Opinion ID: 721438
Heading Depth: 2
Heading Rank: 3

Heading: LDC Bypasses

Text: 268 Order No. 636 creates new opportunities for large retail customers to bypass LDCs and connect directly to pipelines. Problems of scale and efficiency preclude other customers from taking advantage of such options, however. State regulators and LDCs argued before FERC that it is unfair to force an LDC's remaining customers to pay the transition costs that they contend are fairly allocatable to the departed customers of the LDC. Order No. 636, p 30,939, at 30,461; Order No. 636-A, p 30,950, at 30,658-59. FERC, however, refused to adopt a generic rule to address this problem, determining instead that it would consider requests for relief on a case-by-case basis. The Commission believes that it is reasonable to require that an LDC seeking relief in a bypass situation ... show that there is a direct nexus between the bypass and the pipeline, so that the costs it seeks to avoid should be reallocated to the bypassing customer. Order No. 636-A, p 30,950, at 30,659. 269 The PUCs protest that the burden placed on LDCs of demonstrating the nexus between the bypass and the pipeline is nearly impossible to meet because of its specificity. They accordingly argue that the pipeline and the bypassing customer should have to explain why they shouldn't bear the bypassing customer's share of transition costs. FERC counters that it has made no statement as to the ultimate burden of proof in such situations but has left resolution of LDC bypass claims to individual proceedings. However, as noted above, FERC did find it fair to require an LDC seeking bypass relief to show a direct nexus between the bypass and the pipeline. While arguably it may not constitute a burden of proof in a technical sense, it does constitute a hurdle of [319 U.S.App.D.C. 118] causation which LDCs seeking relief must clear in individual proceedings. Therefore, in contrast to the Intervenors' argument, FERC's direct nexus requirement is ripe for review. 270 We find the PUCs' arguments unpersuasive. First, we note that the burden LDCs face in these cases is not impossible to meet. As FERC notes, it has already made it clear that at least one bypassing customer still must bear its fair share of GSR costs. See Arcadian Corp. v. Southern Natural Gas Co., 67 FERC p 61,176, at 61,538 (1994). Second, FERC reasonably determined that the factual circumstances surrounding LDC bypasses differ sufficiently that the Commission cannot justify a generic rule [apart from the direct nexus requirement] that would be appropriate in all circumstances. Order No. 636-A, p 30,950, at 30,659. We accordingly reject the PUCs' challenges on this issue. 271