Opinion ID: 339939
Heading Depth: 2
Heading Rank: 5

Heading: The Standards for Flow-Through of Rate Reductions and

Text: Refunds 171 The principles governing flow-through by a pipeline of rate reductions and refunds by its suppliers trace their origin to policy ingrained in the regulatory scheme of the Natural Gas Act. Since we have already had occasion to discuss that topic in another context, 563 a brief highlighting will suffice here. The great objective of the Act was the underwriting of just and reasonable rates to the consumers of natural gas. 564 The clear intention of Congress' was that natural gas shall be sold in interstate commerce for resale for ultimate public consumption ... at the lowest possible reasonable rate consistent with the maintenance of adequate service in the public interest. 565 The design of the Act is to afford consumers a complete, permanent and effective bond of protection from excessive rates and charges 566 It is the Commission's responsibility in Section 7 proceedings to exercise control over the conditions under which has may be initially dedicated to interstate use. 567 to the end that full protection of the public interest 568 will be afforded. 172 The import of these considerations for flow-through of rate reductions and refunds to pipelines is evident. The rightful beneficiaries of such reductions are consumers when the prices they pay reflect excessive prices paid suppliers by the pipeline. To be sure, pipelines are entitled to charge their customers just and reasonable rates for gas sold them. 569 and a pipeline has a legitimate claim to retention of a rate reduction where it is absorbing excessive supplier-charges from revenues generated by just and reasonable rates of its own; 570 but no more than other natural gas entities subject to the Act can pipelines exact from their customers rates which are either unjust or unreasonable. 571 Retention by a pipeline of supplier-rate reductions is tantamount to overcharging customers when the pipeline is already a fair margin of return. 173 The Commission possesses Section 7 authority to condition any certificate of public convenience and necessity which a pipeline seeks by an imposition of requirements designed to serve the public interest. 572 A requirement that a pipeline flow through reductions in its suppliers' rates, certainly where the pipeline does not claim that it own rates are too low, is an eminently reasonable condition in the public interest. Should either the pipeline or the Commission feel a need to reexamine the pipeline's rates, the remedies conferred by Sections 4 and 5 are available. 573 In the meantime, the flow-through gives consumers the protection which the Section 7 certification process is designed to extend.p4 174 Entitlement to refunds of excessive rates charged pipelines by suppliers rests upon similar considerations. The only real difference in principle results from the difference in character of a rate reduction as remediation for the future and a rate refund as restitution for the past. A pipeline does not merit a supplier refund rectifying exorbitance in a supplier rate simply because it was the pipeline that directly paid the supplier that rate. 575 The aim of the Act was to protect ultimate consumers of natural gas from excessive charges.... They were the intended beneficiaries of rate reductions ordered by the federal commission, though state machinery might have to be invoked to obtain lower rates at the consumer level. 576 If the pipeline's rates to its customers were pushed below a just and reasonable level by the pipeline's absorption of the supplier's excessive rates the pipeline's claim, of course, commands respect. 577 But, when, on the other hand, the supplier's overcharge has already been recouped by the pipeline through higher charges to customers, there is no foundation upon which such a claim can validly be asserted. In sum, the responsibility to dispose of a refund plainly cannot be discharged by payment of the fund to those who show no loss. 578