The Federal Energy Regulatory Commission got it right, findingan access fee charged to interstate shippers by Southern CaliforniaGas was illegal-but then dropped the ball in failing to order$800,000 in refunds, the D.C. Court of Appeals said in a decisionhanded down May 22 (No. 97-1028).

The charge to shippers on Kern/Mojave Pipeline (the onlyinterstate pipeline that has successfully penetrated stateboundaries) to access SoCal’s distribution facilities through a newconnection at Wheeler Ridge, CA, originally was approved by theCalifornia Public Utility Commission. The access charge forinterstate shippers was separate from distribution charges whichwere levied on end users. The charge and the CPUC authorizationwere challenged before the CPUC and the FERC as being outside statejurisdiction, and the CPUC subsequently annulled the tariff. Thestate commission, however, ruled that a refund was inappropriate.

Shippers appealed to FERC and the Commission found the CPUCnever had the authority to make the tariff applicable to interstateshippers. But the federal agency also declined to order therefunds, saying that because SoCal was an intrastate pipelinesubject to the Hinshaw Amendment FERC lacked authority to require arefund. FERC Commissioner (now Chairman) James Hoecker dissented onthe issue saying the Commission in the past had ordered intrastatesto make refunds.

On rehearing, FERC changed its explanation to say it would letthe state agency deal with the refund issue. The three -judge panelled by Chief Judge Edwards found FERC “failed to provide alogically coherent, reasonable explanation for delaying the refund;furthermore, the delay itself was clearly inequitable.” The courtsaid SoCal had “collected a windfall profit” from an illegal chargeand remanded the refund issue to the Commission.

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