Opinion ID: 329424
Heading Depth: 3
Heading Rank: 4

Heading: Differentials due to storage facilities

Text: 54 A more difficult question is posed by those customers, particularly Columbia Gas and Consolidated Gas Supply, who have equipped themselves to take at high load factors by installing storage facilities. 55 In measuring a change of agency policy, the Rule of Law requires not only that the new standards flow rationally from findings that are reasonable inferences from substantial evidence, but that the agency give due consideration to the equities, if any, arising out of commitments based on previous rul- ings. 67 The Atlantic Seaboard formula encouraged the building of storage by offering a discount to high-volume purchasers. 56 All of United's customers benefitted when some of them constructed storage facilities rather than contract for demand levels that would require the addition of more expensive pipeline peaking capacity that would be idled during the summer slack. The ability of some customers to draw on storage volumes during peak periods also makes more gas available during peak seasons to those who do not have similar facilities. The Commission acknowledged analogous systemwide benefits in adopting the ALJ's decision to allocate the costs associated with United's own storage facilities, located primarily in the North, to the system as a whole. 68 57 The FPC rejected the appeal of those who built storage facilities with a terse statement noting that they had been favored with lower unit costs under the Seaboard method: We have determined that under United's gas supply situation the cost of its pipeline system is more directly related to annual rather than peak day operations. 69 58 While we do not say that a claim based upon action taken in response to FPC encouragement (investing in storage facilities to produce high load-factors) is conclusive, we are concerned that it does not seem to have been given any consideration or analysis whatever. However, we cannot say on this record that the FPC order is unreasonable, for customers whose storage permits them to take at high load-factors still receive a significant price discount. 59 Commissioner Moody, in his concurrence to Opinion No. 671, suggests a special rate for gas sold into storage. 70 That alternative is not before us, for the Commission was not presented by the parties in this proceeding with a specific storage discount provision. Instead, it was urged to reject any departure from the 50%-50% formula, 71 a step we cannot say was required as a matter of law.