FERC Thursday approved Industrial Shippers’ request for Northern Natural Gas to revise its tariff to allow for partial crediting of reservation charges during force majeure or unplanned outages.
Industrial Shippers sought rehearing of a Federal Energy Regulatory Commission (FERC) June 16 order that directed Northern Natural to revise its tariff to be consistent with the agency’s policy that requires shippers to receive full reservation charges when scheduled gas is not delivered due to non-force majeure or planned maintenance events. However, the group took issue with the order’s failure to require Northern Natural to implement partial reservation charge crediting for curtailments during force majeure or unplanned events.
“The Commission reaffirms its finding [in the June 16 order] that Northern’s reservation charge crediting provision in non-force majeure events is not consistent with Commission policy and must be changed. As…for non-force majeure outages, where the curtailment occurred due to circumstances within a pipeline’s control, including scheduled maintenance, the pipeline must provide shippers a full reservation charge credit for the amount of primary firm service they nominated for scheduling which the pipeline failed to deliver,” the order said [RP11-2061].
“Northern’s provision that it will grant reservation charge credits only when it is negligent is clearly contrary to the Commission’s policy of requiring full credits in all circumstances where a pipeline fails to make primary firm deliveries because of a non-force majeure event. Northern does not contest that its tariff is inconsistent with Commission policy…However, it asserts that any change in that tariff provision must be in a general NGA [Natural Gas Act] Section 4 rate case.”
FERC rejected this argument. “If the Commission had to await for a pipeline to file a general Section 4 rate case before that pipeline’s compliance with the Commission’s clear policy concerning reservation charge crediting could be addressed, compliance with that policy would be significantly delayed,” the order said.
“Permitting the reservation charge crediting issue to be addressed in a limited Section 4 filing outside the context of a general Section 4 rate case has been the Commission’s policy for a substantial period of time.”
FERC in April rejected a request by a number of associations representing shippers 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 service outages, both planned and unplanned. But the associations did not walk away empty-handed (see Daily GPI, April 26).
After reviewing the tariffs of 33 interstate natural gas pipelines, five associations determined that the lack of compliance with this crediting policy was prevalent and required generic Commission action. They petitioned FERC to take action in late 2010 (see Daily GPI, Nov. 19, 2010).
Although it did not grant their request for generic action, FERC met the five associations — Process Gas Consumers Group, American Public Gas Association, Natural Gas Supply Association, Independent Petroleum Association of America and American Forest & Paper Association — halfway [RP11-1538].
In the order issued at the time, FERC said it “expect[ed] pipelines to maintain tariffs that conform in all respects to the Commission’s reservation charge crediting policy…Therefore, the Commission urges pipelines to review their tariffs to determine whether their individual tariff is in compliance and if not, make an appropriate filing to come into compliance.”
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