After giving Natural Gas Pipeline Co. of America (NGPL) asecond bite at the apple, FERC last week said the pipeline hadsufficiently defended a proposed tariff revision that would allowit to hold its shippers liable for damages resulting fromlower-quality gas entering its system.

FERC “determines that Natural has an operational justificationfor the proposed [tariff change]. The examples provided by Naturalsupport a need to clarify that shippers may be held liable fornon-conforming gas damage,” the order said [RP00-39]. It notedseveral other pipelines have similar liability clauses in theirtariffs.

But it ordered Natural to strike a part of its proposal thatalso would enable it to assign damages for low-quality gas enteringpipeline facilities owned by third parties. “…[N]one of the otherpipeline companies’ [tariffs] include reference to damage onthird-party facilities. It is inappropriate for Natural toreference” this in its tariff, FERC said.

In the event “Natural’s system is damaged by non-conforming gas,then [it]…..will need to seek damages through the courts or otherlegal procedures outside of the Commission” to determine theresponsible part and the extent of liability.

Last November, the Commission approved the proposed tariffrevision to be effective May 1 based on the condition that Naturalfurther justify the need for the change. FERC said the pipelinewill have complied with its directive once it removes any referenceto “third-party facilities” from its proposal. It ordered Naturalto do so within 15 days of the order.

Susan Parker

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