# Opposition Brief — Federal Energy Regulatory Commission v. Columbia Gas Transmission Corporation (No. 90-131) > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_2528%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1900 ## Text Supreme Court, US. * fa (a 1% H i. ey 2) Nos. 89-2001, 90-131 AUB 31 ES JOSEPH Fr Sean) x4 JR, IN THE Fe ada Supreme Court of the United States OCTOBER TERM, 1990 PANHANDLE EASTERN PIPE LINE COMPANY, e¢ al., ” Petitioners, COLUMBIA GAS TRANSMISSION CORPORATION, et al. FEDERAL ENERGY REGULATORY COMMISSION, Petitioner, V. COLUMBIA GAS TRANSMISSION CORPORATION, et al. On Petitions for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit BRIEF FOR CERTAIN RESPONDENTS IN OPPOSITION GILES D. H. SNYDER JOHN H. PICKERING STEPHEN J. SMALL Counsel of Record COLUMBIA GAS TRANSMISSION LouIs R. COHEN CORPORATION TIMOTHY N. BLACK 1700 MacCorkle Ave., S.E. GARY D. WILSON Charleston, W.Va. 25325-1273 SUSAN D. MCANDREW (304) 357-2326 WILMER, CUTLER & PICKERING 2445 M Street, N.W. Washington, D.C. 20037 (202) 663-6000 Attorneys for Columbia Gas August 31, 1990 Transmission Corporation (Attorneys Continued on Inside Cover) DANIEL L. SCHIFFER MICHIGAN CONSOLIDATED GAS COMPANY 500 Griswold Street Detroit, MI 48226 (313) 256-5206 JEFFREY M. PETRASH DICKINSON, WRIGHT, MOON, VAN DUSEN & FREEMAN 1901 L Street, N.W. Washington, D.C. 20036 (202) 457-0160 Attorneys for Michigan Consolidated Gas Company KATHLEEN A. KANE OBERMAYER, REBMANN, MAXWELL & HIPPEL 14th Floor, Packard Bldg. 15th & Chestnut Streets Philadelphia, PA 19102 (215) 665-3222 Attorney for Philadelphia Electric Company LARITO FARINAS PHILADELPHIA GAS WORKS 800 West Montgomery Ave. Philadelphia, PA 19122 (215) 684-6982 Attorney for Philadelphia Gas Works EDWARD J. GRENIER, JR. WILLIAM H. PENNIMAN GLEN S. HOWARD STERLING H. SMITH SUTHERLAND, ASBILL & BRENNAN 1275 Pennsylvania Ave., N.W. Washington, D.C. 20004-2404 (202) 383-0100 Attorneys for The Process Gas Consumers Group Mary E. BALUSS CHRISTOPHER J. BARR MorGAN, LEWIS & BOCKIUS 1700 M Street, N.W. Suite 700 Washington, D.C. 20036 (202) 467-7142 Attorneys for UGI Corporation QUESTION PRESENTED Whether the power of the Federal Energy Regulatory Commission, under section 4(d) of the Natural Gas Act, 15 U.S.C. § 717¢e(d), to “allow changes [in rates] to take effect without requiring the thirty days’ notice herein provided for,” includes the power to authorize pipelines to collect retroactive additional charges for gas sold long before any filing reflecting the additional charges. (i) ii RULE 29.1 STATEMENT Respondent Columbia Gas Transmission Corporation is a wholly-owned subsidiary of The Columbia Gas System, Ine. Respondent Michigan Consolidated Gas Company is a wholly-owned subsidiary of MCN Corporation. Respondent UGI Corporation has one subsidiary that is not wholly-owned, A P Propane, Inc. TABLE OF CONTENTS PRATER, sninsnsssccacacccnssbenitessetatubesnoueabnuibiemenaumananename 1. Producers Collectioz. of Section 110 Costs from BIND. ccsscscideiatensisinsnsenseiaseinsautnceihenscehiiskssuddducdihadaladthialai Pipelines’ Recovery of Section 110 Costs from ee GD a. Commission Approval of Direct Billing .............. 4. Judicial Review and Reversai of Retroactive IY SII sii cvinskanicticnsiaeagenecianabensicccchtnteaiemaneies The Commission’s Effort To Sanction Retro- active Direct Billing by Waiver .......................... The Decision Below Rejecting the Claimed Waiver Authority To Impose Retroactive Rate MII 5 icgthcknskativiccadestannehocounseediaadadahstenabinniabuanedesintes PI snchictcceerdindtiickeele ie Certiorari Is Not Warranted in This Case .............. There Is No Reason to Hold This Case for Disposi- tion of the Petitions in AGD __........---...0.2220--eee eee... CONCLUSION ............. jionhehabidsien cha cth thei antiiiateindinelacaiaanmditien I Oe DED. 0itsincccnncintscntnecasieniinninsaedaileensinmmnimaaiaaime (iii) iv TABLE OF AUTHORITIES Cases Page Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571 9 | | Re passim Associated Gas Distribs. v. FERC, 893 F.2d 349 (D.C. Cir. 1989), reh’g denied, 898 F.2d 809 (D.C. Cir. 1990), petitions for cert. pending, Bean, Gps OO Wile cccctnsteistaciantenneiieee 22 Atlantic Ref. Co. v. Public Serv. Comm'n, 360 U.S. a ee 17 City of Piqua v. FERC, 610 F.2d 950 (D.C. Cir. SOTDD cccscsesssciininninctsnnitintiiasiaaiea 16, 18, 19 FPC v. Sierra Pacific Power Co., 350 U.S. 348 CRIED iccnintccccenedeene sanilenbiataiemeaemnmdaaadamdutens 15, 18 FPC v. Tennessee Gas Transmission Co., 371 U.S. 7 a ne 16 Hall v. FERC, 691 F.2d 1184 (5th Cir.), cert. de- nied sub nom. Arkla, Inc. v. Hall, 464 U.S. 822 (SGD D ..cococcccsnssenmansstenteniaasamasinuaiaiana nn 14, 18 Maislin Indus., U.S., Inc. v. Primary Steel, Inc., No. 89-624, 110 S. Ct. 2759 (1990) .............0....... 18, 21 Mid-Louisiana Gas Co. v. FERC, 664 F.2d 530 (5th Cir. 1981), aff'd in part and vacated in part sub nom. Public Serv. Comm'n v. Mid-Louisiana Gas Co., 468 U.S. 319 (19838) ................................. 10 Montana-Dakota Utils. Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246 (1961) ............................. 21 Nader v. FCC, 520 F.2d 182 (D.C. Cir. 1975) ........ 16 Panhandle Eastern Pipe Line Co. v. FERC, 777 ye Fs oe: | ee 10 Public Serv. Co. of New Hampshire v. FERC, 600 F.2d 944 (D.C. Cir.), cert. denied, 444 U.S. 990 (1979) .......... snbatioselonhiesitaninasianasiadiamnsiaataane aia 5, 21 Texas Eastern Transmission Corp. v. FERC, 769 F.2d 1053 (5th Cir. 1985), cert. denied, 476 U.S. BORG COED cnccctceectattentsiennentleniemannaanees 19, 20 Towns of Concord & Wellesley v. FERC, 844 F.2d ~ ey f: Pee tne. 18 Transwestern Pipeline Co. v. FERC, 897 F.2d 570 CEKS. GER: TG aceccckcntcnneninicssnshaneunhcnataniaiedinattdiannaen 5 v TABLE OF AUTHORITIES—Continued Page United Gas Pipe Line Co. v. Mobile Gas Serv. Co., Se A IID. sciccnetincannidcrtecnsocesecpaienibasnitiiin aes 18 Statutes and Regulations Natural Gas Policy Act of 1978, 15 U.S.C. § 3301 iti ceincinsttanenieneinattiindenansnitessiintnicbbiiiidins 3 15 U.S.C. § 83820(a) (1988) 0... 3 Natural Gas Act, 15 U.S.C. § 717 et seq. (1988) : Section 4(c), 15 U.S.C. § 717c(c) (1988)... 14 Section 4(d), 15 U.S.C. § 717c(d) (1988) 1, 2, 14 Section 5, 15 U.S.C. § 717d (1988) 0 15, 16 18 C.F.R. §§ 154.301-154.310 (1990) 0 5 18 C.F.R. § 271.1104(d) (1) (1990)... eer aes 4 48 Fed. Reg. 5180 (1983)... sssaatclabanl 4 Administrative Orders and Decisions Order No. 94, Order Amending Interim Regula- tions Under the Natural Gas Policy Act of 1978 and Establishing Policy Under the Natural Gas Act, FERC Stats. & Regs., Regs. Preambles 7 30,178 (July 26, 1900)........................................... 3-4, 19 Order No. 94-A, Regulations Implementing Section 110 of the Natural Gas Policy Act of 1978 and Establishing Policy Under the Natural Gas Act, FERC Stats. & Regs., Regs. Preambles { 30,419 Os Mi I 4,6 Order No. 399-A, Refunds Resulting From Btu Measurement Adjustments, FERC Stats. & Regs., Regs. Preambles {30,612 (Nov. 20, I cicsinitneeieniinarinceiebiatiihtatinasdikatientintinsh ciate nian an, 6 Order No. 436, Regulation of Natural Gas Pipe- lines After Partial Wellhead Decontrol, FERC Stats. & Regs., Regs. Preambles { 30,665 (Oct. i I diteiiteeetrnith chelates itt enteric 20 Order No. 452, Purchased Gas Cost Adjustment Provision in Natural Gas Pipeline Companies’ FPC Gas Tariffs, 47 FPC 1049 (1972) 5 vi TABLE OF AUTHORITIES—Continued Order No. 473, Compression Allowances and Pro- test Procedures Under National Gas Policy Act Section 110, FERC Stats. & Regs., Regs. Pre- ambles { 30,747 (June 3, 1987) 00... Order No. 473-A, Compression Allowances and Protest Procedures Under National Gas Policy Act Section 110, FERC Stats. & Regs., Regs. Preambles { 30,788 (Dec. 29, 1987) .................... Order No. 500, Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol, FERC Stats. & Regs., Regs. Preambles {30,761 (Aug. 7, Es Ae ee eee oe ee GIRIED ccsecssnssnsnenstpsensmtesnenennnntstiitisininipnisiiiailinnaatntinayasie EIT scchtivctescceceninsecectbbuasoutedtslenindeienatnnaiibdinieliedtebisicantss Texas Eastern Transmission Corp., 28 FERC 0 a er Transcontinental Gas Pipe Line Corp., 27 FERC _( ¢ EEEESgereee e ee eee Transcontinental Gas Pipe Line Corp., 29 FERC 7 61,148 (1984) ........ a Ea Transcontinental Gas Pipe Line Corp., 31 FERC |.) |: sestathinatiGhadeedinenetianinen Page 20 10 IN THE Supreme Coot of the United States OCTOBER TERM, 1990 No. 89-2001 PANHANDLE EASTERN PIPE LINE COMPANY, et al., Petitioners, V. COLUMBIA GAS TRANSMISSION CORPORATION, et al. No. 90-131 FEDERAL ENERGY REGULATORY COMMISSION, » Petitioner, COLUMBIA GAS TRANSMISSION CORPORATION, et al. On Petitions for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit BRIEF FOR CERTAIN RESPONDENTS IN OPPOSITION STATEMENT This case involves orders of the Federal Energy Reg- ulatory Commission granting “waivers” of the notice re- quirement of section 4(d) of the Natural Gas Act, 15 U.S.C. § 717¢e(d), and thereby purportedly allowing the private petitioners, four interstate pipelines, to collect ad- ditional charges for gas sold during earlier periods. Re- spondents are downstream pipelines, local distribution i cea eeneistmienremineenll 2 companies, and industrial users that are direct or indirect customers of the petitioner pipelines.’ The Commission initially authorized the retroactive ad- ditional charges in orders issued in 1985. In 1987, the court of appeals struck down these orders because the additional charges violated the Act’s requirement that a pipeline charge only the rates on file at the time the gas is sold. Pet. App. 42a-56a (Columbia I).2 No party sought review of that decision in this Court. In 1988, on remand, the Commission issued the order now under review,® Pet. App. 17a-26a, again authorizing the retroactive additional charges, but now relying on its power under section 4(d) to “allow changes to take effect without requiring the thirty days’ notice herein provided for.” 15 U.S.C. § 717¢e(d). In 1990, in the decision from which petitioners now seek review, Pet. App. la-14a (Co- lumbia II), the court of appeals held that the Commis- 1 The respondents for which this brief is filed are Columbia Gas Transmission Corporation, Michigan Consolidated Gas Company, Philadelphia Electric Company, Philadelphia Gas Works, the Process Gas Consumers Group, and UGI Corporation. 