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New York State Electric & Gas Corp. v. Federal Energy Regulatory Commission

filed as amended may 17 1989.: February 15, 1989.

NEW YORK STATE ELECTRIC & GAS CORPORATION, PETITIONER
v.
FEDERAL ENERGY REGULATORY COMMISSION, RESPONDENT; NORTH PENN GAS COMPANY, INTERVENOR; CORNING NATURAL GAS CORPORATION, INTERVENOR; THE PUBLIC SERVICE COMMISSION OF THE STATE OF NEW YORK, INTERVENOR



Seitz, Stapleton, and Cowen, Circuit Judges.

Author: Stapleton

PETITION FOR REVIEW FEDERAL ENERGY REGULATORY COMMISSION

Opinion OF THE COURT

STAPLETON, Circuit Judge

New York State Electric & Gas Corporation ("NYSEG"), Corning Natural Gas Company ("Corning"), and the New York State Public Service Commission ("NYPSC"), collectively the "Petitioners," here petition for review of an order of the Federal Energy Regulatory Commission ("FERC") denying an application for additional rate refunds from North Penn Gas Company ("North Penn"). We will deny the petition.

North Penn is an interstate pipeline. Corning, a wholesale customer of North Penn, is an intrastate utility which sells gas at wholesale and retail in New York State. NYSEG, a local energy distribution company, purchases wholesale gas from Corning for resale in that state. Both Corning and NYSEG are subject to regulation by the NYPSC.

In 1985, North Penn filed with FERC a request for a rate increase. The Petitioners opposed the request on the ground that North Penn's system was underutilized and that, as a result, its proposed rates were unreasonably high. FERC permitted the increase to go into effect on March 1, 1986 subject to refund.

A settlement agreement was entered in June of 1986. Among other things, it provided for refunds to customers for the period between March 1, 1986 and the date upon which the settlement would be approved. The Commission subsequently approved the settlement agreement and on February 12, 1987, North Penn filed a refund report. The Petitioners insisted that the refunds provided for in the report were less than the amount called for in the settlement agreement. After the Commission sided with North Penn on this issue, this petition for review was filed.

The Petitioners and the Staff of FERC contended before the Commission that by offering transportation service and storage service in addition to sales service, North Penn could substantially increase its total "throughput," i.e., the total amount of gas flowing through the North Penn system. As a part of the settlement, North Penn agreed to file for a certificate of authority under the Natural Gas Act to provide transportation and storage services. This application was filed with the settlement agreement and granted by FERC.

The parties to the settlement also agreed to a restructuring of North Penn's rates based on the partial unbundling of North Penn's services. The rates, which were set forth in Appendix H to the settlement agreement, were designed to produce approximately a $1.3 million increase in North Penn's jurisdictional revenues. The rates in Appendix H were based on a projected 12-month "throughput" of 18,992,500 Mcf of gas comprised of the following volumes, allocated among the three kinds of service:

(1) 16,350,000 Mcf of sales volumes,

(2) 1,000,000 Mcf of storage volumes, and

(3) 1,642,500 Mcf of transportation volumes.

Of these sales volumes, the parties agreed on a breakdown between total jurisdictional volumes (8,250,000 Mcf) and total non-jurisdictional (8,100,000 Mcf) volumes, and further agreed upon a figure ($3,414,842) for the cost of the jurisdictional service. The parties further agreed that total "jurisdictional service" would include the 8,250,000 Mcf of sales volumes plus all ...


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