Opinion ID: 184971
Heading Depth: 2
Heading Rank: 2

Heading: The Rate Issues

Text: 33 Both the Indicated Shippers and Williams argue that FERC has improperly addressed the effect of the refunctionalization on El Paso's rates. The Indicated Shippers argue that FERC has gone too far by modifying the fuel charges;Williams argues that FERC has not gone far enough because it has not modified the remaining costs. In response, FERC relies on an interpretation of El Paso's Settlement. Because the status of that Settlement is no longer clear after this court's remand in Edison, FERC's orders under review are vacated insofar as they rely on an interpretation of the Settlement. 34 The Indicated Shippers argue that FERC's orders on review are inconsistent with its order approving the Settlement, specifically 15.2. The Shippers argue that FERC was wrong to find that fuel charges could be adjusted to reflect the refunctionalization of the Chaco compressor because 15.2 stipulated otherwise. As an initial matter, we note that FERC's interpretation of the Settlement is questionable. Section 15.2 stipulated that all El Paso facilities underlying the rates in Docket No. RP95-363-000, which includes the Chaco compressor, are properly functionalized as transmission facilities. Stipulation and Agreement, reprinted in J.A. 661. Section 15.2(i) emphasized that the show cause proceeding for the Chaco compressor was to be terminated. Given these provisions, it is not clear that FERC could adjust the fuel charges with that Settlement in place.We need not decide the issue, however, because that Settlement may no longer be in place. 35 In 1998, this court remanded FERC's order approving the Settlement that underlies the disputes here. See Edison, 162 F.3d 116. As a result, the status of that Settlement is no longer clear. As FERC counsel noted, 36 if on remand, the Commission determines to modify the settlement agreement--the interpretation of which un-derpins [the Indicated Shippers'] arguments here--based on the Edison Court's mandated areas of factual inquiry, litigation over the terms of the settlement agreement would yield nothing but an advisory opinion. 37 Br. for Respondent at 50. FERC's decision making must be reasoned, principled, and based upon the record. Western Resources, Inc. v. FERC, 9 F.3d 1568, 1572 (D.C. Cir. 1993) (citation and quotation marks omitted). Without the Settlement in place, FERC's decisions relying on that Settlement have no reasoned, principled basis. Thus, insofar as FERC's orders depend on an interpretation of that Settlement, they are vacated. In other words, FERC's orders finding that the fuel charges can be modified at El Paso's next adjustment period are vacated and remanded to FERC. 38 Likewise, FERC's order denying Williams' request for a remedy is also vacated because it depends on an interpretation of the Settlement. Williams argues that FERC failed to order an adequate remedy after it refunctionalized Chaco from a transmission facility to a gathering facility. Specifically, Williams argues that FERC should have ordered El Paso to remove the Chaco 'gathering' costs from El Paso's jurisdictional 'transmission' rates. Reply Br. of Petitioner Williams at 3. FERC denied Williams' request because it had approved El Paso's rate in the order approving the Settlement and it determined it would not upset that Settlement. First, it noted that the cost-of-service underlying the settlement rates is a black box number making it impossible to determine what costs of a particular facility were reflected in the settlement cost of service. See 82 F.E.R.C. p 61,337, at 62,340. FERC then noted that settlements like this involve a complex exchange of risks and benefits among the parties and that it would respect these quid pro quos because the results are in the public interest. Id. The very Settlement that FERC is purporting to respect is no longer settled, so FERC's justifications no longer hold weight. In addition, we note that at the time when FERC approved the Settlement, the Commission had decided to functionalize the Chaco compressor as a jurisdictional facility. Williams did not have a chance to challenge that Settlement because at that time it was not injured. Now that FERC has refunctionalized the Chaco compressor, Williams should be allowed to challenge the Settlement. Thus, the order denying Williams full consideration of its claims is vacated. 39 On remand, FERC must consider, in light of Williams' challenges, whether to again approve 15.2. If it does uphold 15.2, FERC must then consider the challenges raised by the Indicated Shippers. FERC is already in the process of reexamining these issues in the context of the remand in Edison. The parties in Edison have proposed a new settlement that specifically relies on the approval of the Settlement. Obviously FERC cannot simply rubberstamp this new settlement without reconsidering the issues raised by the parties in this case. Indeed, Williams apparently has filed a complaint against El Paso, raising some of the same issues raised before this court. 40 On remand, it would be well for FERC to consolidate all these related matters to reach a single, coherent disposition of the outstanding issues. We vacate those portions of FERC's order that rely on an interpretation of the Settlement and remand the case to the agency to reconsider these issues in light of our opinion. We deny the petitions for review in all other respects. 41 So ordered.