2“Pet App.” refers to the appendix to the petition for writ of certiorari in Panhandle Eastern Pipe Line Co. v. Columbia Gas Transmission Corp., No. 89-2001 (filed June 22, 1990). %In addition to the Commission’s order in the remanded pro- ceedings, the Commission in 1988 issued an order authorizing one of the pipeline petitioners, Panhandle Eastern Pipe Line Company (Panhandle), to direct bill its customers for $17 million in certain other production-related costs that had been allowed by Orders Nos. 473 and 473-A (Compression Allowances and Protest Pro- cedures Under NGPA Section 110, FERC Stats. & Regs., Regs. Preambles §{ 30,747, 30,788 (1987) ) based on customers’ purchases from December 1979 to December 1984. Pet. App. 33a-40a. As in the orders issued on remand after Columbia J, the Commission relied on its section 4(d) power to waive the thirty days’ notice require- ment to authorize Panhandle’s direct billing procedure. In the con- solidated proceedings below, the court of appeals struck down the Order No. 473 direct billing order as well as the direct billing orders issued on the remand. aan een 3 sion’s power to waive the 30-day notice period of section 4(d) did not authorize it to impose, on unwarned and un- willing customers, a price increase for sales that oc- curred as much as eight years prior to the rate filing. Neither in Columbia I nor in Columbia II did the court of appeals bar the petitioner pipelines from recover- ing the production-related costs that gave rise to the charges at issue. It held only that such recovery must be done prospectively—for example, by including the costs in the pipelines’ charges to customers for current and future service. See id. at 4a, 54a. As described below, other interstate pipelines recovered the same production- related costs from their customers in that manner, as did one of the petitioner pipelines before it sought and ob- tained authority from the Commission in 1985 to switch to the retroactive recovery method held unlawful in this case. 1. Producers Collection of Section 110 Costs from Pipe- lines In the Natural Gas Policy Act of 1978 (“NGPA”), 15 U.S.C. § 3301 et seg., Congress established ceiling prices for “first sales’ * of certain categories of natural gas. In section 110 of the NGPA, 15 U.S.C. § 3320(a), Con- gress authorized the Commission to allow recovery by first sellers (7.e., gas producers) of certain production- related costs, including compression and gathering costs, in addition to the maximum prices otherwise permitted by the statute. In 1978, the Commission adopted interim regulations governing producers’ applications for recovery of pro- duction-related costs pursuant to section 110. In 1980, however, in Order No. 94, Order "Amending Interim Reg- ulations Under the Natural Gas Policy Act of 1978 and Establishing Policy Under the Natural Gas Act, FERC 4 Generally, “first sales” of natural gas are sales by gas pro- ducers to pipeline companies that in turn resell the gas to other pipelines, wholesale distributors, and large industrial customers. 4 Stats. & Regs., Regs. Preambles {| 30,178 (July 25, 1980), the Commission announced that effective July 25, 1980, it would no longer accept producers’ applications for re- covery of compression or gathering costs until it had com- pleted proceedings to determine appropriate generic al- lowances for such costs. Jd. at 31,218. The Commission assured producers, however, that upon adoption of such allowances ‘“‘a retroactive collection procedure will be pro- vided under which the [generic allewances] . . . will be applied to costs incurred with respect to gas delivered on or after the effective date of this Rule [July 25, 1980] if collection of such costs is contractually authorized.” Id. (emphasis added). In 1983, in Order No. 94-A, Regulations Implementing Section 110 of the Natural Gas Policy Act of 1978 and Establishing Policy Under the Natural Gas Act, FERC Stats. & Regs., Regs. Preambles { 30,419 (Jan. 24, 1983), and an accompanying interim rule,> the Commission promulgated its promised regulations authorizing pro- ducers to collect compression and gathering costs from their pipeline purchasers. Producers were authorized to collect production-related costs on a current basis begin- ning with the March 7, 1983, effective date of the new regulations. Jd. at 30,355. With respect to costs in- curred by producers in the period July 25, 1980, through March 7, 1983, producers were authorized to collect these costs retroactively in installments between March 1983 and December 1984 if their contracts with pipelines so provided. Jd. at 30,368. 2. Pipelines’ Recovery of Section 110 Costs from Their Customers Order No. 94 and Order No. 94-A and the accompany- ing regulations dealt with collection of production-related costs by the producers from their pipeline first-purchas- 548 Fed. Reg. 5180 (1983); see 18 C.F.R. § 271.1104(d) (1) (1990). 5 ers. Neither order dealt with how the producer charges would be recovered by first-purchaser pipelines from their customers. At the time Orders 94 and 94-A -were is- sued, however, long established Commission policy pro- vided for the recovery of such costs by means of the purchased gas adjustment (“PGA”) clause of a pipe- line’s tariff. Current production-related costs, which pipelines pay currently to gas producers, would be re- flected in the pipelines’ current PGA-adjusted rates. With regard to a pipeline’s installment payments to producers for retroactive charges, the Commission’s regulations gov- erning recovery of costs of gas purchased by pipelines expressly provided (and still provide) for prospective ad- justments to a pipeline’s commodity rates in order to compensate for over- and under-recovery of the costs of gas purchased in prior periods. See Comm. Pet. 5 n.3; 18 C.F.R. § 154.305 (1990).7 Such prospective rate ad- justments had long been held by the Commission to be the proper method of recovery by a pipeline for ‘“de- ferred costs” paid to a producer in a present period but attributable to gas delivered in a past period.* Thus, to 6 See Order No. 452, Purchased Gas Cost Adjustment Provision in Natural Gas Pipeline Companies’ FPC Gas Tariffs, 47 FPC 1049 (1972); see generally, 18 CJF.R. §§ 154.301-154.310 (1990). 7™While the PGA mechani for “truing up” recovery of past gas costs is a departure from the normal process of setting fixed rates for the future based pn estimates derived from historical experience, the court of appeals has held that it does not violate the filed rate doctrine or the rule against retroactive rate making since the amounts in question arse included in current gas sales rates, and customers can take them into account in making their purchase decisions. See Transwestern Pipeline Co. v. FERC, 897 F.2d 570, 579-80 (D.C. Cir. 1990). Also, the PGA mechanism itself is on file as part of the pipeline’s tariffs. Cf. Public Serv. Co. of New Hampshire v. FERC, 600 F.2d 944, 960 (D.C. Cir.), cert. denied, 444 U.S. 990 (1979). 8 See Tennessee Gas Pipeline Co., 29 FERC {§ 61,150 at 61,327 (1984) (noting use of PGA mechanism to amortize deferred costs over prospective six-month period as traditional means of recovery for past period gas costs). 6 the extent that Order No. 94-A mentioned the pipeline’s recovery at all, it clearly contemplated that such costs would be recovered in the traditional manner, i.e., pro- spectively through the pipeline’s PGA mechanism.°® Consistent with the Commission’s established policy, when producers began to bill pipelines for current and retroactive compression and gathering cost allowances in 1983, some interstate pipelines paid the producers and collected those costs from their customers by means of prospective adjustments to their PGA rates. With re- gard to “amounts relating to past periods,” the Commis- sion specifically concluded that they were “appropriate for recovery by way of ... [the] PGA clause through inclusion in Account No. 191 and a subsequent sur- charge.” Texas Eastern Transmission Corp., 28 FERC | 61,182, at 61,344 (1984). In accordance with the nor- mal PGA procedure, such surcharges were recovered from pipeline customers in the six-month PGA period immedi- ately following the payments to producers. See Comm. Pet. 5 n.3. Other pipelines, however, delayed paying producers both the current and the retroactive production-related costs."° Beginning in 1983, some pipelines were starting to have difficulty in selling gas at prices that reflected their high-cost purchases in the late 1970s and early 1980s. By delaying payment of production-related costs, a pipeline could lower its PGA-adjusted prices relative to the PGA rates of pipelines that had instituted produc- ® The Commission noted that an interstate pipeline “may re- ceive compensation for paying... section 110 allowances through its purchased gas adjustment clause.” Order No. 94-A, FERC Stats. & Regs. at 30,369 (emphasis added). 10 See Order No. 399-A, Refuncs Resulting From Btu Measure- ment Adjustments, FERC Stats. & Regs., Regs. Preambles § 30,612 at 31,208 (Nov. 20, 1984). 7 tion-cost payment and PGA recovery promptly, as the Commission’s 1983 order had contemplated. Delay in payment of production costs (and in their PGA recovery) reduced a pipeline’s rates initially, but it had the effect of exacerbating the difficulty of eventual recovery of these costs from the pipeline’s customers by building up the unpaid costs and increasing the size of the next PGA rate adjustment when the costs were eventually paid. To deal with this problem, petitioner Transcontinental Gas Pipe Line Corporation (Transco) sought and obtained permission in its September 1984 PGA filing to implement a special 4.5 cent prospective surcharge during the six months beginning November 1, 1984, for recovery of installments of retroactive produc- tion-related costs it anticipated paying in the last half of 1984, as well as a regular 5.5 cent prospective surcharge to recover “‘production related charges, both ‘current’ and ‘retroactive,’ that it had paid in the prior six months.” Transcontinental Gas Pipe Line Corp., 29 FERC { 61,148, at 61,319 (1984). In 1985, however, Transco—which had by then re- covered over one quarter of the amounts it had paid to producers for production-related costs—reversed course. In its May 1985 PGA filing, Transco deleted the PGA surcharge the Commission had previously authorized and announced an intent to charge such amounts to its cus- tomers by a retroactive “direct bill.” See Transcontinen- tal Gas Pipe Line Corp., 31 FERC 7 61,129 (1985)." Subsequently, Transco filed its “direct bill” proposal, which assessed each customer a share of the production related charges attributable to the gas Transco purchased from producers between July 1980 and August 1984 in proportion to that customer’s share of gas purchased 11'To “avoid a double-collection,” Pet. App. 70a, Transco pro- posed to refund the approximately $32 million that it had already recovered through its prospective PGA-adjusted rates, 8 from the pipeline in that period.”