Commissioner James Danly Statement
October 29, 2021
Docket No. 
RP21-1187-000

I write separately to express my misgivings with the directive that Eastern Gas Transmission and Storage, Inc. (EGTS) show cause why section 45 of its General Terms and Conditions (GT&C) of its tariff remains just and reasonable and not unduly discriminatory or preferential.[1]

The Commission undoubtedly has authority under the Natural Gas Act (NGA) to order hearings to determine whether a pipeline’s tariff is unjust or unreasonable and to direct pipelines to submit information necessary for the Commission to make its determination.[2]  However, in order to direct EGTS to revise GT&C section 45, the Commission must meet its burden of showing that the existing term is unjust or unreasonable and its replacement is just and reasonable.[3]  Based on the support cited in today’s order, I am not confident that the Commission can meet its burden.[4]  I am submitting this concurring statement to provide guidance to the parties as to what I believe would be helpful to address in their submissions.

First, the order finds “EGTS’ [sic] tariff does not contemplate how it would handle the unlikely, but possible, situation in which there was also an outage exactly one year prior.”[5]  Then, quoting the recent Texas Eastern case, the order states “[a]s a general matter, ‘it is unjust and unreasonable for a pipeline to calculate credits based on usage levels that have been constrained by previous outages.’”[6]  The order cites to no other cases.  Texas Eastern also cites to no other cases and made that determination without conducting a hearing—a statutory requirement under NGA section 5.[7]  I would like to hear from the parties as to whether the Commission can meet its burden that GT&C section 45 is unjust or unreasonable based on Texas Eastern.

Further, the Texas Eastern case discussion on the requirement is as follows: 

In addition, we agree with Northeast LDCs that Texas Eastern should be required to eliminate periods in which shippers’ use of the system was constrained in its calculation of historical usage.  We find that it is unjust and unreasonable for a pipeline to calculate credits based on usage levels that have been constrained by previous outages.[8]

          I would find it helpful if parties addressed whether the Commission supported its finding with substantial evidence as required by NGA section 19.[9]

There are also many Commission cases regarding a pipeline’s methodology for calculating usage that state “[a]ny inaccuracies in the estimate produced by [a pipeline’s] proposed methodology should even out over time, because that methodology could as easily overestimate, as underestimate, a shipper’s need for . . . service during the outage”[10] and “there is no perfect method of estimating that usage.”[11]  I would like to hear from the parties on whether this precedent, and the fact that the situation the Commission seeks to address is “unlikely” to occur,[12] weighs against a finding that GT&C section 45 is unjust or unreasonable.[13]

Second, the order requires EGTS to show cause on GT&C 45.1.B.3, which provides that reservation credits “shall be applied to: . . . if quantities are nominated on a Day in which Pipeline has provided Customer with . . . advance notice of the unavailability of service . . . .”  The order states “requiring nominations . . . becomes unreasonable during a pre-announced, outage, when shippers know that none of their nominations will be honored.”[14]  In support, the order cites the recent Texas Eastern case, which states, “[t]he Commission determined that shippers that have notice of an outage should be permitted to focus on obtaining alternate supply routes, and not compelled to submit nominations that they do not reasonably expect the pipeline to honor.”[15] 

This statement originates from a Rockies Express Pipeline LLC (Rockies Express) case, which provided, “[t]he use of the ‘lesser of’ tariff language would unnecessarily require shippers to submit scheduling nominations in the situation where the pipeline has given advance notice of an outage so as to ensure that it would receive credits at the level of its average usage during the preceding seven days.”[16]  The Commission in the Rockies Express case required the pipeline to revise its tariff without a hearing or finding the existing tariff provision was unjust or unreasonable—whether the tariff “unnecessarily requires” an action is not the standard.  I would like to hear from the parties as to whether the Commission can meet its burden that GT&C section 45 is unjust or unreasonable based on Rockies Express or other relevant Commission precedent.[17]

Based on today’s order, and the orders upon which it relies as Commission policy, I am concerned that the Commission is frequently not meeting its statutory burden under section 5 of the NGA.  While some of these policies may seem like good ideas, appear to take minimal effort on the pipeline’s part, and have not been contested by a pipeline, that does not change our obligations under NGA section 5.  The Commission bears the burden of demonstrating that the existing tariff is unjust or unreasonable and to set forth a just and reasonable replacement. 

