Consolidated Gas Transmission Corp. v. F.E.R.C.
| Decision Date | 17 September 1985 |
| Docket Number | Nos. 84-1240,84-1323,84-1256,84-1328 and 84-1342,84-1324,s. 84-1240 |
| Citation | 771 F.2d 1536 |
| Parties | CONSOLIDATED GAS TRANSMISSION CORPORATION, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Maryland Office of People's Counsel, Columbia LNG Corporation, Public Service Commission of the State of NY, Public Utilities Commission of OH, et al., Columbia Gas Transmission Corporation, Public Service Commission of West Virginia, Intervenors. NIAGARA MOHAWK POWER CORPORATION, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Maryland Office of People's Counsel, Columbia LNG Corporation, Public Service Commission of the State of NY, Public Utilities Commission of OH, et al., Columbia Gas Transmission Corporation, Public Service Commission of West Virginia, Consolidated System LNG Company, et al., Intervenors. CONSOLIDATED SYSTEM LNG COMPANY and Consolidated Gas Transmission Corp., Petitioners, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Niagara Mohawk Power Corporation, Maryland Office of People's Counsel, Columbia Gas Transmission Corporation, Intervenors. COLUMBIA LNG CORPORATION, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Maryland Office of People's Counsel, Consolidated System LNG Company, Columbia Gas Transmission Corporation, Public Service Commission of West Virginia, Cincinnati Gas & Electric Company, et al., Intervenors. PUBLIC SERVICE COMMISSION of the State of New York, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, State of Ohio, et al., Maryland Office of People's Counsel, Consolidated System LNG Company, Columbia Gas Transmission Corporation, Public Service Commission of West Virginia, Columbia LNG Corporation, Intervenors. NIAGARA MOHAWK POWER CORPORATION, Petitioner, v. FEDERAL ENERGY REGULATORY COMMISSION, Respondent, Maryland Office of People's Counsel, Consolidated System LNG Company, Columbia Gas Transmission Corporation, Columbia LNG Corporation, Intervenors. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
John E. Holtzinger, Jr., Washington, D.C., with whom Charles R. Brown, Joseph E. Stubbs, and James L. Blasiak, Washington, D.C., were on brief, for Consol. System LNG Co., and Consol. Gas Transmission Corp., petitioners in Nos. 84-1240 and 84-1323 and the joint brief for intervenors in Nos. 84-1256, 84-1324, 84-1328 and 84-1342.
Harry H. Voigt, Washington, D.C., with whom L. Charles Landgraf and Mindy A. Buren, Washington, D.C., were on brief, for Niagara Mohawk, petitioner in Nos. 84-1256 and 84-1342 and intervenor in No. 84-1323.
L. Michael Bridges, Earl L. Fisher, and Hart T. Mankin, Wilmington, Del., were on brief for Columbia LNG Corp., petitioner in No. 84-1324 and the joint brief for Columbia LNG Corp., et al., intervenor in Nos. 84-1240, 84-1256, 84-1328 and 84-1342.
Richard A. Solomon, Washington, D.C., with whom David E. Blabey, Albany, N.Y., was on brief, for Public Service Com'n of New York, petitioner in No. 84-1328 and intervenor in Nos. 84-1240 and 84-1256.
Andrea Wolfman, Atty., F.E.R.C., Washington, D.C., with whom Barbara J. Weller, Deputy Sol., F.E.R.C., Washington, D.C., was on brief for respondent in Nos. 84-1240, 84-1256, 84-1323, 84-1324, 84-1328 and 84-1342. Jerome M. Feit, Sol., F.E.R.C., Washington, D.C., entered an appearance for respondent.
Robert S. Tongren and M. Howard Petricoff, Columbus, Ohio, were on brief for State of Ohio and the Public Utilities Com'n of Ohio, intervenors in Nos. 84-1240, 84-1256 and 84-1328.
John K. Keane, Jr. and Thomas C. Gorak, Baltimore, Md., were on brief, for Maryland People's Counsel, intervenor in Nos. 84-1240, 84-1256, 84-1323, 84-1324, 84-1328 and 84-1342.
Richard E. Hitt entered an appearance for Public Service Com'n of West Virginia Glen L. Kettering entered an appearance for Columbia Gas Transmission Corp., intervenor in Nos. 84-1240, 84-1256, 84-1323, 84-1324, 84-1328 and 84-1342.
intervenor in Nos. 84-1240, 84-1256, 84-1324 and 84-1328.
James J. Mayer, Cincinnati, Ohio, entered an appearance for Cincinnati Gas & Elec. Co., et al., intervenors in No. 84-1324.
Before WALD and STARR, Circuit Judges and PARKER, * District Judge.
Opinion for the Court filed by Circuit Judge WALD.