* Appendix, infra, 5a. These charges were to be independent of and unaffected by the customer’s current level cf contractual entitlement or purchases from the pipeline. As the court of appeals held in Columbia I, the proposed charges amounted to a retroactive surcharge on rates paid by pipeline customers for gas they had purchased in past periods. Pet. App. 5la. ’ Transco’s petition was not based on any claim that con- tinued recovery of its production-related costs through its PGA mechanism would be impossible. Nor did Transco concede that its objective was to keep its current charges low by imposing a retroactive surcharge on completed transactions. Rather, Transco asserted that direct bill- ing “is the most logical and equitable method of assign- ing cost responsibility for this extraordinary, out-of- period item.” Appendix, infra, 15a. 3. Commission Approval of Direct Billing In August 1985, the Commission granted Transco’s direct billing proposal, finding it “equitable” because it “imposes the cost responsibility on the customers who bought the gas.” Pet. App. 70a. 12 The petitioner pipelines state that the question presented is whether the Commission may permit recovery of costs that arose during the 1980-83 “moratorium” period and argue throughout their petition that the Commission’s “moratorium” on collection by producers of production-related costs makes the retroactive recovery by pipelines equitable and lawful. See Pan. Pet. (i), 3, 7, 11, 16, 20; cf. Comm. Pet. 8, 12. It should be noted, however, that the “moratorium” was lifted as of March 7, 1983. Yet in each case, the petitioner pipelines sought and were authorized to recover production-related costs incurred for gas sold in a “retro- active period” that went well beyond the end of the “moratorium.” See Pet. App. 6la (Transco: July 25, 1980 to August 31, 1984); 87a (Texas Gas: August 1, 1980 to December 31, 1984); 99a (Trunkline: July 25, 1980 to February 28, 1985); 110a (Pan- handle: August 1, 1980 to February 28, 1985). ————_,£<,—__iiv The Commission rejected contentions by a number of protesters that the proposal constituted an unlawful retro- active increase in the rates charged for past gas sales. The Commission dismissed these contentions as “without merit” and “in effect . . . a collateral attack on Order No. 94-A” because “Order No. 94-A expressly authorized the collection of retroactively effective allowances which, to the extent directly billed now, are a cost to those cus- tomers.” Jd." Following Transco’s direct billing proposal, a number of other pipelines—including Texas Eastern Transmission Corporation and petitioners Texas Gas Transmission Cor- poration, Panhandle Eastern Pipe Line Company and Trunkline Gas Company—also filed direct billing pro- posals modeled after Transco’s.'* In a series of orders issued late in 1985, the direct billing proposals of these four pipelines were approved on the basis of the Transco precedent. Pet. App. 79a-86a (Texas Eastern); 87a-96a (Texas Gas); 97a-109a (Trunkline); 110a-123a (Pan- handle). At about the same time, on rehearing of its Transco approval, the Commission again rejected conten- tions that the direct billing scheme constituted an un- lawful retroactive rate increase, asserting once again that “Order No. 94-A expressly autl:orized the collection of retroactively effective allowances.” Jd. at 129a. Re- sponding to the argument that similar deferred costs had 13 The Commission also waived the provisions of its regulations requiring that all changes in pipeline rates be reflected in filed tariff sheets. The Commission found that no purpose would be served by such filing in view of the retroactive nature of the new “rates”: Any such [tariff] sheets would necessarily change each month and would consist of a listing company-by-company, of the actual amounts billed. . .. [T]he original gas costs to which these section 110 payments apply were reflected on tariff sheets. Here, we are permitting retroactive change in those CONGD «64% Pet. App. 72a (emphasis added). 14 See id. at 79a; 87a; 97a; 110a. 10 always been recovered prospectively through PGA adjust- ments, the Commission stated that the production-related cost payments were “different” because “these amounts [the production-related costs] were authorized by special rule on a continuing, not a one-time only, basis, and are so large as to warrant special treatment.” Jd. Subse- quently, the Commission likewise denied rehearing of its approval of the four other pipelines’ direct billing pro- posals. Jd. at 134a (Texas Eastern) ; 135a (Texas Gas) ; 136a-39a (Trunkline) ; 140a-42a (Panhandle). 4. Judicial Review and Reversal of Retroactive Direct Billing A number of customers of the five pipelines challenged these orders in the D.C. Circuit on the ground that they constituted an unlawful retroactive rate increase. In Columbia I, the court of appeals overturned the Com- mission’s approval of the five direct billing proposals. The court found that the orders violated the rule against retroactive ratemaking, which it characterized as “de- rived from the provisions in the NGA requiring sellers of natural gas to file their rates with the Commission 15Claims that these costs are “extraordinary” are, at the very least, exaggerated. For example, in May 1984 the Commission found a Transco proposal for PGA recovery of some $61 million in deferred costs over a six month period to be “consistent” with Transco’s history of recovering other deferred costs ranging from $53 million to $89 million in other recent six-month pericds. Trans- continental Gas Pipe Line Corp., 27 FERC {§ 61,227 at 61,437 n.6 (1984). Similarly, in 1984 the Commission authorized another petitioner—Panhandle—to recover through its PGA over a 39- month period an “enormous” build-up of unrecovered gas costs attributable to past periods amounting to some $270 million. See Panhandle Eastern Pipe Line Co. v. FERC, 777 F.2d 739 (D.C. Cir. 1985). Some pipelines also recovered through PGA adjust- ments the costs arising from repricing their own production pur- suant to the decision in Mid-Louisiana Gas Co. v. FERC, 664 F.2d 530 (5th Cir. 1981), aff'd in part and vacated in part sub nom. Public Serv. Comm’n v. Mid-Louisiana Gas Co., 463 U.S. 319 (1983). See, e.g., Consolidated Gas Supply Corp., 24 FERC § 61,271 ° (1983). aaa 11 (section 4] and defining its authority to modify them [sec- tion 5].” Pet. App. 52a. The court described these stat- utory provisions as forming the basis for the “filed rate doctrine” as articulated by this Court in Arkansas Louisi- ana Gas Co. v. Hall, 453 U.S. 571, 578 (1981) (Arkla): [T]he [Natural Gas] Act bars a regulated seller of natural gas from collecting a rate other than the one filed with the Commission and prevents the Commis- sion itself from imposing a rate increase for gas al- ready sold. The court found that the direct billing orders of the Com- mission violated the rule against retroactive ratemaking and the filed rate doctrine because: the effect of the orders is quite clear: downstream purchasers are expected to pay a surcharge, over and above the rates on file at the time of sale, for gas they had already purchased. However described, this constitutes a retroactive rate increase that we find to be prohibited by the NGA. Pet. App. 5ia. The court rejected the Commission’s argument that Order No. 94-A in 1983 had established a “retroactive collection procedure” for pipelines. The court pointed out that Orders 94 and 94-A were addressed solely to re- covery of production-related costs by producers from first purchasers, and the orders did not deal with the pro- cedures for collection by pipelines from their customers. Id. The court concluded that there was no reason at all for pipeline customers in 1980-83 to suppose that they would be subject to retroactive direct charges, since such recovery had never been permitted by Commission policy and the Commission’s regulations expressly required that such deferred costs be recovered prospectively through the PGA mechanism. The Commission petitioned for rehearing, asserting for the first time that it had authority under section ‘ 4(d) of the Natural Gas Act to “waive” the filed rate doctrine to allow the direct billing procedures to go into 12 effect. See Pet. App. 58a-59a. The court denied rehearing but stated that the Commission could consider on remand whether the statute permits a waiver of the filed rate doctrine and, if so, whether such a waiver would be appropriate in the circumstances of these cases. Jd. at 59a. 5. The Commission’s Effort To Sanction Retroactive Direct Billing by Waiver Without any hearing or further proceedings, the Com- mission on remand again approved the same direct bill- ing mechanisms that the court had struck down in Co- lumbia I. Pet. App. 17a-26a. This time, the Commission relied solely on its authority under section 4(d) of the Act to “allow changes to take effect without requiring the thirty days’ notice herein provided for.” The Com- mission asserted that its “authority to waive the filed rate doctrine and its discretion whether to exercise this authority in particular circumstances are unquestioned,” subject only to the statutory requirement that the waiver must be based on “good cause shown.” /d. at 2la. FERC found that good cause existed for waiver of the filed rate doctrine in each of the remanded proceedings for the same reasons advanced in its original orders approving the rate changes. Jd. at 22a-23a. Several of the present respondents sought rehearing, arguing that the Commission could not rely on its waiver authority under section 4(d) to impose a retroactive rate increase, that the Commission had failed to explain its departure from its longstanding policy of permitting waivers only to allow previously contracted-for rates to take effect prospectively from the date set by the contract, and that the Commission does not have equitable powers to take actions that are contrary to the statute. See Pet. App. 28a-29a. The Commission rejected these arguments on the basis of an unexplained “overwhelming public in- terest” that would be “impeded” by normal prospective ratesetting. Jd. at 32a. 13 6. The Decision Below Rejecting the Claimed Waiver Authority To Impose Retroactive Rate Increases In Columbia II, the court of appeals rejected the Com- mission’s argument that its waiver authority permits it to allow a pipeline to impose additional charges for trans- actions completed before any rate filing containing the charges. The court noted that the language of section 4(d) only authorizes the Commission to allow rate changes “to take effect without requiring the thirty days’ notice herein provided for.” Pet. App. 10a. The court also pointed out that the few decisions that have allowed rate changes to become effective as of a date prior to their filing had all been cases in which the customers had by contract prospectively consented to the pre-filing effective date. Jd. at 1la-12a. The court concluded, with- out reaching the question of “good cause,” that the Com- mission lacked statutory power to do what it did: “[WJe are unaware of any principle in equity or law that em- powers an agency to ignore explicit legislative commands ..