FERC Thursday rejected a major interstate gas pipeline group’s challenge to a prior ruling addressing the crediting of reservation charges during service outages.

In November 2010, five associations representing major gas shippers asked the Federal Energy Regulatory Commission (FERC) to exercise its Section 5 authority requiring pipelines to amend their tariffs to comply with the Commission’s policy on the crediting of reservation charges during outages, both planned and unplanned.

The Commission in April rejected the request for generic action against the pipelines, but the associations — Process Gas Consumers Group, American Public Gas Association, Natural Gas Supply Association, Independent Petroleum Association of America and American Forest & Paper Association — did not walk away empty-handed (see NGI, May 2).

In the April order FERC urged pipelines to determine whether their individual tariffs were in compliance with FERC policy, and if not, to bring them into compliance. Moreover, the Commission told the Division of Audits in the Office of Enforcement that “future audits of interstate pipelines…should include whether the tariffs comply with the Commission’s reservation charge-crediting policy.”

FERC policy requires that full reservation charges be credited to a shipper when scheduled gas is not delivered due to a non-force majeure or planned maintenance event, since the failure was due to the pipeline’s conduct and was within its control. But FERC determined that when a pipeline’s failure to deliver gas is due to a force majeure or unplanned maintenance event, all parties should share the financial burden. A pipeline in this case is required to provide a partial reservation charge credit to an affected firm shipper.

After reviewing the tariffs of 33 interstate natural gas pipelines, the five associations determined that the lack of compliance with the crediting policy was prevalent and required generic Commission action. (see NGI, Nov. 5, 2010).

The Interstate Natural Gas Association of America (INGAA), which represents interstate gas pipelines, challenged the April order and sought rehearing. It argued that the ruling was tantamount to Commission action under Section 5 of the Natural Gas Act (NGA) and had the impact of a regulation, which was issued without going through the proper rulemaking procedures.

“The Commission denies INGAA’s request for rehearing of the April 21 order’s encouragement of pipelines to review their tariffs and the directive that future audits of interstate pipelines conducted by the Division of Audits should include whether the tariffs comply with the Commission’s reservation charge crediting policy,” the order said [RP11-1528].

“Contrary to INGAA’s contentions, the Commission did not take any action under NGA Section 5 in the April 21 order. In fact, the Commission specifically denied the petitioners’ request for NGA Section 5 action, and the April 21 order did not order any interstate pipeline take any specific action with respect to modifying its tariff,” it said.

“The April 21 order’s summary of the Commission’s existing reservation charge crediting policy is…a policy statement. It provides in one place a comprehensive summary of the Commission’s existing policies concerning reservation charge crediting, as developed in prior adjudications so as to assist the parties in future case-by-case adjudications of whether a particular pipeline’s reservation charge crediting tariff provisions are just and reasonable.”

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