Opinion ID: 586801
Heading Depth: 2
Heading Rank: 2

Heading: The Latest Chapter

Text: 12 The present problem arises under the now-replaced Order No. 500. The Commission continues to apply that scheme in the orders before us--rather than the new Order No. 528--because neither Williston Basin nor K N challenged the purchase deficiency methodology that resulted in our AGD II holding and the need for Order No. 528. While we might have expected the Commission to apply Order No. 528 across the field, we have not ordered it to do so. 13 In fact, the arguments petitioners raise today in no way revolve around the purchase deficiency mechanism. Rather, they focus narrowly on a separate component of the equitable sharing scheme: the commodity rate surcharge mechanism. Petitioners object to both the fashion in which FERC has defined the scope of the surcharge and the justifications it has offered for its definition. 14 Following the announcement of Order No. 500, Williston Basin formulated a plan for resolving its take-or-pay costs requiring it to absorb 25 percent of these costs itself, forcing sales customers to pay another 25 percent (as calculated by means of the purchase deficiency method), and allowing it to recoup the remaining 50 percent through a surcharge based on its sales volume alone. See Williston Basin Interstate Pipeline Company, 52 FERC (CCH) p 61,096 (July 27, 1990). 15 FERC accepted the first two components of Williston Basin's proposal, but rejected the third. It held that a commodity rate surcharge could only be based on total throughput. That is, if Williston Basin wanted to use the commodity rate surcharge mechanism, it could only recover from its sales customers an amount that reflected their percentage of total throughput; Williston Basin would have to absorb the portion of liability reflecting the usage of open access and § 7(c) transportation customers. FERC grounded its rejection of the Williston Basin plan in the language of § 2.104(a); in its view, that regulation required that both commodity rate and volumetric surcharges be based on total throughput. Subsequently, Williston filed--under protest--a revised tariff complying with the Commission's order. Under its new filing, Williston replaced its commodity rate surcharge with a volumetric surcharge, one taxing sales and transportation customers alike based on their actual usage. 16 K N, a transportation customer displeased with the Commission's ruling, joined Williston Basin in seeking a rehearing before the Commission and the reinstatement of the proposed commodity rate surcharge based on sales volume only. FERC denied rehearing, and petitioners filed for review in this court. Western intervened in support of various arguments raised by petitioner K N; the Montana [297 U.S.App.D.C. 17] Consumer Counsel, the Montana Public Service Commission, and the Public Utilities Commission of South Dakota intervened in support of FERC.