Mo. Pub. Serv. Comm’n v. Fed. Energy Regulatory Comm’n

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The TMP is a 5.6-mile stretch of pipeline, connecting Missouri with Illinois beneath the Mississippi River. Under the Natural Gas Act, 15 U.S.C. 717f, the Federal Energy Regulatory Commission issued MoGas a certificate of public convenience and necessity for a project that included using the TMP for natural gas service for the first time. On remand, the Commission approved inclusion of the acquisition cost in MoGas’s rate base because the TMP had been devoted to a new use, transporting natural gas instead of oil, and the cost of new construction would have been greater. Objectors challenged the Commission’s determination that the company had shown that the acquisition of pipeline facilities provided specific benefits in accordance with Commission precedent. Although acknowledging that a lower acquisition cost can produce benefits to customers in some cases, they argued the Commission failed to examine whether there were actual quantifiable dollar benefits for Missouri customers. The D.C. Circuit affirmed, deferring to the Commission’s benefits exception, which allows an acquisition premium to be included in a pipeline’s rate base when the purchase price is less than the cost of constructing comparable facilities, the facility is converted to a new use, and the transacting parties are unaffiliated. View "Mo. Pub. Serv. Comm'n v. Fed. Energy Regulatory Comm'n" on Justia Law