Opinion ID: 373874
Heading Depth: 4
Heading Rank: 1

Heading: Ratemaking Under the Natural Gas Act

Text: 34 The purpose of the Natural Gas Act was to underwrite just and reasonable rates to the consumers of natural gas. 24 It was framed to afford consumers a complete, permanent and effective bond of protection from excessive rates and charges, 25 and at the same time, to ensure that rates set be consistent with the maintenance of adequate service in the public interest. 26 35 Three interrelated sections constitute the comprehensive and effective regulatory scheme 27 Congress created with regard to ratemaking. Section 7 provides that to undertake the transportation or sale of natural gas, an entity must first obtain a certificate of public convenience and necessity issued by the Commission. 28 In issuing such certificates, the Commission has the power to attach . . . such reasonable terms and conditions as the public convenience and necessity may require. 29 Once rates are authorized under section 7, a natural gas company may file for an increase crease under section 4. 30 The company must file its rates thirty days before they go into effect. 31 The Commission may then suspend the new rate schedule for five months. 32 Thereafter the increased rates may be collected but the Commission may require a bond to ensure refunds of increased rates or charges by its decision found not justified. 33 The burden of proof in section 4 proceedings is on the natural gas company. 34 36 On the other hand, if rates are unjust or unreasonable, the Commission may adjust them pursuant to section 5. 35 This section provides that (w) henever the Commission, after a hearing . . . shall find that any rate . . . is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate . . . and shall fix the same by order. 36 Section 5 rate adjustments may be prospective only, 37 and the Commission may not order rate increases unless the company has filed a new rate schedule. 38 37 In the instant case, the Commission has attempted to effectuate the policies of the Natural Gas Act by mandating a flow-through of revenues to resale customers as a condition on a section 7 transportation certificate. The Commission has implicitly determined that permitting Panhandle to retain these transportation revenues would allow it to be unjustly enriched at the expense of consumers. 39 Since theoretically Panhandle is already recovering from rates set in a prior rate settlement the fixed costs of the unused capacity that permits it to provide transportation services, additional revenues covering the same fixed costs are overcollections. 40 38 Panhandle claims that if in fact the Commission believes its rates are too high, it must follow the customary procedures under section 5 of the Act which permits it to act only after hearing and only after a finding that Panhandle's overall rates are unjust. 41 The Commission argues that since the revenue crediting condition was imposed pursuant to the Commission's section 7 power, section 5 requirements of hearings and findings do not apply. 42 39 The underlying premise of the Commission's argument is that it had authority under section 7 to condition the certificate to require revenue crediting, so long as the condition was supported by soundly based findings in the record and was reasonable. 43 We do not interpret section 7 so expansively. 40