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News Digest

Fortnightly Magazine - August 1998

and therefore energy use in the United States -- will be avoided by a successful emissions trading program that the Administration plans to negotiate. According to an analysis by economist W. David Montgomery, overly optimistic predictions of trading of credits for greenhouse emissions from abroad and rosy forecasts on replacing U.S. coal-fired electric utilities with natural gas-powered units over the next decade are responsible for the Administration's claims.


GAS CAPACITY TURNBACK. The FERC has ruled that when Pacific Gas & Electric Co. turned back pipeline capacity to El Paso Natural Gas Co., which in turn released the capacity to Natural Gas Clearinghouse, PG&E's former shippers could not automatically recall that capacity for their own use simply by showing that NGC was not making use of it, but instead were required to show that NGC had actually used the capacity to serve end users outside PG&E's service territory. PG&E had turned back the capacity as of Jan. 1, leaving more than 35 percent of El Paso's firm transportation capacity unsubscribed, but had paid $58 million on behalf of end users giving them a limited right to recall so-called "Block II" capacity in northern California at times when capacity to PG&E's service territory was constrained. Docket Nos. RP97-287-010, RP97- 287-014, June 10, 1998.

INTERNAL RESTRUCTURING. The FERC on June 11 unveiled the results of a four-month study known as FERC First, an internal initiative designed to streamline the agency and improve the timeliness of decision making. The FERC also plans to focus more on employee development. "The Commission must embrace the culture of customer service and advanced technology into which regulated companies are swiftly being drawn," said Chairman James Hoecker. (See,


FILED-RATE DOCTRINE. The U.S. Supreme Court ruled that the filed-rate doctrine applies to nonprice features in utility tariffs, such as service conditions and billing options, as well as rates. Thus, the high court overturned a 9th Circuit decision and ruled that the Communications Act of 1934 preempted a suit filed by a telephone reseller that alleged that AT&T had breached promises to offer certain services and billing options (regarding hook-ups, multi-locational billing and support services), where AT&T's tariff already had addressed availability of such services. AT&T v. Central Office Tel. Inc., No. 97-679, June 15, 1998 (U.S.).

GAS PIPELINE CAPACITY. A federal appeals court remanded a 1996 FERC ruling that required interstate natural gas pipelines to obtain prior commission approval before acquiring upstream or downstream capacity rights, saying the FERC had failed to justify its ruling. The court noted: "The FERC does not seriously contest that the delay associated with case-by-case authorization practically eliminates any opportunity for pipelines to compete for short-term transportation services." Colorado Interstate Gas Co. v. FERC, Nos. 97-1214, 97-1215, 1998 WL 326856, June 23, 1998 (D.C.Cir.).

WATER UTILITY RATEMAKING. A Florida appeals court ruled that state law allows "capband" rates for large water utility systems (service areas are grouped by cost of service, with rates set uniformly within each group). However, it reversed the rate case because the state commission had switched to a new