FERC has refused to stay an order convening a settlement conference on refunds of unused funds that Tennessee Gas Pipeline collected to remediate hazardous contamination on its system.

In mid-November Tennessee asked the Federal Energy Regulatory Commission (FERC) to stay the appointment of the settlement judge indefinitely unless and until the pipeline chooses to request a settlement conference. As grounds for its request, Tennessee cited the global credit crunch, which it says has strained its budget, as well as its ongoing efforts to repair hurricane damage to its facilities in and near the Gulf of Mexico.

But the Commission issued an unequivocal “no” to the pipeline. “The Commission finds that it would not cause irreparable harm to Tennessee…to participate in settlement negotiations. Further, the effect on Tennessee of global credit conditions and Tennessee’s efforts to repair storm damage are irrelevant to the question of irreparable harm in light of the 1995 settlement’s limitation on how Tennessee may use the funds at issue,” the order said [RP91-203, RP92-132].

The May 1995 settlement addressed the recovery of the costs of remediating polychlorinated biphenyl (PCB) and other hazardous substance list (HSL) contamination on Tennessee’s system.

In May of this year Tennessee filed a request to extend the operation of the 1995 settlement through June 2010. FERC in June granted Tennessee’s request, but it conditioned it upon the pipeline meeting with its customers to discuss refunds. Last month the Commission found that little progress had been made on the issue, and it ordered a settlement judge to be appointed to resolve the dispute over the 1995 settlement.

Dominion Resources’ utilities — Dominion East Ohio, Dominion Peoples and Dominion Hope — argued that the current economic climate has heightened the need for prompt action to allocate Tennessee’s “vastly overcollected funds” to the pipeline’s ratepayers, the order said. Further, they expressed concern that Tennessee may use the PCB/HSL remediation funds for purposes other than PCB/HSL remediation. This is barred under the 1995 settlement.

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