Opinion ID: 542917
Heading Depth: 2
Heading Rank: 2

Heading: Protecting full requirements customers.

Text: 30 Similarly, we find reasonable FERC's arguments for rejecting the second Seaboard justification--that the minimum bill is necessary to protect CIG's full-requirements customers from bearing a disproportionate share of fixed costs. 16 FERC did not deny that CIG itself or some of its other customers might bear the burden of paying fixed costs not paid by NGPL. It concluded, however, that the benefits to ratepayers of placing [CIG] at risk for [certain] costs here involved outweigh the potential detriment of shifting those costs to full requirements customers. 41 FERC at 61,466 (citing Transcontinental Gas, 40 FERC p 61,188, at 61,590.) CIG claims FERC's reasoning completely dismisses this second criterion. 31 In its brief FERC offers the following explanation for its conclusion regarding Seaboard factor 2. The benefits to ratepayers to which its opinion refers, FERC asserts, are well known to CIG and other members of the natural gas community that participated in the Commission's Order No. 380 rulemaking proceeding [eliminating recovery of variable costs from minimum bills]. FERC cites, without listing, several benefits identified by the D.C. Circuit in reviewing that order (citing Wisconsin Gas, 770 F.2d at 1161). The most significant of these benefits is lower prices for all customers resulting from the increased incentive to compete vigorously in an environment where minimum bills do not maintain gas prices at artificially high levels. 17 As for the costs of eliminating the minimum bill, FERC also adopted the Wisconsin Gas court's finding that the harm, if any, to full requirements customers would be isolated, of short duration, and outweighed by the overall long-term benefits to these customers. 32 FERC's brief makes clear what its challenged orders do not--that FERC views the costs and benefits of eliminating the minimum bill from a 'national perspective'  (quoting 770 F.2d at 1161). This was also the view FERC adopted in its rulemaking eliminating recovery of variable costs in all minimum bills, an approach affirmed by the D.C. Circuit in Wisconsin Gas. Since then the D.C. Circuit has affirmed FERC's reliance on this balancing test in eliminating a company's minimum bill altogether. East Tennessee, 863 F.2d at 940. See In re Atlantic Seaboard Corp., 404 F.2d at 1274 (task of determining what interests should be protected, and to what extent, is a policy matter for the agency). We also find it a reasonable approach. 33 In order to overcome the foregoing considerations, FERC requires a pipeline to produce evidence to show that excessive cost-shifting would occur on its system in the absence of a minimum bill. Tennessee Gas, 871 F.2d at 1105. FERC and the D.C. Circuit interpret this requirement to mean concrete evidence not simply speculation. Id. Here FERC stated CIG must offer more than broad generalities and vague possibilities of economic calamities that might result in the absence of a minimum bill, and that CIG must specifically demonstrate that particular full requirements customers are likely to bear higher overall rates as a result of the minimum bill's elimination (citing Mississippi River Transmission Corp. v. FERC, 759 F.2d 945, 955 (D.C.Cir.1985)). 34 This approach to the second Seaboard justification, approved by the D.C. Circuit, has been described in more detail by FERC in at least two prior cases. In Tennessee Gas Pipeline Co. and Transwestern Pipeline Co., FERC made clear it will not 35 approve a minimum bill simply because there exists the slightest possibility that some costs will be shifted to full requirements customers.... To balance these conflicting interests the initial questions that must be answered are: Will the full requirements customers be affected ...? If so, by how much? These questions are intensely factual. They turn on the resolution of such subsidiary questions as: Will the partial requirements customer in fact reduce its purchases? If so, by how much? Will the reduction be short-term or long-term? Will the pipeline reduce its costs to compete for the partial requirements customer? And, will the pipeline increase sales to other customers be they existing or new? 36 Tennessee Gas, 871 F.2d at 1105 (quoting 40 FERC p 61,140, at 61,437), and (36 FERC p 61,175, at 61,145). 37 FERC concluded here and we agree that CIG simply has not demonstrated any shifting of costs with sufficient specificity to warrant the retention of its minimum bill. Thus, FERC reasonably rejected the second Seaboard justification. 18 38