Remand

FERC Thursday denied rehearing of a November 2007 order on remand in which it declared Transcontinental Gas Pipe Line’s (Transco) pipeline network located onshore and offshore Louisiana to be transmission in nature and thus subject to agency jurisdiction.

In a Notice of Proposed Rulemaking (NOPR) last Thursday FERC heeded a recent court remand and adopted its slimmed-down affiliate rule in its standards of conduct, Order 497, that bars gas pipelines from giving preferential treatment solely to their marketing affiliates. The Commission also requested comments on whether the slimmed-down version of the rule should be applied to electric utilities.

In a Notice of Proposed Rulemaking (NOPR) Thursday FERC heeded a recent court remand and adopted its slimmed-down affiliate rule in its standards of conduct, Order 497, that bars gas pipelines from giving preferential treatment solely to their marketing affiliates. The Commission also requested comments on whether the slimmed-down version of the rule should be applied to electricity utilities.

Acting on remand, FERC on Wednesday reinstated a policy of permitting interstate pipelines to limit selective shipper discounts to the primary receipt and delivery points specified in a shipper’s contract (RP00-463-006).

The Federal Energy Regulatory Commission has denied a motion for a stay and remand of its earlier orders authorizing construction of Guardian Pipeline, a 141-mile, 36-inch line designed to deliver up to 750 MMcf/d from the Chicago Hub near Joliet, IL, to southeastern Wisconsin.

FERC upheld its March decision on remand in which it disclaimedjurisdiction over a four-mile, six-inch line of KN WattenbergTransmission LLC that serves two industrial customers in FortMorgan, CO. The Commission asserted jurisdiction over the lateralin a November 1997 ruling, but the U.S. Court of Appeals for theTenth Circuit remanded the decision two years later. Last March,FERC vacated its controversial decision upon acknowledging that theline met the qualifications for a Hinshaw exemption and, therefore,was subject to regulation by the Colorado Public UtilitiesCommission.

FERC yesterday upheld its March decision on remand in which itdisclaimed jurisdiction over a four-mile, six-inch line of KNWattenberg Transmission LLC that serves two industrial customers inFort Morgan, CO. The Commission asserted jurisdiction over thelateral in a November 1997 ruling, but the U.S. Court of Appealsfor the Tenth Circuit remanded the decision two years later. LastMarch, FERC vacated its controversial decision upon acknowledgingthat the line met the qualifications for a Hinshaw exemption and,therefore, was subject to regulation by the Colorado PublicUtilities Commission.

In another case the FERC is going to have to defend its policyof not requiring pipelines to flow through penalty revenues, theU.S. Court of Appeals ruled Friday in remanding a case involvingNorAm Gas Transmission (No. 97-1607). The 2-1 decision in Amoco v.FERC, with Judge Randolph concurring in part and dissenting inpart, did not object to NorAm’s raising penalty rates, but it doesask for an explanation of why the Commission believes penaltyrevenues will be so insignificant as to warrant no consideration.In the year prior to NorAm’s rate filing the pipeline had collected$1.8 million in penalty revenue. The court noted FERC appeared tobelieve that because penalty rates were raised, the incidence ofpenalties would decrease. But “even if a lesser number of penaltiesare imposed, the increased penalty rate might result in a grossincrease in penalty revenue. Moreover – and this is the keyimponderable – whether a shipper will be willing to incur thepenalty depends on his cost in securing alternative supplies in atight market.”

In another case the Federal Energy Regulatory Commission isgoing to have to defend its policy of not requiring pipelines toflow through penalty revenues, the U.S. Court of Appeals ruledFriday in remanding a case involving NorAm Gas Transmission (No.97-1607). The 2-1 decision in Amoco v. FERC, with Judge Randolphconcurring in part and dissenting in part, did not object toNorAm’s raising penalty rates, but it does ask for an explanationof why the Commission believes penalty revenues will be soinsignificant as to warrant no consideration. In the year prior toNorAm’s rate filing the pipeline had collected $1.8 million inpenalty revenue. The court noted FERC appeared to believe thatbecause penalty rates were raised, the incidence of penalties woulddecrease. But “even if a lesser number of penalties are imposed,the increased penalty rate might result in a gross increase inpenalty revenue. Moreover – and this is the key imponderable -whether a shipper will be willing to incur the penalty depends onhis cost in securing alternative supplies in a tight market.”