "would abuse the process and argue that, even before the facts of the complaint are adequately supported, that the Commission should issue a restraining order or a stay."
INGAA proposed that FERC's standard for issuing temporary restraining orders and stays should be the same as that used by the federal courts.
©Copyright 1998 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.