FERC last week upheld its previous orders accepting TexasEastern Transmission’s tariff provisions that require emergencyshippers, such as hospitals, to reimburse non-emergency shippersjust for the loss of firm transportation capacity — not the lossof gas supply — stemming from pro-rata curtailments.

The Commission initially had accepted Tetco’s tariff provisionsin 1993 as part of the pipeline’s Order 636 filing. But thedecision was bounced to the U.S. Circuit Court of Appeals for theD.C. Circuit, which remanded the orders saying FERC hadn’tadequately explained why non-emergency shippers shouldn’t becompensated for costs associated with loss of gas supply as well asthe loss of firm capacity. In response to the remand, FERC orderedTetco last July to file a proposal addressing the court’s concerns.Last week, it rejected the pipeline’s proposal and reaffirmed itsinitial decision limiting compensation to lost capacity[RS92-11-027].

“…[I]n the capacity curtailment situation at issue here, theemergency shipper does not take, or use, any other shipper’s gassupply. The emergency shipper must still arrange for, and purchase,its own gas supply. It only uses some of the curtailed shippers’pro rata share of the pipeline’s transportation capacity,” theorder said in addressing the issue raised by the court. “Therefore,while compensation [for gas supply]…..is appropriate in theimbalance and gas supply curtailment situations, it is notappropriate in the capacity curtailment situation.”

However, FERC conceded there may be “unusual circumstances”where compensation for lost gas supply to non-emergency shippers iswarranted. “..[T]here could be circumstances where thenon-emergency shipper suffers disproportionate damages as a resultof its loss of gas supply. In such circumstances, the non-emergencyshippers may file with the Commission a request for sufficientcompensation to avoid a disproportionate loss.”

Furthermore, the Commission recognized there was nothingprecluding a non-emergency shipper from bringing a lawsuit againstany party, including the pipeline, “alleged to have violated someduty of care or other obligation to the non-emergency shipper.”

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