+. Id. at 13a. The private petitioners, but not FERC, sought rehear- ing en banc, which was denied unanimously. /d. at 15a. ARGUMENT The court of appeals properly rejected FERC’s asser- tion, made for the first time in this case, that FERC’s power under section 4(d) of the Natural Gas Act to allow rate “changes to take effect without requiring the thirty days’ notice herein provided for” includes the power to allew a pipeline to impose a retroactive addi- tional charge for gas sales that occurred years earlier. FERC’s reading of the statute would obliterate (but only in favor of sellers and not for the protection of customers) the well-established principle that FERC has “no power to alter a rate retroactively.” Arkla, 453 U.S. at 578. This case presents no issue worthy of this Court’s review. 14 Certiorari Is Not Warranted in This Case 1. Contrary to the Solicitor General’s submission, the court of appeals’ ruling was based squarely on the stat- ute. In Columbia I, from which no party sought review in this Court, the court of appeals first found that “the effect of |FERC’s] orders is quite clear: downstream purchasers are expected to pay a surcharge, over and above the rates on file at the time of sale, for gas they had already purchased. However described, this consti- tutes a retroactive rate increase.” Pet. App. 5la."* Decades of authority have established that under the Natural Gas Act, as under other major federal ratemak- ing statutes, the Commission may neither authorize a “rate increase for gas already sold” nor impose a “retro- active rate alteration.” Arkla, 453 U.S. at 578 and n.8. This rule against retroactive ratemaking, as the court of appeals held (Columbia I, Pet. App. 51a-52a), flows di- rectly from sections 4 and 5 of the Act, which require that charges for jurisdictional natural gas service be set forth in publicly filed tariffs and that any changes in those rates be made prospectively. In Columbia II, the court’s discussion centered on “the scope of the section 4(d) waiver authority” (id. at 9a), and its ruling was that “the statutory language of section 4(d) and the logic of [certain earlier decisions] deny the Commission the authority its claims.” Jd. at 10a. Section 4(c), 15 U.S.C. § 717e(¢e), requires that rates be set forth in tariffs filed with the Commission. Pipe- line-initiated changes to filed rates are governed by section 4(d), 15 U.S.C. -§ 717¢e(d). That section first ‘6 Neither the Commission nor the pipeline petitioners challenged or now challenge the court of appeals’ holding in Columbia ] that the “direct billing” proposals approved by the Commission impose on pipeline customers an added charge for gas those customers had already purchased. As the Fifth Circuit held in Hall v. FERC, 691 F.2d 1184, 1191 (5th Cir.), cert. denied sub nom. Arkla, Inc. v. Hall, 464 U.S. 822 (1983), a “purer example” of a retroactive rate increase would be “difficult to imagine.” 15 provides that no change may be made in any filed rate “except after thirty days’ notice to the Commission and to the public.” The notice may be given only “by filing with the Commission and keeping open for public inspec- tion new schedules stating plainly the change or changes . .. and the time when the change or changes will go into effect.” Jd. (emphasis added). The next sentence provides that the Commission “for good cause shown, may allow changes to take effect without requiring the thirty days’ notice herein provided for by an order specifying the changes so to be made and the time when they shall take effect and the manner in which they shall be filed and published.” Jd. (emphasis added) ."’ On its face, section 4(d) gives the Commission only the power to shorten or eliminate the required thirty- day notice period."* The statute requires 4 pipeline to make its filing thirty days before the rate changes “will” go into effect. It permits the Commission to dispense with this notice, but only by an order specifying when the changes “shall” go into effect. Nothing in this language suggests that the Commission may allow an additional charge to be imposed on gas sales completed before the change-of-rate filing is made. Consistent with these basic statutory provisions, this Court has held that the Commission may not allow a 17 Section 5, 15 U.S.C. § 717d, which is not involved in this case, provides the only other means by which rates may be changed, and it too makes clear that changes are to be prospective only. It pro- vides that if the Commission reaches a determination that existing rates are unjust or unreasonable, the Commission may then pre- scribe the just and reasonable rate “to be thereafter observed.” See FPC v. Sierra Pacific Power Co., 350 U.S. 348, 353 (1956). (Sierra arose under the corresponding section of the Federal Power Act. The Court has an “established practice of citing interchange- ably decisions interpreting the pertinent sections of the two stat- utes.” Arkla, 453 U.S. at 577 n.7.) 1* The Commission concedes in its petition that section 4(d) “can be” so read. Comm. Pet. 15. 16 pipeline to alter rates retroactively, pursuant to new tariffs filed by the pipeline under section 4. FPC v. Ten- nessee Gas Transmission Co., 871 U.S. 145, 152-53 (1962). The D.C. Circuit has followed suit, holding that the Act bars the “Commission’s retroactive substitution of an unreasonably high cr low rate with a just and reasonable rate.” City of Piqua v. FERC, 610 F.2d 950, 954 (D.C. Cir. 1979) (quoted with approval in Arkla, 453 U.S. at 578). That court has described this as a “cardinal principle of ratemaking” that binds both the utility in initially setting its rates and the Commission in approv- ing or itnposing changes in those rates. Nader v. FCC, 520 F.2d 182, 202 (D.C. Cir. 1975). Not surprisingly, neither the Commission nor the petitioner pipelines have cited any decision of this or any other court permitting the retroactive impositien of an additional charge on cus- tomers for gas bought in prior periods.’® The reading of the statute now urged by the Commis- sion and the petitioner pipelines would produce a bizarre result contrary to the clear intent of the Act. Both peti- tioners are clear that the Commission has no authority to impose a retroactive rate reduction under section 5, even after finding (on a customer complaint or its own initia- tive) that a filed rate is unjust and unreasonably high (Comm. Pet. 17; Pan. Pet. 18-14): Section 5 permits the Commission only to prescribe a rate “to be thereafter observed,” and this Court has squarely held that FERC is limited by the section to prescribing a reasonable rate for the future. See note 17, supra. But the Commission argues it may approve retroactive rate increases sought 19 Petitioner pipelines’ suggestion, Pet. 11, that this case does not “concern the filed rate doctrine,” since “no party here is seek- ing to enforce a rate not filed with and accepted by, the Commis- sion,” is specious. It is directly refuted by this Court’s holding in Arkla that a “retroactive rate increase” is ‘precisely what the filed rate doctrine forbids.” 453 U.S. at 578-79. Indeed, on the remand after Columbia J, the Commission stated that the issue was whether it should “waive the filed rate doctrine.” Pet. App. 2la. 17 by a pipeline under section 4 whenever it finds “good cause.” That asymmetrical outcome would stand on its head a statutory scheme whose primary purpose was to provide a “complete, permanent and effective bond of pro- tection” for consumers. Atlantic Ref. Co. v. Public Serv. Comm’n, 360 U.S. 378, 388 (1959). It is hardly sur- prising that no court or (until these cases) agency has 30 read the statute. 2. Petitioners make several further arguments in sup- port of a grant of the writ in this case. None has merit.” a. Contrary to tne submissions of the petitioner pipe- lines, this case does not present the “waiver” question left unresolved by this Court in Arkla. That case in- volved a rate that had been contractually agreed to but not filed. The Court said, 453 U.S. at 578 n.8 (emphasis by the Court): Although the Commission may not impose a retro- active rate alteration... it may ‘for good cause shown’ . . . waive the usual requirement of timely filing of an alteration in a rate. Assuming, argu- endo, that waiver is available for retroactive collec- tion of a higher rate than the one on file, we note that [the Commission expressly rejected any waiver in this case}. *” The petiticner pipelines imply that this case is important be- cause what is at issue is “approximately $1.5 billion” in industry- wide “moratorium” period costs. Pan. Pet. 3. Where the figure came from is unclear. (The Commission at one point noted esti- mates of ‘up to” that figure. Pet. App. 29a n.8). But in any event, most of these costs have long since been paid and recovered through mechanisms that have not been challenged. The Commission more accurately estimates the magnitude of the costs at issue here as the approximately $500 million in production- related costs that petitioner pipelines and Texas Eastern have collected under the direct bill mechanisms authorized by FERC’s orders. Comm. Pet. 7 n.5. A part of that amount, however, plainly related to recovery of costs arising out of gas sold well after the end of the “moratorium” period. Sce note 12, supra, 18 The present case, unlike Arkla, involves an attempt to “impose” a retroactive rate increase on unwilling cus- tomers who fully paid the rates that were on file when the sales in question were completed; nothing in Arkla suggests that there is any open question about whether the Commission has power to do that. b. Petitioners cite cases in which courts of appeals have permitted the Commission, acting under section 4 (d), to sanction a pre-filing effective date for a rate change agreed to by the parties before it became effec- tive.