Opinion ID: 701297
Heading Depth: 2
Heading Rank: 3

Heading: The Commission's Order on Rehearing

Text: 14 Northwest Natural sought a rehearing. On October 8, 1993, the Commission granted Northwest Natural's request in part and issued an order addressing those claims upon which rehearing had been granted. The Commission first rejected Northwest Natural's claim that Northwest's failure to assess FRP charges against its bundled customers was violative of Section 14.8 of its tariff. The Commission concluded that Section 14.8 applied to all transportation services identified in Volume No. 1-A of Northwest's tariff, which covered unbundled transportation service, but that Section 14.8 did not apply to the rate schedules SGS-1 and LS-1 which are contained in Volume No. 1 of Northwest's tariff, and which cover bundled storage and transportation services. The Commission further stated that the rate schedules LS-1 and SGS-1 do not provide for an FRP to be paid for those services. Northwest Pipeline Corp., 65 FERC p 61,046, at 61,429 (1993). In short, the Commission ruled that the tariff provision applicable to unbundled customers required them to pay for system fuel, but that the tariff provision applicable to bundled customers did not contain such a requirement. 15 However, the Commission also ruled that Northwest's exclusion of the bundled SGS-1 and LS-1 volumes from the denominator of the FRP calculation had violated Section 14.8 of the tariff, Volume No. 1-A. According to the Commission, Section 14.8 states clearly that in calculating the FRP the 'total annual volumes' should be included. There is no language excluding volumes transported pursuant to sales or storage services. Id. at 61,430. The Commission also observed, as a matter of contract construction, that had the phrase total annual volumes been intended to exclude those volumes transported pursuant to sales and storage services, then the language including volumes transported for Shipper contained in the antecedent clause would be superfluous. Id. The Commission concluded that it must be the intent of this provision to include in the calculation of the FRP volumes other than those transported by shipper customers--and there is no language suggesting that storage volumes are to be excluded from those other volumes that must be included. Id. 16 Based upon the Commission's conclusion that the FRP had been erroneously calculated, it ordered Northwest to file a revised FRP which included the bundled transportation volumes in the calculation. 7 It further ordered Northwest to refund the overcharges back to the affected unbundled customers who had paid more than their pro rata share. 8 17 Northwest's request for rehearing was denied by the Commission on July 21, 1994. Northwest Pipeline Corp., 68 FERC p 61,106 (1994). The Commission stated in its order denying rehearing that when bundled SGS-1 and LS-1 volumes are transported through the system, they are no different than any other volumes moving in the transportation facilities--system fuel (including LUF) had to be expended to move the volumes. The FRP would not accurately reflect the percentage of gas used for fuel if any transportation volumes were excluded from the calculation for whatever reason. Id. at 61,585. 18 The Commission also rejected Northwest's argument that, by having to refund monies to its unbundled customers, while not recovering those costs from its bundled customers, it would undercollect its costs. 9 The Commission first noted that such a claim was premised upon the presumption that Northwest had not recovered a proportionate share of fuel costs from customers of the SGS-1 and LS-1 rate schedules in the bundled rates charged under those schedules. Id. 10 The Commission went on to observe, however, that in any event Northwest had not been constrained from filing to recover fuel costs from its SGS-1 and LS-1 customers in a Section 4 (Natural Gas Act) general rate case. The Commission concluded that Northwest's failure to recover system fuel costs from its bundled customers was its own error, deeming it unacceptable for Northwest to have violated the clear terms of its own tariff and overcharged some other customers (those using unbundled storage services) to make itself whole. Id. 19 Additional rehearing was requested by Northwest and, on September 16, 1994, the Commission issued its order granting rehearing in part and denying rehearing in part. Northwest Pipeline Corp., 68 FERC p 61,305 (1994). The Commission agreed that Northwest had changed Section 14.8, effective April 1, 1993, to remove the tariff language at issue in this case. Accordingly, the refund order was modified and limited to the period April 1, 1991, to March 31, 1992. The Commission also denied Northwest's claim that it should be allowed to recover the deficiencies from its bundled SGS-1 and LS-1 customers. The Commission observed that Northwest's [Volume No. 1] tariff did not include a provision for billing its bundled SGS-1 and LS-1 storage customers for fuel use. Northwest's proposal, therefore, would not be a mere billing adjustment since there was to be no billing of fuel charges at all to those customers. Id. at 62,259. This appeal followed.