Court Opinion

ID: 9439120
Source: CourtListenerOpinion
Date Created: 2023-08-03 06:22:20.239502+00
Date Added: 2024-06-11T17:26:10.115067
License: Public Domain

RANDOLPH, Circuit Judge,
concurring in part and dissenting in part:
In Pennsylvania Office of Consumer Advocate v. FERC, we faced the same question we face here regarding a pipeline’s proposal to assess penalties on those customers whose actions threatened the pipeline’s operational integrity — namely, whether “as a policy matter, the mere possibility of revenue gains [from a natural gas pipeline’s collection of penalties] justifies a prospective requirement that the revenues be credited to customers.” 131 F.3d 182, 187 (D.C.Cir.1997). We there sustained the Commission’s refusal to impose such a requirement, in part because “the record failed to demonstrate that such revenue gains would occur.” The same is true here, as are the other reasons we gave for upholding the Commission. Yes, NorAm collected $1.8 million in overrun penalties (but nothing in penalties for violations of Operational Flow Orders) the year before its filing. If NorAm had proposed continuing the same level of penalties for the future, I would be with my colleagues. But NorAm proposed, and the Commission approved, an increase in penalties in order to prevent shippers from taking more gas from the system than they were entitled to take. Given the increase in penalties, there is no evidence in the record that “revenue gains would occur” in the future; past experience shows nothing of the sort. In the Commission’s expert judgment, based partly on the experience of other pipelines having the same level of penalties, little or no penalty revenue will be generated under the new penalty regime. As in Pennsylvania Office of Consumer Advocate, the Commission’s prediction may turn out to be right, or it may turn out to be wrong, but this “is an accepted feature of the rate-setting regime.” Id. at 187. The sort of certainty about the future my colleagues want from the Commission is unattainable, depending as it does on many unknowables, not the least of which is how cold the winters will be.
Although I therefore dissent from the majority’s opinion insofar as it orders the Commission to explain more fully its decision not to require penalty revenue crediting, I concur in the portion of the opinion upholding the increase in penalties.