Opinion ID: 270900
Heading Depth: 2
Heading Rank: 4

Heading: Rate Settlements

Text: 22 (1) January 25, 1961 the Commission approved the Texas Eastern 1961 Rate Settlement (Docket Nos. G-12706 and G-18841), 25 F.P.C. 172. This settlement established rates for Texas Eastern's future sales based upon a test year cost-of-service determination. The settlement takes into account rate increases then being paid by Texas Eastern to some of its suppliers (including United), under pending applications that might later be denied. Texas Eastern agreed to flow through to its own customers any refunds that might be received from its suppliers in certain of their pending proceedings listed in an appendix to the agreement. The flow-through provision would apply from December 1, 1959 to the effective date of Texas Eastern's next rate increase. Among the applications listed were six of United filings: Nos. G-9547, G-10592, G-12801, G-15360, G-18406, and RP60-2. 23 (2) The United 1962 Rate Settlement, 27 F.P.C. 504 (March 12, 1962) covered all the dockets enumerated in the appendix to the Texas Eastern 1961 settlement plus an additional docket, No. RP61-18, based on a 1961 United application not mentioned in the 1961 Texas Eastern settlement. As a result of this 1962 settlement, United made refunds to Texas Eastern both for flow-through to Texas Eastern's customers and for Texas Eastern's own enjoyment under Docket No. RP61-18. 24 The settlement in Docket No. RP61-18 also obligated United to flow through future refunds received from its suppliers to Texas Eastern and other jurisdictional customers. Accordingly, the Commission's order issued March 12, 1962 approving the settlement, required that United 'shall pass on to its jurisdictional customers    such refunds including interest as it may receive from its suppliers under Sections 4 and 7 proceedings under the Natural Gas Act in accordance with Article V' of the settlement agreement. 25 Texas Eastern asserts, as fundamental to its position, that it absorbed a rate increase as a result of the United settlements. Texas Eastern contends that (a) the new United rates were higher than the cost of gas reflected in its own rate settlements for the periods covered; and (b) that the company did not 'track' United's increases with subsequent increases to their own customers. Texas Eastern asserts a net increase of $1,336,000 a year brought about by the United rate changes in RP61-18 and RP63-1, or $2,225,000 for the 20 month period covered (January 1, 1963 to August 31, 1964). 26 The Commission concedes that petitioners did not 'track' the United rate filings with applications of their own. And it agrees, for sake of argument, that the new United rates might be higher than the old. But the Commission urges that even the $2,225,000 United rate increase Texas Eastern allegedly absorbed falls short of the $6,204,696 in refunds claimed for the same 20 month period. The Commission would look not only to the difference in United's rate schedules, but also to petitioners' 'actual average cost of gas' for the period, including zone differentials and average load factors. In short, the petitioners are in sharp disagreement with the Commission on the increase-decrease issue. The Commission has made no findings on the issue, however, and has discussed it only in the briefs, arguing that the present record is insufficient to make adequate findings on this point.