Moreover, perhaps instead of serial adjudications, the Commission should initiate a generic proceeding to determine whether these types of reservation credit terms and conditions are unjust or unreasonable.  That way, all interested stakeholders can participate in what becomes policy rather than be subjected to the policy at the Commission’s convenience. 

For these reasons, I respectfully concur.

 

 

 

 

 

[1] See E. Gas Transmission & Storage, Inc., 177 FERC ¶ 61,064, at P 28 (2021).

[2] See Interstate Nat. Gas Ass’n of Am. v. FERC, 285 F.3d 18, 39 (D.C. Cir. 2002) (“The Commission has authority under § 5 to order hearings to determine whether a given pipeline is in compliance with FERC’s rules, 15 U.S.C. § 717d(a), and under § 10 and § 14 to require pipelines to submit needed information for making its § 5 decisions, 15 U.S.C. §§ 717i & 717m(c).”).

[3] See Sea Robin Pipeline Co. v. FERC, 795 F.2d 182, 187 (D.C. Cir. 1986) (“The Commission staff must bear the burden of proving both that the existing provision is unjust or unreasonable and that the proposed replacement is just and reasonable.”).

[4] I recognize that I recently voted for the Texas Eastern Transmission, LP (Texas Eastern) case where the Commission similarly required the pipeline to show cause regarding whether its reservation credit terms and conditions were consistent with Commission policy.  176 FERC ¶ 61,138 (2021).  Because the rehearing of that order and the pipeline’s compliance filing are pending, I will only recite the facts and reasoning of that case.

[5] E. Gas Transmission & Storage, Inc., 177 FERC ¶ 61,064 at P 26.

[6] Id. (quoting Tex. E. Transmission, LP, 176 FERC ¶ 61,138 at P 31).

[7] 15 U.S.C. § 717d(a) (“Whenever the Commission, after a hearing had upon its own motion . . . shall find that any rate . . . is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate . . . and shall fix the same by order . . . .”) (emphasis added).

[8] Tex. E. Transmission, LP, 176 FERC ¶ 61,138 at P 31.

[9] 15 U.S.C. § 717r; see also Consol. Edison Co. of N.Y., Inc. v. NLRB, 305 U.S. 197, 229 (1938) (explaining substantial evidence means “more than a mere scintilla,” that is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion”) (citations omitted).

[10] Tex. Gas Transmission, LLC, 141 FERC ¶ 61,223, at P 79 (2012) (Tex. Gas); see Trunkline Gas Co., LLC, 172 FERC ¶ 61,218, at P 10 (2020) (citing Tex. Gas, 141 FERC ¶ 61,223 at P 79); Tex. E. Transmission, LP, 149 FERC ¶ 61,143, at P 172 (2014) (same); Equitrans, L.P., 148 FERC ¶ 61,250, at P 33 (2014) (same); Dominion Transmission, Inc., 146 FERC ¶ 61,101, at P 29 (2014) (same); Iroquois Gas Transmission Sys., L.P., 145 FERC ¶ 61,233, at P 52 (2013) (same); Dominion Transmission, Inc., 142 FERC ¶ 61,154, at P 37 (2013) (same).

[11] Tex. Gas, 141 FERC ¶ 61,223 at P 79 (citing Midwestern Gas Transmission Co., 137 FERC ¶ 61,257, at P 22 (2011)).

[12] E. Gas Transmission & Storage, Inc., 177 FERC ¶ 61,064 at P 26.

[13] I acknowledge that EGTS briefly discusses this precedent in its Answer.  See EGTS October 18, 2021 Motion for Leave to Answer and Answer of Eastern Gas Transmission and Storage, Inc. at 5.

[14] E. Gas Transmission & Storage, Inc., 177 FERC ¶ 61,064 at P 27.

[15] Tex. E. Transmission, LP, 176 FERC ¶ 61,138 at P 30 (citing Transcon. Gas Pipe Line Co., LLC, 175 FERC ¶ 61,085, at P 19 (2021) (Transco) and Rover Pipeline LLC, 172 FERC ¶ 61,103, at P 9 (2020) (Rover)).  I acknowledge that I voted for both the Transco and Rover orders.

[16] Rockies Express Pipeline LLC, 142 FERC ¶ 61,075, at P 32 (2013).

[17] See, e.g., id. (citing S. Nat. Gas Co., 135 FERC ¶ 61,056, at P 33 (2011)).

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