Opinion ID: 658297
Heading Depth: 3
Heading Rank: 3

Heading: Great Plains surcharge.

Text: 61 Finally, the petitioners object on cost-causation grounds to the 2.3 cent volumetric surcharge to be levied upon all sales and transportation services as part of the Restructuring Settlement. The Commission approved the surcharge in order to enable Transco to recover a portion of the above market costs it incurred in connection with the now abandoned Great Plains coal gasification project. The agency reasoned that, because the expected technological benefits would have redounded to all future gas users ... by increasing the supply of available gas, all of Transco's customers should share in the cost of this failed project. 55 FERC at 62,341. The petitioners challenge this decision as another departure from the principle that customers should pay rates based only upon the costs they cause the pipeline to incur. 62 In response, the FERC refers us to K N Energy, Inc. v. FERC, 968 F.2d 1295, 1300-1302 (D.C.Cir.1992), for the proposition that [304 U.S.App.D.C. 99] in certain unusual circumstances it may abandon the cost-causation principle and instead base rates upon cost-spreading and value-of-service rationales. In K N Energy the Commission approved a volumetric surcharge for certain transportation customers in order to help resolve the take-or-pay crisis in the pipeline industry. See id. at 1301. The Commission explained both that it was necessary, because of the magnitude of that crisis, to spread the cost of its resolution across the entire natural gas industry, and that it was proper that all segments of the industry, including those that did not cause the take-or-pay problem, share in the cost of its resolution, as all would benefit therefrom. This court accepted the FERC's general principle that cost-spreading and value-of-service considerations could justify a volumetric surcharge that could not be justified as a matter of cost causation. We remanded the case only because the FERC had not provided a sufficient explanation for its decision to rely upon those considerations in the circumstances of that case. 63 Upon the precedent of K N Energy, the Great Plains surcharge at issue in the present case is lawful. As the Commission noted, had the Great Plains plant succeeded in increasing the supply of natural gas, it would have contributed also to reducing the price of natural gas, to the benefit of all natural gas customers. (Indeed, buyers of competing fuels would have benefited, too.) Transco's transportation customers would have benefited because they are by definition purchasers of natural gas--whether from Transco or from another supplier. Accordingly, we uphold as reasonable the volumetric surcharge included in the Restructuring Settlement.