No sooner has El Paso Natural Gas resolved its dispute withSouthern California Edison over the 1996 capacity-turnbacksettlement than another potential threat has cropped up. Last weekthe D.C. Circuit Court of Appeals gave Williams Field ServicesGroup Inc. another bite at the apple to challenge the rates in thecontroversial settlement.

The court vacated and remanded orders in which the Commissiondenied Williams’ request to remove the costs associated with ElPaso’s Chaco compressor station from the pipeline’s transmissionrates in the settlement. Williams made the request after FERC, onrehearing, reversed itself and found the Chaco facilities to benon-jurisdictional gathering in nature. Despite its decision torefunctionalize the Chaco facilities, however, the Commission in a1998 order refused to upset the settlement and the settlement ratesby removing the Chaco costs.

But “the very settlement that FERC is purporting to respect isno longer settled, so FERC’s justifications [for denying William’schallenge] no longer hold weight,” the appellate court said in an11-page decision. In 1998, the court remanded the orders approvingthe 1996 settlement because FERC had failed to take into accountEdison’s claims as an indirect customer of El Paso. The decisionthreatened the foundation of the settlement. But the feud wastentatively resolved last August when El Paso agreed to pay Edison$32 million and make other concessions in exchange for the utilitywithdrawing its protests to the settlement. The court remand on the1996 settlement and the El Paso-Edison agreement are awaiting FERCaction.

The effect of the court’s decision “is that all of the issuesraised by Williams need to be consolidated along with thesettlement docket. So while it doesn’t actually threaten thesettlement, it will make it more difficult for the Commission toapprove the settlement because it will have to deal with moreissues,” a lawyer close to the case said.

Susan Parker

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