On November 13, 2024, Joel deJesus, the Administrative Law Judge presiding over a proceeding involving Southern Natural Gas Company, L.L.C. (SNG), certified to the Commission an Offer of Partial Settlement (Partial Settlement) filed by SNG on October 24, 2024 as uncontested.  “According to SNG, the Partial Settlement resolves ‘certain issues regarding SNG’s transportation fuel retention rates and terms of service set for hearing in the captioned proceeding.’  But the Partial Settlement does not resolve all of the issues the Commission set for hearing in Docket Nos. RP24-982-000 and RP25-36-000 [(see S. Nat. Gas Co. L.L.C., 188 FERC ¶ 61,226, at P 10 (2024) (Hearing Order); S. Nat. Gas Co. L.L.C., 189 FERC ¶ 61,057, at P 9 (2024) (Consolidation Order))].”

Background

Judge deJesus noted that “SNG has recovered the operational costs of both its gas-fueled and electric compressors by retaining gas.  When recovering electric compression costs, SNG has calculated a quantity of retained gas (referred to Dekatherm-equivalent or e-Dth gas) that is equal in value to the electric costs of the prior period and retains it [(see Hearing Order, 188 FERC ¶ 61,226 at P 2)]. … On August 20, 2024, SNG filed revised tariff records updating its transportation fuel retention rates and replacing, effective October 1, 2024, the e-Dth gas retention mechanism with a new electric power cost (EPC) mechanism, which tracks and trues up SNG’s actual electric power costs over time.  This filing also proposed a surcharge for collecting $9.5 million in under-recoveries incurred under the present e-Dth mechanism. … Numerous parties commented on and protested SNG’s August 20 proposal [(see Hearing Order, 188 FERC ¶ 61,226 at P 5-6)].  Most ‘generally maintain that Southern has not demonstrated that its proposed rate and tariff changes are just and reasonable [(Hearing Order, 188 FERC ¶ 61,226 at 6)].’  While many parties support converting the present e-Dth gas retention mechanism to the EPC tracking and true-up mechanism, they nonetheless oppose SNG’s proposal to impose a surcharge to recover $9.5 million on prior under-recoveries [(see Hearing Order, 188 FERC ¶ 61,226 at 6)].”

“On September 30, 2024, the Commission issued its Hearing Order. In that order, the Commission granted all notices of intervention and timely motions to intervene and accepted SNG’s and SMG’s respective answers [(Hearing Order, 188 FERC ¶ 61,226 at P 5)].  The Commission accepted the tariff records included in the SNG Fuel Filing and suspended them for five months, to be effective upon motion on March 1, 2025, and subject to refund and the outcome of a hearing [(Hearing Order, 188 FERC ¶ 61,226 at P 12)]. … Based on the Commission’s preliminary analysis, the Commission concluded that the SNG Fuel Filing may be unjust, unreasonable, unduly discriminatory, or otherwise unlawful and that it raises issues of material fact that are more appropriately addressed in a hearing [(Hearing Order, 188 FERC ¶ 61,226 at P 10)].”

Subsequently, “[o]n October 2, 2024, in Docket No. RP25-36-000, SNG filed revised tariff records to update its 2024/2025 winter period fuel retention rates under its currently effective e-Dth gas retention mechanism [(SNG Fuel Update Filing)].  In this filing, SNG asked that the Commission act on the SNG Fuel Update Filing by October 22, 2024, and allow the tariff records to go into effect on October 2, 2024.20 … On October 22, 2024, the Commission issued the Consolidation Order.  In that order, the Commission granted all timely motions to intervene and any unopposed motions to intervene out-of-time filed prior to October 22, 2024 [(Consolidation Order, 189 FERC ¶ 61,057 at 7)].  The Commission also accepted and suspended the tariff records included in the SNG Fuel Update Filing for a nominal period, to become effective October 2, 2024, subject to refund and the outcome of hearing procedures [(Consolidation Order, 189 FERC ¶ 61,057 at P 10)].  Based on the Commission’s preliminary analysis, the Commission concluded that the SNG Fuel Update Filing may be unjust, unreasonable, unduly discriminatory, or otherwise unlawful; found that it raises issues of material fact that are more appropriately addressed in a hearing; and consolidated the issues raised by the SNG Fuel Update Filing in Docket No. RP25-36-000 with the hearing previously established in Docket No. RP24-982-000 [(Consolidation Order, 189 FERC ¶ 61,057 at P 9)]. … SNG submitted the Partial Settlement on October 23, 2024, but the Commission’s secretary accepted the Partial Settlement for filing on October 24, 2024, in Docket No. RP24-982-003.  Also on October 24, 2024, SNG submitted a revised version of Attachment D (clean and redlined pro forma tariff revisions) to reflect ‘a date of October 1, 2024, instead of November 1, 2024, in Section 35.’”

Comments

In its initial comments, Trial Staff did “not oppose the Partial Settlement.  In general, Trial Staff finds the Partial Settlement to be fair and reasonable ‘absent the proposed October 1, 2024, effective date.’ … Trial Staff notes two issues with the Partial Settlement’s proposed October 1, 2024, effective date.  First, Trial Staff notes that the Partial Settlement’s effective date is essentially a request to waive the five-month suspension period the Commission has ordered for the EPC mechanism [(citing Hearing Order, 188 FERC ¶ 61,226 at PP 1, 13).].  Second, Trial Staff notes that there is a pending rehearing request of that same suspension period issue.  Other than pointing out those issues, Trial Staff does not take any position on the proposed October 1, 2024, effective date and does not ‘oppose the Presiding Judge certifying the Partial Settlement to the Commission.’”

Discussion

Judge deJesus found “that no participant contests the Partial Settlement, and therefore, I have no discretion other than to certify it to the Commission under Rule 602(g)(1) [(18 C.F.R. § 385.602(g)(1) (2024))].  According to the Partial Settlement and Trial Staff, Commission approval of the Partial Settlement would resolve some of the issues set for hearing in this proceeding without an evidentiary hearing.  The Partial Settlement is the product of good faith negotiations among the participants, and no participant submitted comments opposing it. … Additionally, the participants represent that the Partial Settlement does not affect other pending cases, involve issues of first impression, depart from Commission precedent, or seek to impose a standard of review other than the ordinary just and reasonable standard for any changes to the Partial Settlement that might be sought by either a third party or the Commission acting sua sponte.”

“In its initial comments, Trial Staff points out that the Partial Settlement effectively accelerates the effective date that the Commission set for the EPC mechanism in the Hearing Order and that there is a pending rehearing request regarding the effective date.  But Trial Staff fails to explain why the Commission should care about those points, and I find them unremarkable. … Since Trial Staff does not explain why these issues would be a basis to decline to certify the Partial Settlement, I will simply point them out to the Commission’s attention as Trial Staff pointed them out to my attention. Since no party contests the Partial Settlement and Trial Staff’s observations at most raise legal issues and not genuine issues of material fact, the issues highlighted by Trial Staff do not prevent me from certifying the Partial Settlement. … Accordingly, based on the participants’ representations, I recommend that the Commission find the Partial Settlement to be fair and reasonable and therefore approve the Partial Settlement.”

See ¶466: Fuel and LAUF Gas Costs for more information on the recovery of electric power costs by natural gas pipelines.

Southern Natural Gas Company, L.L.C., Order Certifying Uncontested Partial Settlement, 189 FERC ¶ 63,009 (2024) (J. deJesus) [Docket Nos. RP24-982-003 and RP25-36-002 (Consolidated)].