Petitioners and intervenors in these consolidated cases challenge various aspects of an opinion by the Federal Energy Regulatory Commission ("FERC" or "Commission") interpreting the minimum bill provision of a tariff for resale of liquified natural gas ("LNG") imported from Algeria and regasified at a facility in Cove Point, Maryland. The minimum bill provision in each of the tariffs provides that the LNG company can recover certain operating expenses, but not a return on equity, if it is "unable to deliver gas" to the transmission company. LNG supplies from Algeria to the Cove Point facility were cut off in March, 1980, but the two companies who jointly own the plant ("the LNG companies") did not invoke the minimum bill provisions of their tariffs with their affiliated pipeline companies until December, 1980. The Commission, in a series of three opinions, eventually concluded that the LNG companies should have invoked the minimum bill as of May 31, 1980, and ordered the LNG companies and their affiliated pipelines to refund amounts above the minimum bill charged after that date. Columbia Gas Transmission Corp., 25 F.E.R.C. p 61,460 (1983) [hereinafter cited as Op. 202], vacated, 27 F.E.R.C. p 61,089 [hereinafter cited as Op. 202-A], modified, 28 F.E.R.C. p 61,053 (1984) [hereinafter cited as Op. 202-B]. We find the Commission's order to be based on substantial evidence and to be a rational exercise of its broad powers to fashion discretionary relief. We therefore deny the petitions for review.
Petitioners 1 Consolidated System LNG Company ("Consolidated LNG") and Columbia LNG Corporation ("Columbia LNG") jointly own a regasification terminal for LNG at Cove Point, Maryland and a pipeline from the terminal to Loudoun County, Virginia. In 1972, the Federal Power Commission ("FPC" or "Commission") authorized each of the companies to import LNG from Algeria and to revaporize it at Cove Point for transportation and sale to its pipeline affiliate, Columbia Gas Transmission Corporation ("Columbia Transmission") and Consolidated Gas Transmission Corporation ("Consolidated Transmission"), respectively. Columbia LNG Corp., 47 F.P.C. 1624 [hereinafter cited as Op. 622], modified, 48 F.P.C. 723 (1972) [hereinafter cited as Op. 622-A]. 2 The facility began operating in 1978 with Columbia LNG as the operator.
The Commission certificated the Cove Point facilities pursuant to Sec. 7 of the Natural Gas Act, 15 U.S.C. Sec. 717f (1982), largely While the Commission was convinced that the LNG was badly needed by the companies, it warned "that it is [not] in the best interest of gas consumers in the United States that any project which promises new supplies of gas be approved regardless of the associated price and other conditions." Op. 622-A at 727. The Commission acted instead to balance the need to make the project economically viable with its duty to protect gas consumers. Id. at 726. It chose the minimum bill as the tariff mechanism by which to create "an equitable apportionment of the risk between customers and stockholders and ... to assure the financing of the project on reasonable terms to the consumer." Id. at 730.
in response to a shortage of natural gas in the United States and on the systems involved. Op. 622 at 1636-37. The import and certificate authorizations provided that El Paso Algeria Corporation would "deliver the equivalent of 650,000 Mcf per day of LNG at Cove Point, 300,000 Mcf for Columbia LNG and 350,000 Mcf for Consolidated LNG." Id. at 1637. 3 The regasified LNG would provide base load supplies of gas to the transmission companies estimated at 9.1% of Columbia's and 14.3% of Consolidated's 1977 gas supplies. Initial Decision, 47 F.P.C. 1656, 1696-97 (1972) [hereinafter cited as Initial Dec.]. The Commission authorized the imports of LNG pursuant to Sec. 3 of the Natural Gas Act, 15 U.S.C. Sec. 717b (1982), finding the LNG supplies from Algeria to be adequately reliable but recognizing "that there can be no absolute guarantee that there will be no interruption of supply." Op. 622 at 1633
A minimum bill provision similar to that adopted by the FPC to apportion the project's risk had initially been proposed by Consolidated LNG. Consolidated LNG's proposed tariff provided that the company would not pass on to customers return on equity costs in the event of a service interruption in excess of one day. In return for this assumption of some of the risk of interruption, Consolidated LNG sought a greater return on equity than that granted its pipeline affiliate. Initial Dec. at 1694-95. Columbia LNG, on the other hand, had proposed a tariff providing for the payment of all costs, including a return on equity, " 'regardless of: (i) the amount of gas delivered, and (ii) the non-delivery of gas for any reason, including force majeure,' " and was willing to accept the same return on equity as its pipeline affiliate in return for being allowed to pass the entire risk of interruption on to its customers. Id. at 1694. The Commission approved the certificates and most of the proposed tariffs for sales by the LNG companies to their affiliated pipelines but rejected the portions of both tariffs requiring payment whether or not LNG was delivered, finding the provisions contrary to the public interest. Op. 622 at 1639. On rehearing, however, the Commission found that "although full 'cost-of-service' tariffs are not in the public interest, the type of minimum bill proposed by Consolidated LNG is acceptable for this project, and that, in the event of non-delivery, certain fixed costs should be recovered by the LNG...
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