Opinion ID: 542917
Heading Depth: 2
Heading Rank: 3

Heading: Protecting customers from take-or-pay liabilities.

Text: 39 Finally, FERC concluded the minimum bill does not serve as a means of minimizing take-or-pay costs--the third Seaboard justification. 19 Here, too, FERC held CIG's evidence insufficient to make the required showing. It found that CIG ... has shown no specific connection between its minimum bill and its take-or-pay obligations. Opinion No. 290, 41 FERC at 61,466. Specifically, FERC noted that CIG has not referred to any record evidence that [NGPL's] cutbacks caused or will cause particular minimum bill or take-or-pay obligations to be incurred [by CIG]. Opinion No. 290-A, 43 FERC at 61,278. 20 40 Requiring a specific connection is consistent with FERC's approach affirmed in other cases. For example, Tennessee Gas held that a minimum bill can be justified under this factor if it links cost-incurrence with cost-causation, i.e., if it assists in collecting take-or-pay costs from those customers that have caused the costs by reducing their purchases. 871 F.2d at 41 1105. 21 While CIG alleged such a connection, it offered no evidence in support thereof. Indeed, it may have been unable to make such a demonstration, given that CIG's sales to customers other than NGPL apparently also had declined in recent years. 42 CIG calls FERC's assertions on this issue cavalier and disingenuous in light of the facts. Yet the facts relied on by CIG are remarkably skimpy. For example, CIG claims it purchases gas under firm take-or-pay contracts in order to meet NGPL's demand. But CIG's only citation to the record in support of this claim is incomplete and misleading. Testimony immediately following the statement to which CIG refers states that CIG does not necessarily incur take-or-pay liability to the extent it is unable to sell gas to [NGPL]. And CIG cites no facts to bolster its argument that the CIG minimum bill, [b]y providing an economic incentive to NGPL to buy from CIG, ... allows [CIG] to avoid take-or-pay deficiencies. (Emphasis in original). Indeed, CIG disregards the glaring inconsistency between this allegation and its repeated emphasis on NGPL's failure to buy CIG's gas in favor of more costly supplies. 43 The Commission also points out that CIG has not quantified any take-or-pay costs it has incurred allegedly because of NGPL's failure to buy gas. FERC further argues that elimination of a minimum bill does not invariably lead to increased pipeline take-or-pay costs, noting that CIG's minimum bill contains a crediting provision like the one in Wisconsin Gas, which allowed penalty payments to be credited to subsequent gas purchases. See 770 F.2d at 1160. CIG has responded to neither of these arguments. 44 Accordingly, the Commission determined and we agree that CIG has not adequately demonstrated its minimum bill was necessary to enable CIG to collect its take-or-pay costs. Allegations and arguments claiming necessity to protect customers from take-or-pay liabilities are not sufficient. Having failed to satisfy any of the three Seaboard justifications for retaining a minimum bill, FERC properly concluded the bill was unjust and unreasonable and should be eliminated.