Requiring

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.”

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.”

The Federal Trade Commission has issued a proposed consent orderrequiring Shell Oil subsidiaries Tejas Energy and Transok to divest171 miles of the 690 miles of natural gas gathering lines recentlyacquired from Coastal Corp. subsidiaries in Oklahoma and the TexasPanhandle.

Attempting to head off proposed federal legislation, theInterstate Natural Gas Association of America has proposed new FERCprocedures requiring pipelines to notify affected landowners aboutnew construction plans on the first business day after filing acertificate application.

FERC has issued a final rule requiring interstate pipelines toidentify the names and addresses of their marketing affiliates ontheir web sites on the Internet. The new rule is aimed at assistingthe Commission in its oversight efforts and at helping shippers tobetter monitor transportation transactions between pipelines andtheir affiliated marketers.