Order 636 Upheld, with Remands

Fortnightly Magazine - September 15 1996
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DC PSC RFP Technical Consultant for Formal Case (FC) No. 1156

The U.S. Court of Appeals for the District of Columbia Circuit on July 16 upheld Order 636, which required unbundling of natural gas pipeline sales and transportation services, but remanded at least six issues to the Federal Energy Regulatory Commission (FERC) for further explanation (United Distr. Cos. v. FERC, No. 92-1485, July 16, 1996).

In giving cause for remand, the court questioned several FERC policies: 1) no prior hearings on allowing pipelines to modify storage injection and withdrawal schedules; 2) the May 18, 1992, eligibility date for no-notice transportation; 3) forcing incumbent shippers to match competing offers for pipeline capacity of up to 20 years under first refusal rights; 4) FERC's pro rata protocol for pipeline capacity shortages (whether service alternatives will mitigate pipeline market power); 5) FERC's refusal to allow customers of downstream pipelines to retain rate discounts when they become direct customers of upstream pipelines; and 6) FERC's 10-percent allocation of gas supply realignment (GSR) costs to interruptible transportation customers, without any allocation to pipelines.

Until the FERC takes final action on the remand order, Order 636 remains intact.

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