Breathitt Dissents in Texas Gas Settlement Case
The FERC majority last week approved a settlement that not only
gives customers on Texas Gas Transmission lower rates and refunds,
but also clears the way for NorAm Gas Transmission, a non-shipper
and pipeline competitor, to have an evidentiary hearing on two
deferred rate-related issues in the case. Commissioner Linda
Breathitt dissented in part, saying the ruling set a dangerous
precedent for other rate settlement cases.
Since NorAm is neither a current shipper on the Texas Gas system
nor is it likely to become one in the future, Breathitt said she
questioned "the equity and sense of allowing a non-shipper and
competitor to interfere with an otherwise uncontested rate-decrease
settlement." She noted shippers that "agreed to settle the rate
case will be forced to participate in the [NorAm] hearing to
protect their rights," and subsequently will incur additional legal
expenses. The bottom line is that the majority ruling "essentially
reduces or eliminates the benefits of the settlement to shippers
who actually use the Texas Gas system."
Also, "...I am concerned about the adverse effect the majority's
decision might have on pipelines and their shippers' ability to
resolve rate cases through settlements" in the future.
The Commission overturned the ruling of an administrative law
judge (ALJ), who held NorAm wasn't entitled to an evidentiary
hearing on the so-called "NorAm issues" - such as whether a
separate production-area rate zone should exist on the Texas Gas
system with a separate production-area cost of service. In its
decision, however, FERC noted that Texas Gas had agreed in its last
rate case to resolve the "NorAm issues" in its current rate case.
Breathitt argued that FERC contradicted a 1987 precedent set by
the D.C. Circuit Court of Appeals. That case, she said, held that
"a contesting party did not have the right to a hearing as
non-shipper but instead had only a future right to a hearing if and
when it became a direct ratepayer." She noted the Commission had
applied the court's ruling in a Northwest Pipeline case last year.
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