*! The rationale for these rulings was that the change was not “retroactive” where the parties to the change had agreed to it in advance by contract. The continuing validity of these decisions may be in question; in any event, they have no bearing here: whether the Act per- mits the Commission to allow a private contract, phrased prospectively, to take effect, in accordance with the wishes of the parties, pricr to the date of filing is not the issue in this case. What the court below declared (consistent with every other decided case) is that the seller and the Commission together cannot retroactively impose a rate change never agreed to by the customer. 21Comm. Pet. 14-15, citing City of Piqua, 610 F.2d 950 (D.C. Cir. 1979); Hall v. FERC, 691 F.2d 1184 (5th Cir. 1983); Towns of Concord & Wellesley v. FERC, 844 F.2d 891 (1st Cir. 1988); Pan. Pet. 14 n.7, citing City of Piqua. *2 All of the cited decisions were rendered before this Court’s decision in Maislin Indus., U.S., Inc. v. Primary Steel, Inc., No. 89-624, 110 S. Ct. 2759 (1990), rejecting the authority of the In- terstate Commerce Commission to allow negotiated rather than filed rates to be charged. The Court has, in other contexts, recog- nized that private contracts have an important role under the Natural Gas Act, which differs in this regard from the Interstate Commerce Act. See FPC v. Sierra Pacific Power Co., 350 U.S. 348 (1956); United Gas Pipe Line Co. v. Mobile Gas Serv. Co., 350 U.S. 332 (1956). Whether this role distinguishes City of Piqua, Hall, and Concord sufficiently to allow them to survive Maislin is & question not presented in this case, 19 ce. The pipeline petitioners stress the fact that in Texas Eastern Transmission Corp. v. FERC, 769 F.2d 1053, 1066 (5th Cir. 1985), cert. denied, 476 U.S. 1114 (1986), the court of appeals rejected a challenge to FERC’s Or- der No. 94-A, which authorized producers to recover ear- lier production-related costs through retroactive charges to pipelines. But as the Fifth Circuit stressed, “the pur- chasers [i.e., the pipelines] were on notice as of 1980 {the beginning of the production-cost period, by virtue of FERC Order No. 94) that allowances would eventually be promulgated” (id. at 1066). Moreover, Order No. 94 expressly provided fer such recovery from pipelines only “if collection of such costs is contractually authorized.” FERC Stat. & Regs. at 31,218. There is no conflict between the decision below and the Fifth Circuit’s decision in Texas Eastern. The Fifth Cir- cuit’s decision allowed retroactive cost recovery by pro- ducers pursuant to the explicit advance notice given in 1980 in Order No. 94, and in accordance with express authority in the existing contracts between producers and pipelines. Compare City of Piqua, 610 F.2d at 954. In the present case, respondent pipeline customers neither received advance notice of the charges in question (by Commission order or otherwise) nor contractually au- thorized the pipelines to collect them.~ As noted above, the decision below does not bar pipe- lines from recovering from their customers the costs allowed to be charged to them by producers under Texas- Eastern; * it merely requires that this be done by means that do not constitute a retroactive rate increase. 23 Petitioners suggest that because one of the respondents, Co- lumbia, is itself a pipeline, it was effectively on notice of the charges the Conimission ordered in the present case. Even if the accidenta] status of one of the respondents were pertinent, there can be no question that no one was on notice before 1985 that pipe- line customers would be direct-billed, based on their purchases in 1980-85, for these costs. * For this reason there is no merit to suggestions that the court of appeals’ decision violates the “pass through” requirement of the 20° d. Contrary to FERC’s implication, Comm. Pet. 5-6, the restructuring of the gas industry in which pipelines became “open access” transporters has essentially nothing to do with the issues in this case.* FERC began au- thorizing retroactive direct billing of production-related costs before it issued FERC Order No. 436,%° which en- couraged pipelines to become open access, and all of the FERC orders that originally authorized such billing by the pipeline petitioners were issued before such peti- tioners became open-access pipelines. NGPA. As the Commission has itself recognized, that Act doea not require that pipelines be afforded guaranteed recovery of costs, but merely a fair opportunity to recover legitimate costs. See Order No. 500. Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol, FERC Stats. & Regs., Regs. Preambies 30,761 at 30,786 (Aug. 7, 1987). The Commission and the court of appeals have repeatedly recognized that the PGA mechanism affords such an opportunity to recover gas costs. % The Commission incorrectly states that only one producer began recovery of costs before the 1985 decision of the Fifth Cir- cuit in Texas Eastern. Comm. Pet. 5. In fact, the Commission had ordered that all costs for the 1980-83 period be recovered in installments ending in December 1984, and some pipelines paid their producers as the Commission envisioned. See p. 6, supra. It may well be that other pipelines delayed paying production- related costs pending judicial review of Order No. 94-A in the hope that it would be reversed on appeal. But there was no stay of Order No. 94-A in effect, and having failed to process and recover production-related costs in the time provided for by the Commission, petitioner pipelines should not be heard to complain as they now do that “the customer base of the pipelines had changed to an unprecedented degree between the lifting of the Commiasion’s moratorium in 1983 and the time of the Fifth Cir- cuit’s Tecas Eastern decision in 1985” by which time “the pipeline segment of the industry was in the process of a massive restructur- ing.” Pan. Pet. 6-7. 26 Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol, FERC Stats. & Regs., Regs. Preambles { 30,665 (Oct. 9, 1985). 21 Moreover, the argument that the Commission should be able to ignore the filed rate doctrine because it needs “latitude” in order to deal with “the massive restruc- ting of the natural gas market” (Comm. Pet. 19) was decisively answered by this Court in Maislin Indus., U.S., Inc. v. Primary Steel, Inc., No. 89-624, 110 S. Ct. 2759 (1990). As the Court said there, if “strict ad- herence” to statutory requirements has become “an anachronism,” the responsibility for modifying the statu- tory scheme lies with Congress. Jd. at 2771.* Indeed, the expansive view of the Commission’s sec- tion 4(d) waiver powers espoused by petitioners is fun- damentally inconsistent with the view of the filed rate doctrine taken by this Court in Maislin. While the role of the filed rate doctrine under the Natural Gus Act is not identical to that under the Interstate Commerce Act, there is no basis for contending that the protective pur- poses of the doctrine are less fundamental or less grounded in statute here. To the contrary, in light of the long history of interpretation of the Natural Gas Act referred to above, it is clear that what this Court said of the agency’s effort to rewrite the statute in Muzislin is equally true here: ‘Although the Commission has both the au- thority and expertise generally to adopt new policies when faced with new development in ‘he industry, ... it does not have the power to adopt a policy that directly conflicts with its governing statute.” 110 S. Ct. at 2770. 27 There is no substance to petitioners’ suggestion that the hold- ing below will have untoward effects on the electric power industry. The traditional view of the filed rate doctrine reflected in the deci- sion below has already (and for many years) been applied under the Federal Power Act, with no apparent adverse effects on the electric power industry. See, e.g., Montana-Dakota Utils. Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246 (1951); Public Serv. Co. v. New Hampshire v. FERC, 600 F.2d 944 (D.C. Cir. 1979). 22 There Is No Reason to Hold This Case for Disposition of the Petitions in AGD The Commission does not seek plenary review in this case but suggests that it be held pending the Court’s disposition of the petitions in Associated Gas Distribs. v. FERC, 898 F.2d 849 (D.C. Cir. 1989). reh’g denied, 898 F.2d 809 (D.C. Cir. 1990), petitions jor cert. pending, Nos. 89-1988, et al. (AGD), in which it has sought plenary review. That suggestion is unfounded. The Com- mission’s suggestion assumes that the Court will grant its petition in AGD—an assumption that may well prove wrong.* But even if review were warranted in AGD, —this case presents an essentially different question from that presented here, and resolution of AGD is highly un- likely to have any bearing on the outcome here. The question for which review is sought in AGD is whether a surcharge imposed to recover certain pipeline “take-or-pay” costs is, as the court of appeals found, retroactive and, therefore, prohibited by the statute’s re- quirement that a pipeline charge only the “filed rate.” No question of a Commission waiver (under section 4({d) or otherwise) is involved in any way in that case. In- stead, the Commission’s rationale in seeking review in AGD is that the costs at issue there are “present” costs merely allocated on the basis of past customer purchase decisions. In this case, by contrast, no one seriously disputes that the Commission’s orders impose a retroactive rate increase otherwise forbidden by the statute; the only 28 Certain of the respondents here are also respondents in AGD and have filed a Brief in Opposition setting forth the reasons why certiorari is not warranted in that case. If the Court agrees, the Commission’s suggestion here would of course be moot. 29 The Commission itself has recognized that its orders authorize a “retroactive change” in costs charged to pipeline customers. See note 13, supra. 