Opinion ID: 339939
Heading Depth: 1
Heading Rank: 7

Heading: the second southern louisiana area rate proceeding

Text: 196 After this litigation made its appearance in this court, the Commission announced Opinion No. 598 and an effectuating order, by which the maximum rates chargeable for gas produced in the Southern Louisiana area were revised upward. 642 That decision does not, however, alter the conclusions we have expressed as to the basis for computation of producer refunds due Texas Eastern, 643 and of flow-through of those refunds by Texas Eastern, 644 prior to August 1, 1971, the effective date of the increases permitted by Opinion No. 598. 645 In that view, this latest promulgation of area rates for Southern Louisiana does not affect our ruling respecting the treatment of those matters in the Commission's pre-1971 Opinion Nos. 565 and 565-A. 197 Of course, by the terms of Opinion No. 565, the maximum price which Texas Eastern could pay the producers for gas extracted from Rayne Field rose to the applicable new area rate on the date it took effect. 646 That rise, in turn, had obvious implications, from that time onward, for the rates which Texas Eastern could charge its customers, 647 for refunds by the producers to Texas Eastern, 648 and for flow-through of such refunds by Teas Eastern, 649 matters as to which we are not now summoned to express any opinion. We think, however, as we have held, 650 that producer refunds and pipeline flow-through up to the operative date of the new area rates must be calculated on the basis of the original 18.5-cent just and reasonable area rate established in the Commission's first Southern Louisiana Area Rate Proceeding. 651 198 During the pendency of the proceeding leading to Opinion No. 598, a settlement conference was convened by the Commission, and eventually a settlement proposal was submitted by 32 major producing companies. 652 The proposal envisioned higher ceiling prices for gas whether sold under contracts dated before or after October 1, 1968, 653 and a total of $150 million in refunds--a reduction from $375 million--from sales subject to scrutiny in specified Commission dockets. 654 The Commission approved the proposal, 655 and adopted for the Southern Louisiana area the price ceilings and refund bases which it advanced. 656 199 Very importantly, however, neither the settlement proposal nor Opinion No. 598 or its related order embraced the refund questions presented in the case at bar. The settlement proposal explicitly admonished that '[t]he terms hereof do not dispose of any issues in the Rayne Field (Docket no. G-12446, et al.) ... proceedings 657 --the litigation now before us--and its refund provisions were expressly made subject to that exclusion. 658 In turn, the Commission, in its words in Opinion No. 598, adopt[ed] those provisions of the settlement proposal which prescribe[d] the ... refund provision for deliveries made. 659 And just as the settlement proposal defined the transactions subject to refund in terms excluding the gas sales involved here, so did the order accompanying Opinion No. 598. 660 200 We need not, in these circumstances, consider whether Opinion No. 598 could in any event affect the refund and flow-through issues which the Commission was called on to resolve several years previous to its promulgation. The critical fact is that Opinion No. 598 left those issues untouched. For that reason, we have concluded that our disposition of the refund and flow-through questions presented on this review must remain uninfluenced by Opinion No. 598.