A petition by Southern Natural Gas (SNG) pipeline to amend a stipulation and agreement requiring it to file a new rate case by the end of February has come under attack at FERC.
The proposed amendment would extend the date by which SNG must either file a settlement or file a general Section 4 rate case from Feb. 28 to May 31, assuming the Commission issues an order by Jan. 31. “The additional time afforded by the proposed amendment will materially increase the likelihood that [SNG] and its customers will be able to reach a prefiling settlement resolving all issues related to [SNG’s] upcoming rate filing,” the pipeline told the Federal Energy Regulatory Commission (FERC) [RP09-427].”
PCS Nitrogen Fertilizer LP “vigorously opposes this petition.” It said SNG “has not met its burden to demonstrate that the petition is fair and reasonable, unopposed, and in the public interest.” SNG filed its last general rate case in March 2009. After extensive negotiations, the pipeline and shippers reached a settlement, which the Commission approved it in January 2010. The settlement called for the pipeline to file rates on Feb. 28, 2013 and, after a five-month suspension period, for the rates to go into effect on Sept. 1, 2013.
“SNG has been on notice since 2009 that it was obligated to file a new Section 4 rate case in 2013 (at the latest) and if it wanted to try to engage in prefiling discussions with its shippers in an effort to reach consensus on a settlement in order to avoid the filing date now looming, it has had more than adequate time to do so,” said PCS Nitrogen.
“This last minute effort simply does not constitute a compelling reason to upset the balance of interests contained in the 2009 settlement, particularly over the strenuous objections of one of the settling parties. It is simply unfair to PCS as a signatory to the settlement, to shift the filing date of SNG’s Section 4 rate case.”
SNG’s petition “fails to meet the just and reasonable standard because it clearly fails to preserve the ‘benefit of the bargain’ embodied in the 2009 settlement,” the pipeline said. “The ‘bargain’ that was struck by the parties in the settlement involved a commitment by SNG to make a general Section 4 rate case, with rates to be effective no later than Sept. 1, 2013. Nowhere in the settlement is it contemplated that the filing date would be postponed.”
Moreover, PCS Nitrogen contends that modifying the settlement will have a “chilling effect” on future settlements. “If this petition is approved and the Commission fails to enforce the 2009 settlement, how can parties to future proceedings be assured that they will get the benefit of their bargain, knowing that their agreement may be modified later at any time, over their objections?”
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