28 question presented is whether the Commission’s section 4(d) waiver power enables it to authorize a result it could not otherwise bring about. In sum, there is noth- ing in the grounds aeserted for review in AGD that gives any reason to expect that any foreseeable disposition by the Court of those petitions would affect the holding of the court of appeals in this case. The Commission’s suggestion (Pet. 19) that this case is related to AGD in that both involved cost allocation by pipelines in the wake of Order No. 436 and the “mas- sive restructuring of the natural gas market” toward open access is simply wrong. As noted above, the FERC orders that originally authorized retroactive direct bill- ing by the petitioner pipelines all preceded the times when the petitioners became open-access pipelines under Order No. 436. Chief Judge Wald, whose dissent from the denial of rehearing en banc in AGD was based on her (erroneous) understanding of the role of Order No. 436 in that case, concurred in the denial of rehearing here. Pet. App. 15a. CONCLUSION For the reasons set forth above, the petitions for writ of certiorari should be denied. Respectfully submitted, Gites D. H. SNYDER JOHN H. PICKERING STEPHEN J. SMALL Counsel of Record CoLUMBIA GAS TRANSMISSION Louis R. COHEN CORPORATION TIMOTHY N. BLack 1700 MacCorkle Ave., S.E. Gary D. WILSON Charleston, W.Va. 25325-1273 Susan D. MCANDREW (304) 357-2326 WILMER, CUTLER & PICKERING 2445 M Street, N.W. Washington, D.C. 20037 (202) 663-6000 Attorneys for Columbia Gas Transmission Corporation DANIEL L. SCHIFFER MICHIGAN CONSOLIDATED GAS COMPANY 500 Griswold Street Detroit, MI 48226 (313) 256-5206 August 31, 1990 24 JErryReY M. PeTRasH DICKINBON, WRIGHT, MOON, VAN DUSEN & FREEMAN 1901 L Street, N.W. Washington, D.C. 20036 (202) 457-0160 Attorneys for Michigan Consolidated Gas Company KATHLEEN A. KANE OBERMAYER, REBMANN, MAXWELL & HIPPEL 14th Floor, Packard Bldg. 15th & Chestnut Streets Philadelphia, PA 19102 (215) 665-3222 Attorney for Philadelphia Electric Company LARITO FARINAS PHILADELPHIA GAS WORKS 800 West Montgomery Ave. Philadelphia, PA 19122 (215) 684-6982 Attorney for Philadelphia Gas Works EDWARD J. GRENIER, JR. WILLIAM H. PENNIMAN GLEN S. HOWARD STERLING H. SMITH SUTHERLAND, ASBILL & BRENNAN 1275 Pennsylvania Ave., N.W. Washington, D.C. 20004-2404 (202) 383-0100 Attorneys for The Process Gas Consumers Group Mary E. BaLuss CHRISTOPHER J. BARR MorcGan, Lewis & Bockius 1700 M Street, N.W. Suite 700 Washington, D.C. 20036 (202) 467-7142 Attorneys for UGI Corporation APPENDIX la APPENDIX DEPARTMENT OF ENERGY BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION WASHINGTON, D.C. a Docket No. RP85-148-000 >. 5 IN THE MATTER OF TRANSCONTINENTAL GAS PIPE LINE CORPORATION PETITION OF TRANSCONTINENTAL GAS PIPE LINE CORPORATION FOR AUTHORITY TO INSTITUTE DIRECT BILLING PROCEDURE FOR RETROACTIVE ORDER NO. 94 PAYMENTS Communications with respect to this Petition should be addressed ; to: *R.V. Loftin, Jr., Vice President and Genera! Counsel James A. Porter Transcontinental Gas Pipe Line Corporation P.O. Box 1396 Houston, Texas 77251 and * Designated to receive service in accordance with Rule 2010(c) of the Rules of Practice and Procedure. 2a *Thomas F. Ryan, Jr. Robert G. Hardy Andrews & Kurth 1730 Pennsylvania Avenue, N.W. Washington, D.C. 20006 Attorneys for Transcontinenta! Gas Pipe Line Corporation Filed: May 22, 1985 i 3a DEPARTMENT OF ENERGY BEFORE THE sds DERAL ENERGY REGULATORY COMMISSION WASHINGTON, D.C. Docket No. IN THE MATTER OF TRANSCONTINENTAL GAS PIPE LINE CORPORATION PETITION OF TRANSCONTINENTAL GAS PIPE LINE CORPORATION FOR AUTHORITY TO INSTITUTE DIRECT BILLING PROCEDURE FOR RETROACTIVE ORDER NO. 94 PAYMENTS Transcontinental Gas Pipe Line Corporation (Transco) hereby petitions, pursuant to Rule 207 of the Commis- sion’s Rules, 18 C.F.R. § 385.207, for authority to in- stitute a special, one-time direct billing procedure to re- cover from its customers retroactive payments made pur- suant to Order Nos. 94 and 94A, all as more fully ex- plained hereinbelow. In support of this Petition, Transco respectfully shows as follows: I. The names, titles and mailing addresses of the persons to whom correspondence concerning this proceeding are to be addressed are as follows: = 4a R.V. Loftin, Jr., Vice President and General Counsel Transcontinental Gas Pipe Line Corporation P.O. Box 1396 Houston, Texas 77251 and Thomas F. Ryan, Jr. Andrews & Kurth 1730 Pennsylvania Avenue, N.W. Washington, D.C. 20006 5a Il. Transco is a corporation duly organized and existing under the laws of the State of Delaware, with its prin- pal place of business in Houston, Texas. Transco is a natural gas company engaged in the transportation and sale of natural gas in interstate com- merce by means of its natural gas transmission system extending from its principal sources of natural gas sup- ply in Texas, Louisiana, Mississippi, and the offshore Gulf of Mexico area through the States of Alabama, Georgia, South Carolina, North Carolina, Virginia, Mary- land, Pennsylvania, and New Jersey to its termini in the New York City Metropolitan area. To augment its domestic gas supply sources, Transco also imports natural gas from Canada. Il. SUMMARY OF PROPOSED DIRECT BILLING PROCEDURE ! Because of the inequities and undesirable market dis- tortions inherent in recovering retroactive Order No. 94 costs through PGA filings, Transco seeks authorization to bill customers directly for such costs. As more fully ex- plained below, Transco proposes to caiculate each cus- tomer’s share of such costs for the retroactive period (hereinafter defined as the period July 25, 1980 through August 31, 1984 unless otherwise indicated) based upon a matching of the incurrence of Order No. 94 costs, by month, to the customer’s share of system purchases dur- ing such months. Sucn amounts will be billed directly, in- cluding interest, in equal monthly installments over a succeeding 12-month period commencing July 1, 1985 1 Inasmuch as the instant filing is not a tariff filing, no fee under Part 381 of the Commission’s Regulations is required. See, 29 FERC © 61,381 (1984). 6a (or at the customer’s option, in a lump sum”) or at such later date as may be established in the Commission’s order approving the direct billing procedure. Transco also is proposing to refund directly to its customers all retroactive Order No. 94 amounts coliected, plus interest, pursuant to Transco’s PGA filings in Docket Nos. TA84- 2-29-000 and TA85-1-29-000, including the special Order No. 94 surcharge of 4.5 cents per dt contained in Transco’s Decket No. TA85-1-29-000 filing, such refund (the prin- cipal amounts of which are detailed on Schedule B hereto) to be contingent upon approval of the direct billing pro- cedures proposed in the instant filing. This refund will be made within fifteen days of the date on which the Commission approves Transco’s direct billing procedure. In essence, Transco’s proposal is designed to place cus- tomers in the position they would have been in if no retroactive Order No. 94 costs had been collected in Transco’s rates to date, and then to apportion the total costs to customers on the basis of their respective pur- chase levels from Transco during the period such costs were incurred. IV. PERTINENT BACKGROUND A. Order 94 Costs Pursuant to Section 110 of the Natural Gas Policy Act of 1978, the Commission has established “production- related cost” allowances above the otherwise applicable maximum lawful ceiling price for nautral gas. These allowances encompass certain costs (‘other than “produc- While providing for a lump-sum payment option, Transco an- ticipates that most, if not all, customers would consider the twelve monthly installment payments to be in the best interests because, among other things, such method eases the financial burden and also could obviate payment, at least in part, if the pending court proceedings (see page 4, infra) were to overturn Order No. 94 during the interim. Ta tion costs”) incurred for delivering, compressing, treat- ing or conditicning nautral gas or other specified serv- ices. In Order No. 94 (issued July 25, 1980 in Docket No. RM80-47), the Commission stated that generic al- lowances for compression and gathering would be de- veloped in future orders and made effective as of the date of Order No. 94. On January 24, 1983, the Com- mission issued Order No. 94-A, titled “Final Rule and Order on Rehearing of Order No. 94” amending the state- ment of policy. 22 FERC { 61,055. The aforementioned generic allowances were first stated in an Interim Rule also issued January 24, 1983 in Docket Nos. RM8&0-73 and RM80-47 and were made effective March 7, 1983. The amendments of the Interim Rule were issued as a Final Rule in Order No. 334, issued September 27, 1983. Order 334-A, issued December 27, 1983, denied the peti- tions for rehearing and petitions for stay of Order 94. The allowances for production-related costs are set out at Section 271.1104 of the Commission’s Regulations (18 C.F.R. § 271.1104). Order Nos. 94 ana 94-A have been appealed to the United States Court of Appeals for the Fifth Circuit by Transco and others in Texas Eastern Transmission Cor- poration, et al. v. FERC, No. 83-4390. Briefs have been filed by the parties and oral argument has been held; the case is pending a decision by the court. Subsequently, the Commission issued Order No. 399-A, 29 FERC {61,254 (1984), which authorized producers to offset refunds due for Btu measurement requirements * by monies due them under Order No. 94. This ‘‘offset” procedure was overturned by the court in /nterstate Nat- ural Gas Association of America v. FERC, D.C. Cir. No. 81-1690, et a/., issued March 5, 1985. Such action was taken by the court at the behest of Associated Gas Dis- tributors, a group which includes many of Transco’s “Interstate Natural Gas Association of America v. FERC, 716 F.2d 1 (D.C. Cir. 1983), cert. denied, 104 S.Ct. 1615 (1983). Sa larger customers. Therefore, as matters now stand, retro- active Order No. 94 payments apparently cannot be offset by refunds for the Btu measurement rules.* B. Transco’s Treatment Of Order 94 Costs Transeo has been invoiced for substantial retroactive Order No. 94 amounts. A _ substantial part of these amounts has been paid, debited to Account No. 191 and flowed-through in two Transco PGA filings. All of the retreactive Order No. 94 amounts that were paid prior to September 1, 1984 have been reflected in Transco’s PGA filing in Docket No. TA84-2-29-000 (effective May 1, 1984)° or in Transco’s PGA filing in Docket No. TA85- 1-29-000 (effective November 1, 1984) .° In its PGA filing in Docket No. TA85-3-29-000 (effec- tive April 1, 1985), Transco indicated that it would be seeking Commission authority to direct bill Order No. 94 payments. In that regard, Transco explained that its filing did not reflect the balance (at February 28, 1985) in the appropriate subaccount of Account No. 191 associ- *It is Transco’s understanding that although D.C. Circuit’s man- date was issued on May 20, 1985, at least one—and perhaps more— of the interested parties intends to seek a writ of certiorari from the Supreme Court. “In Docket No. TA84-2-29-000, Transco included approximately $2.2 million of retroactive Order No. 94 payments in its PGA de- ferred account. This amount reflects retroactive payments related to the period July 25, 1980 through August 31, 1983. ®In Docket No. TA85-1-29-000, Transco included approximately $22.4 million of retroactive Order No. 94 payments in its PGA deferred account. This amount reflects retroactive payments re- lated to the period July 25, 1980 through February 29, 1984. In addition, Transco requested, and was granted, waiver of the Com- mission’s regulations to include in the PGA and recover through a special surcharge of 4.5 cents per dt, approximately $21.6 million of known installment payments that Transco had not made at the time the PGA was filed but would make before the end of the period the rates in Docket No. TA&5-1-29-000 were to be in effect. Ga ated with the relevant PGA period, $7,074,086, which amount relates to Order No. 94 payments not reflected in the surcharge and not previously contained in the deferred account. This amount remains deferred on Transco’s books pending the outcome of the direct bill- ing procedure proposed herein.’ Transco’s filing also ex- plained that its direct billing procedure would include provision for crediting to customers the amounts already paid, including amounts paid through the special 4.5 cents per dt surcharge. In addition, Transco has paid additional retroactive Order No. 94 amounts since February, 1985 and also is now processing a large amount of retroactive Order No. 94 invoices which, due to the time involved in verifying each such invoice, have not yet been paid. An accurate estimate of the timing of such payments cannot be made at this time. There are other qualifying producers (i.¢., those which have made a proper notice filing in accordance with Sec- tion 271.1104 of the Commission’s Regulations) to whom Transco also owes a substantial amount of retroactive Order No. 94 costs, but for which Transeo has not re- ceived invoices. With respect to amounts attributable to the period after March 6, 1983, Transco may not receive invoices since such amounts relate to periods subsequent to the Commission-defined retroactive period and, there- fore, as is the case for normal gas cost payments, in- voices are not required for payment to be made. Pro- 7In its April 30, 1985 order in Docket No. TA85-3-29-000, the Commission, among other things, ordered Transco to furnish addi- tional information regarding Order No. 94 charges, and to file revised PGA tariff sheets to recover Order No. 94 payments during the period covered by the current PGA, without prejudice to Transco’s direct billing proposal. Transco intends to file revised tariff sheets but also to seek a stay of their effectiveness pending action on the instant petition, and to seek clarification ef the Commission’s April 30 order with respect to the revised PGA filing required thereby. 10a ducers will be paid for these amounts once Transco has verified the amount of the Order No. 94 allowance due, and these unit amounts are entered into Transco’s gas purchase payment system. ¥. DESCRIPTION OF TRANSCO’S PROPOSED DIRECT BILLING PROCEDURE A. The “Retroactive” Period Is July 25, 1980 Through Augqust 31, 1984 Transco proposes to accumulate in a special subaccount of FERC Account No. 191 on its books al! retroactive Order No. 94 amounts which it has paid or expects to pay related to the period July 25, 1980 through August 31, 1984. In that connection, Transco has been invoiced for substantial retroactive Order No. 94 amounts related to the period after March 6, 1983 (‘the effective date of Commission Order No. 94 and the termination date of the Commission-defined “retroactive” period). In nu- merous cases, these invoices were received several months after the period to which the payment applies and many of these invoices have yet to be verified. Due to the mag- nitude of these amounts and the time involved in verify- ing such amounts, these amounts could not be paid within a reasonable time after the period to which payments apply. Therefore, Transco is proposing to include pay- ments related to periods after the Commission-defined “retroactive” period in the instant direct billing pro- cedure. In that regard, however, Transco proposes to ex- clude from the total retroactive Order No. 94 amounts in- cluded in this special subaccount any such payments made over the deferral periods in Docket Nos. TA84-2-29 and TA85-1-29 (Sentember, 1983 through February, 1984, and March, 1984 through August, 1984, respectively) which related to production during those deferral periods. Transco proposes to exclude such amounts from its special lla subaccount since it views these amounts as essentially “current” payments and therefore such amounts are more appropriately recovered through the normal PGA mech- anism rather than through the proposed direct billing procedure. B. Description of Direct Billing Procedure; Refunds For Past Collections The total retroactive Order No. 94 amounts which will be debited to Transco’s special subaccount will be de- tailed by the production month to which they apply. These monthly amounts will be allocated to Transco’s sales customers based on each such customer’s share of purchases during each month of the proposed retroactive period. Allocating these amounts to customers on this basis results in the most equitable distribution of the cost responsibility related to these amounts, as discussed more fully in Part VI below. As a part of the instant petition, Transco is proposing to refund directly all amounts, plus interest, Transco has recovered from the customers as a result of having included certain of these retroactive Order No. 94 amounts in Transco’s PGA filings in Docket No. TA84-2-29-000 and Docket No. TA8&5-1-29-000, including amounts re- covered from Transco’s customers as a result of the 4.5 cents per dt special Order No. 94 surcharge which be- came effective November 1, 1984 in Docket No. TA85-1- 29-000. Such refunds, detailed by customer and by PGA filing, are reflected on Schedule B, attached. The refund- ing of these amounts is contingent upon Transco receiv- ing Commission authority for its direct billing procedure. C. Twelve Monthly Installments; Lump Sum Payment Option The allocated amounts of retroactive Order No. 94 pay- ments will be billed customers directly, pius interest com- puted in accordance with the Commission’s PGA regula- 12a tions, in equal monthly installments over a 12-month pe- riod beginning July 1, 1985 or such other date as es- tablished by the Commission in its order approving this procedure. Transco is proposing such monthly billing in order to ease the financial burden which would be caused by billing customers on a lump sum basis. Moreover. a court decision in the interim on the legality of Order No. 94 may effectively negate any further need for the pro- cedure and subsequent payments thereunder. However, any customer which prefers to pay Transco is allocated share of these retroactive Order No. 94 amounts on a lump sum basis may choose to do so and thereby avoid the additional interest charges due as the result of Transco’s proposed twelve monthly installment basis of payment. D. Showing Estimated Direct Billing By Customer: Adjustments Will Be Made to Reflect Actual Amounts Attached as Schedule A is an estimate of the total amount, excluding interest, Transco proposes to bill each of its customers in order to recover all amounts charged to the special subaccount at the time the direct billing procedure commences. Transco will credit this special subaccount monthly to reflect recovery of these amounts from its customers. As explained earlier, Transco has included in its direct billed amounts estimates of retro- active Order No. 94 amounts which it has been invoiced for but has not yet paid. To the extent Transco pays any amount which differs from the amount it has estimated, it will debit or credit the special subaccount by the amount which the actual payment differs from the esti- mate. At the end of the 12-month billing period, Transco will transfer any remaining balance or excess in this special subaccount to Account No. 191 and reflect this amount in its next PGA filing. In addition, Transco has reflected in its direct billing calculations approximately $18,900,000 of retroactive Order No. 94 amounts which 13a have been offset, pursuant to Commission Order No. 399- A, against amounts owed customers under Order No. 93. As previously noted, such offset procedure has been dis- allowed by order of the court but the court’s decision may not be the final word on the subject." The amounts reflected on Schedule A necessarily are estimates, but Transco believes they are reasonably ac- curate. In any event, Transco intends to adjust such estimates for actual amounts, plus interest, and antici- pates (a) that the actual amounts will not vary signifi- cantly from the estimates, and (b) that such actual amounts should be known prior to the completion of the twelve-month billing period. By way of further explana- tion, for retroactive Order No. 94 payments related to the years 1980, 1981 and 1982 it was necessary, for pur- poses of allocating these amounts to customers at this time, to estimate the production month in which these payments applied since only annual amounts are available without a detailed review of ali producer invoices. For purposes of the estimates contained on Schedule A. Transco allocated each annual amount to the individual months based on total system purchases. While individual producer amounts thus estimated will vary | up and down) from the actual amounts which will be determined after the detailed review of all invoices, the aggregate amount and each customer’s share) is not expected to vary from the estimated amounts to any significant de- * Should the dispostion of the offset procedure for Btu measure- ment refunds remain unresolved as of the time Transco’s direct billing procedure commences, Transco hereby agrees to reduce the balance in its specia! subaccount by the offset amounts, to reduce each customer's direct bill sums by each such customer's allocable share of these amounts, including interest, and to commence its direct billing procedure using such adjusted amounts. If the off- set procedure ultimately is determined to be unlawful. Transco will increase the balance in its special subaccount and increase each customer’s allocable share, including interest, utilizing the same procedures set forth herein. l4a gree. Such review of invoices is underway; substantial man-hours are involved in such undertaking. Likewise, during the Commission-defined retroactive period July 25, 1980 through March 6, 1983, Transco paid certain gathering allowances which were in effect prior to the Commission approval of the generic allow- ances under Order No. 94. The allowances approved by the Commission pursuant to Order No. 94 replaced, retro- active to July 25, 1980, the allowances in existence prior to Order No. 94. Any payments made by Transco after March 6, 1983 did not include the full amount of charges related to the allowances approved under No. 94 in in- stances where other allowances in effect prior to Order No. 94 had already been paid