Opinion ID: 461203
Heading Depth: 2
Heading Rank: 1

Heading: Substantial Evidence for Findings

Text: 17 In sustaining the twelve-month carrying charge limit, the ALJ found, and the Commission affirmed, that the extreme underrecovery was attributable primarily to Panhandle's imprudent failure to change its PGA format to a projected method by the summer of 1982 at the latest when it knew or should have known that the historic method it had been using was becoming increasingly less accurate due to changes Panhandle deliberately made in its purchasing pattern. ALJ Decision, 26 F.E.R.C. at 65,256; see June Order, 27 F.E.R.C. at 61,673. This finding, we are persuaded, is supported by substantial evidence. 18 Record evidence demonstrates that as early as September 1981, and continuously thereafter, Panhandle's actual purchased gas costs greatly exceeded its historical estimates. Shortly after September, its deferred account balance began to soar; by May 1982, the balance had reached $165.8 million, twice what it had been only three months earlier. ALJ Decision, 26 F.E.R.C. at 65,251. The record further shows that Panhandle could and should have anticipated these increased costs. It had decided as early as November 1981 to vary its purchasing pattern so as to buy a larger quantity of more expensive gas from its affiliate Trunkline. See June Order, 27 F.E.R.C. at 61,673 & n. 10. From March 1982 on, Panhandle also had information that it faced a decline in sales, which would cause further deferral unless reflected in its cost estimates. See ALJ Decision, 26 F.E.R.C. at 65,256. Panhandle does not contest this evidence, which fairly establishes its imprudence in not changing its PGA format. 19 Instead, Panhandle unavailingly disputes the significance of the finding that it should have changed its PGA format by the summer of 1982. First, it argues that it began discussions with the Commission to change its PGA format as early as September 1982--almost within the mid-1982 deadline that the Commission held prudence dictated. But the fall of 1982 was too late merely to initiate such a change. The ALJ found that it was improvident not to have changed format by the summer of 1982 at the latest, id.; similarly, the Commission set a deadline for the accomplished changeover of at least [ ] mid-1982. June Order, 27 F.E.R.C. at p 61,345. The ALJ and FERC cast these dates as absolute limits for good reason: when Panhandle finally did file for a format change in September 1982, its Account No. 191 surcharge was already so high that consumers opposed the change because it would raise costs still higher. See June Order, 27 F.E.R.C. at 61,673. As a result, the proceeding dragged on until March 1984. See Panhandle Eastern Pipe Line Co., 26 F.E.R.C. p 61,342 (Mar. 19, 1984), on rehearing, 27 F.E.R.C. p 61,233 (May 10, 1984). 20 Second, Panhandle argues that even if it had filed for a format change in mid-1982, as the Commission indicated that prudence required, it still would not have recovered the 189 million dollars then in the Account No. 191. Brief of Petitioner at 42. In making this argument, Panhandle has again conspicuously misread the Commission's decision: the argument assumes that the Commission held only that Panhandle should have changed its PGA format during mid-1982 rather than by mid-1982 at the latest. See June Order, 27 F.E.R.C. at 61,673; ALJ Decision, 26 F.E.R.C. at 65,256. Panhandle could reasonably have anticipated a need for a change in its format at least as early as November 1981 when it altered its purchasing pattern. Had it done so, Panhandle might have deferred none of the 189 million dollars. 21 Finally, Panhandle argues that two Commission orders that mandated new operating procedures for Panhandle, and not its own imprudence, caused it to underrecover 66.6 million dollars during the period in question. 10 But the Commission conceded that these factors contributed to the deferred account balance and nonetheless found that the primary cause of the huge balance was Panhandle's failure to change its PGA format. June Order, 27 F.E.R.C. at 61,673-74. 11 Even if we assume arguendo that the two orders contributed to Account No. 191 the full 66.6 million that Panhandle claims, Panhandle still has not carried its burden of proving that the carrying charges on the remaining 203.5 million dollars in the Account were costs that its customers should be required to bear. And, as we now show, see infra note 14 and accompanying text, the Commission's decision to disallow twenty-seven months of interest fell well within a zone of reasonableness bounded at the upper bracket with this figure of 203.5 million dollars in view. 12