Opinion ID: 721438
Heading Depth: 3
Heading Rank: 6

Heading: Discounts for former customers of downstream pipelines

Text: 236 In requiring a continuation of the pre-Order No. 636 small customer discounts, FERC only mandated that downstream pipelines offer the discount to the class of customers eligible for it on May 18, 1992. But the Small Distributors 88 argue that FERC should have required upstream pipelines to provide the discounts to any customers of downstream pipelines who received the discounts on May 18, 1992. The downstream pipeline customers were indirect customers of the upstream pipelines under the old regime and now are direct customers of these upstream pipelines. The Small Distributors argue that these former downstream pipelines customers are now indistinguishable from the upstream pipeline's other small customers, with whom they compete directly for markets. FERC's failure to account for this fact results in undue discrimination between similarly-situated small customers on the same pipeline solely on the basis of whether they used to be served through a downstream pipeline prior to Order [No.] 636. Although FERC did indicate in Order No. 636-B that the former downstream pipeline customers' need for discounts should be examined in individual restructuring proceedings, the Small Distributors contend that it is unfair and unreasonable to make them demonstrate such a need in restructuring proceedings when that need has already been presumed for other small customers. 237 The Small Distributors raise excellent points. FERC's failure to counter them with anything but its insistence that former downstream customers can raise their need for small customer discounts in upstream pipeline restructuring proceedings (perhaps they can, although the Small Distributors dispute the effectiveness of such a course of action), does not address the core of the Small Distributors' argument. FERC has made an [319 U.S.App.D.C. 112] arbitrary distinction between former indirect small customers of upstream pipelines (who are now direct small customers) and small customers who have always been direct customers of the same pipelines. Because FERC has not supported this distinction with substantial evidence in the record, we remand this issue to the Commission for further consideration of whether or not the small customer benefits should be made available to the former downstream small customers.