Opinion ID: 658297
Heading Depth: 3
Heading Rank: 1

Heading: The 100% load factor.

Text: 45 The petitioners first argue that applying the same 100% load factor to interruptible and firm service is inconsistent with the Commission's Policy Statement on cost allocation. See Policy Statement Providing Guidance with Respect to the Designing of Rates, 47 FERC p 61,295, (May 30, 1989), ord. on reh'g and clarif., 48 FERC p 61,122 (July 12, 1989). In that Policy Statement the Commission indicates that the costs associated with a particular class of users should be allocated to those users so that rates serve efficiently to ration pipeline capacity. In particular, the FERC states there that a firm customer should usually pay a higher rate than an interruptible customer because it is more costly to provide guaranteed service on demand. See Clarifying Policy Statement, 48 FERC at 61,446. 46 The petitioners also argue that, in allocating a 100% load factor to interruptible customers, the Commission unreasonably ignored its own commitment to consider the quality of service in setting relative transportation rates. See generally, 47 FERC at 62,058. Transco's interruptible service is decidedly inferior to its firm service, they claim in their brief, because market capacity is severely constrained and no interruptible service at all [can] be scheduled for long periods. 47 The petitioners' position is by no means illogical, but it proceeds from an erroneous premise. Firm customers as a class are in fact charged a higher rate than interruptible customers under the pricing structure approved in the Transportation Settlement, reflecting the cost and quality differentials between the two classes of customers. The 100% load factor is only the lowest per unit rate that a firm customer can in principle pay, i.e., if it takes 100% of its demand entitlement. Because many firm customers do not take all of their entitlements, firm customers overall end up paying a greater load factor than interruptible customers, who never pay more than the 100% load factor. See 55 FERC at 62,355-56; 57 FERC at 62,121. See also Orange and Rockland Utilities, Inc. v. FERC, 905 F.2d 425, 427-28 (D.C.Cir.1990) (accepting as plausible FERC's argument that 100% load factor accounts for quality difference between firm and interruptible service because a firm customer would pay as little per unit only if it bought its full contract quantity) (emphasis in original). Therefore, we reject the petitioners' objection to the 100% load factor allocation scheme in the Transportation Settlement. 48 [304 U.S.App.D.C. 97] Additionally, the petitioners argue that the FERC's summary disposition of the 100% load factor issue in Transco's 1992 Rate Case is inconsistent with (1) the agency's assurance in its brief in this case that it would reexamine this issue in the pipeline's next rate case and (2) other pipeline restructuring orders, in which the Commission has held a separate hearing in order to develop a record on the proper load factor. The petitioners' objections, however, properly relate to the 1992 Rate Case, not to the orders under review. The Commission never represented in the orders under review that it would revisit, much less hold an evidentiary hearing on, the load factor issue. In any event, as we noted above, the FERC has since agreed to hold an evidentiary hearing on the proper load factor. Thus, the petitioners will have a forum for the presentation of evidence bearing upon the load factor issue, but not in this case. 49