by Transco. In these cases, the amount Transco actually paid retroactively was the difference between the allowance approved under Order No. 94 and the allowance in effect prior to Order No. 94. An analysis of representative months of the retroactive period reflects that approximately 91 percent of the total Order No. 94 amounts were actually paid on a retroactive basis. The remaining 9 percent were paid on a current basis via the allowances in effect prior to Order No. ‘4. Transco has utilized such estimated breakdown in calcu- lating the direct billed amounts shown on Schedule A. Again, such amounts will be adjusted for actuals, plus interest, after the detailed review of invoices has been completed, and the final amounts are not expected to vary significantly from the estimated amounts. At the time Transco completes the accounting review and adjusts its direct billing amounts to reflect actuals, those customers, if any, which opted for the lump-sum procedure will have the option to pay additional amounts, if any, on a lump-sum basis or to switch to a monthly basis, including interest, over the remaining months of the twelve-month billing period. Any reductions that may be due as a result of adjusting for actuals will be dis- tributed to customers which opted for lump-sum billing l5a on a lump-sum basis, and to those customers which opted for monthly payments by reducing the remaining monthly billings by equal monthly amounts. E. Calculation of Interest on Payments and Credits The amounts which appear on Schedule A represent principal amounts only and therefore exclude any ap- plicable interest. Transco will adjust the principal amounts to reflect interest to the date at which the billing procedure commences. Such interest on retroactive Order No. 94 payments will be calculated from the date of pay- ment by Transco through the date the billing procedure commences. Inasmuch as Transco is proposing to give customers the option to pay these amounts over a 12- month period, additional interest will be calculated on these net amounts in order to determine each such cus- tomer’s monthly payment. In addition, interest wil! also be calculated on amounts shown on Schedule B which wil! be refunded to each customer. As described earlier, these refunds result from the fact that certain retroactive Or- der No. 94 amounts have been included in PGA filings in Docket Nos. TA84-2-29-000 and TA85-1-29-000. Interest on these refund amounts will be calculated from the date when these amounts were paid by the customer through the date when the direct billing procedure commences. All such interest shall be calculated in accordance with the Commission’s PGA regulations at the applicable in- terest rate in effect from time to time. VI. REASONS SUPPORTING DIRECT BILLING PROCEDURE The direct billing procedure is the most logical and equitable method of assigning cost responsibility for this extraordinary, out-of-period item. These substantial ret- roactive payments relate to gas purchased by Transco from producers since mid-1980. Clearly, the matching 16a of such out-of-period costs to the customers’ respective purchases, by month, during the period to which the costs are related is the most equitable method of allocating such costs. Thus, the proposed procedure will most clearly approximate the cost assignment that would have oc- curred had the payments been made at the same time as the gas purchases to which they relate. By the same token, collecting retroactive Order No. 94 payments through the regular PGA procedures would lead to a dis- tortion of marketing signals because such costs relate to purchases made during prior periods. Direct billing 1s supported not only by logic and equity, but also by precedent. Collecting these large retroactive Order No. 94 amounts through a pipeline’s regular PGA mechanism is inconsistent with the Commission’s treat- ment of other such out-of-period costs. Specifically, in Order No. 98, the Commission established a direct refund procedure for Btu measurement adustments wherein the pipeline’s customers would be refunded these amounts based on their respective shares of purchases over the affected period. The Commission determined that flowing these large refund amounts through a pipeline’s PGA could result in an inequitable distribution of refunds to the pipeline’s customers. As the Commission explained in Order No. 399 issued September 20, 1984, the PGA mechanism is not appropriate for large out-of-period re- funds ‘Mimeo, pp. 32-33): “The Commission believes that the use of he PGA mechanism to pass through the refunds could result in inequities. For example, customers which do nct now purchase gas from an interstate pipeline would not receive a refund with a PGA pass-through, and it would be unfair if the customers actually over- charged did not receive a refund in the same pro- portion to their overcharges, given the magnitude and long-term nature of the overcharges. 17a In contrast, the Commission believes that the lump- sum mechanism is a fair and equitable procedure. Specifically, the lump-sum mechanism ensures that refunds will be made to those customers who over- paid the pipelines, and this mechanism will return the refunds to the ultimate consumer more quickly. Finally, the Commission recognizes that the Btu re- fund may temporarily disrupt the current gas mar- ket. But, the Commission believes that a lump-sum cash payment requirement wiil disrupt the current natural gas market less than the use of the PGA mechanism, since a lump-sum gas payment is made to those over-charged and does not adjust current prices,” Transco believes that retroactive Order No. 94 pay- ments should be treated in a similar fashion, particularly in light of the fact that Transco has numerous customers on its system that currently are purchasing at much lower levels than they did during the period to which the retro- active Order No. 94 amounts ayply. If Transco continued to flow these amounts through its PGA, such customers would be assessed substantially less than their equitable portion of the cost responsibility related to these amounts. Not only does direct billing result in the most equitable treatment of customers, it also effectively forecloses any and all allegations or concerns regarding potential manipulation of PGA filings for competitive or other purposes. It should also be noted that the Commission has ap- proved direct billing of Order No. 94 costs in Natural Gas Pipeline Company of America, Docket No. RP85-18- 000, letter order issued January 29, 1985, and has pending before it in Docket No. RP83-8-000 a settlement proposal —supported by Commission Staff—which would establish direct billing for Tennessee Gas Pipeline Company, a competitor of Transco. 18a VI. MISCELLANEOUS MATTERS A. Transco wishes to make it abundantly clear that the instant proposal is not intended to—nor will it—cir- cumscribe or restrict in any way interested parties’ rights with respect to questioning the appropriateness of indi- vidual retroactive Order No. 94 payments. See, letter order issued January 29, 1985 in Natural Gas Pipeline Company of America, Docket No. RP85-18-000, mimeo at 2. B. Transco is serving the instant petition on its custom- ers, state commissions and other parties normally served with Transco’s rate filings, and on those additional parties whieh hare intervened in-Transeo’s PGA filing in Docket No. TA85-3-29-000 which relates to the instant filing in the manner explained hereinabove. Transco submits that good cause exists for expedited consideration and, to that end, requests that an abbreviated intervention and com- ment period be established. C. Transeo requests that the Commission grant any waivers of its Regulations as may be required to make the direct billing procedure effective as proposed. VIII. CONCLUSION For all of the foregoing reasons, Transcontinental Gas Pipe Line Corporation respectfully submits that the above-described proposed direct billing procedure is in the public interest and should be authorized as expedi- tiously as possible. Respectfully submitted, TRANSCONTINENTAL GAS PIPE LINE CORPORATION By /s/ Robert G. Hardy Its Attorney 19a TRANSCONTINENTAL GAS PIPE LINE CORPORATION SCHEDULE A TOTAL AMOUNT OF RETROACTIVE ORDER NO. 94 AMOUNTS TO BE INCLUDED IN PROPOSED DIRECT Rate Schedule CD-1, PS-1, E-1 CD-2, PS-2, E-2 CD-3, PS-3, E-: S-2 Customer BILLING PROCEDURE Atlanta Gas Light United Cities, GA Total Carolina Pipeline Clinton-Newberry Columbia-Dranesville Commonwealth Danville Fort Hill Greenwood Laurens Lexington Lynchburg North Carolina Gas North Carolina Nature] Piedmont Public Service of N.C. Shelby Washington Gas Light Total Brooklyn Union Columbia-Rockville Columbia-Downington Columbia-Muncy Consolidated Edison Delmarva Eastern Shore Elizabethtown Long Island Lighting National Fuel Pennsylvania Gas & Water Philadelphia Electric Philadelphia Gas Works Public Service E & G South Jersey Union Gas Company Total Total Retroactive Amounts 7/80-8/84 $ 3,746,990.63 305,039.27 $ 4,052,029.89 1,148,214.97 244,356.19 576,254.60 5,462,946.37 741,321.05 443,657.85 352,906.52 218,533.72 342,156.18 438,135.18 370,153.65 5,219,044.03 8,628,318.75 5,956,928.22 477,508.30 3,769,022.30 $32,389,437.87 10,467,032.67 360,444.86 511,156.25 570,630.38 17,983,883.88 2,896,159.86 1,056,760.22 3,760,284.07 8,310,738.03 866,463.97 2,014,068.26 5,837,284 .24 5,599,448.42 20,362,432.554 5,242,194 43 538,467.72 $86,377,449.61 Total Retroactive Amounts Rate Schedule Customer 7/80-8/84 FI-2 Owens-Corning 240,110.47 G & OG1, PS-1 Alexander City 115,236.47 Bowman, GA 3,064.11 Buford, GA 71,715.15 Butler, AL 7,677.12 Clanton, AL 32,951.62 Commerce, AL 47,967.30 Covington, GA 127,684.38 East Central Alabama 48,751.35 Elberton, GA 61,368.41 Hartwell, GA 49,506.81 Lawrenceville, GA 94,086.44 Liberty, MS 7,011.12 Linden, AL 77,360.33 Madison, GA 15,338.66 Maplesville, AL 6,293.11 Monroe, GA 101,680.07 Roanoke, AL 34,977.63 Rockford, AL 1,977.06 Royston, GA 19,801.31 Social Circle, GA 20,131.85 Sugar Hill, GA 17,454.23 Thomaston, AL 1,693.51 Toccoa, GA 99,044.93 Tri-County Natural Gas 76,672.92 Wadley, AL 3,874.27 Wedowee, AL 5,758.20 Winder 198,435.30 Total $1,346,913.64 G & OG 2, PS-2 Bessemer City, N.C. 52,202.77 Blacksburg, S.C. 27,419.10 Fountain Inn, S.C. 40,537.27 Greer, S.C. 211,678.36 Kings Mountain, N.C. 122,558.36 Southwestern Va. Gas 254,909.73 Union, S.C. 182,884.98 United Cities—S.C. 316,862.13 Total $1,209,052.79 2la Total Retroactive Amounts Rate Schedule Customer 7/80-8/84 G & OG 3, PS-3 Columbia Gas (New Village) 127,695.48 Fredrick Gas Co. ¥ 158,536.18 U.G.I. 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Public record. Not legal advice.