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Shippers protest new tariff proposals FERC compliance filing, rehearing requests by TAPS pipeline owners draw objections from Flint Hills, Anadarko, State of Alaska Rose Ragsdale For Petroleum News
Shippers on the trans-Alaska oil pipeline filed a flurry of protests and comments Aug. 4-5 in response to an earlier filing by the pipeline’s owners in compliance with a June 20 Federal Energy Regulatory Commission order to lower their interstate shipping tariffs.
The shippers, Flint Hills Resources Alaska LLC, Anadarko Petroleum Corp. and the State of Alaska, filed the protests and comments separately just two weeks after attorneys for the pipeline’s owners submitted a detailed set of documents July 21 intended to implement rulings in FERC’s order.
In June, the commission upheld a May 2007 administrative law judge ruling that interstate rates charged on the Trans-Alaska Pipeline System in 2005 and 2006 were not “just and reasonable” and also ordered limited refunds to shippers who had overpaid.
The law judge found that pipeline owners BP Exploration (Alaska) Inc., ConocoPhillips Alaska, ExxonMobil Production Co., Unocal Pipeline Co. and Koch Alaska Pipeline Co. LLC, failed to prove proposed rate increases in their 2005 and 2006 tariffs were just and reasonable.
The order, which the five-member commission approved without comment, also established the basis for new just and reasonable rates to go into effect for the two years in question and for future years.
The pipeline owners also requested a rehearing of the commission’s order that they establish a uniform rate, and BP, acting alone, also requested a rehearing on a related issue.
The owners also reserved the right to appeal the FERC order.
Flint Hills seeks clarification Flint Hills filed comments and a request for clarification of the pipeline owners’ compliance filing Aug. 4, essentially objecting to the owners’ approach to calculating lower rates for 2005 and 2006 and their suggestions for determining 2007 and 2008 rates.
Flint Hills also asked FERC to direct the owners to refund to the shippers the full difference between pipeline tariffs charged for 2004 and the amounts charged for 2005 and 2006 “in light of the fact that rate calculations submitted by the Carriers are all lower than the 2004 rates.”
State cites improper use of actual costs
The State of Alaska filed a protest Aug. 5, accusing the pipeline owners of making several mistakes in their compliance filing. The state said the carriers improperly used 2005 and 2006 actual cost figures “that are neither supported by the record nor within the scope of the Commission’s compliance directives in Opinion No. 502.”
Secondly, the owners did not comply with the FERC’s instruction to determine rates prospectively and have them take effect Jan. 1, 2005, the state said.
Last, the owners improperly interjected discussion of extraneous and immaterial issues that are beyond the scope of the commission’s order.
Anadarko raises several objections In its Aug. 5 protest, Anadarko said it objected to the pipeline owners including in their compliance filing different proposed rates for the various years in question and trying to introduce new evidence after the hearing is closed. The shipper also said $1.92 per barrel of oil should be the rate adopted for 2005 and $2.02 per barrel for 2006.
“There is no mystery regarding the Opinion No. 502 compliance rate for 2006 forward ($2.02 per bbl), which the Carriers properly calculate in Attachment A, Exhibit 1 of their Compliance Filing. Indeed, the Interstate Commerce Act (“ICA”) clearly states that the just and reasonable rate set by the Commission is the rate ‘to be thereafter observed:’” Anadarko’s attorneys wrote.
The shipper also concurred with Flint Hills’ view that the pipeline owners improperly presented alternative rates “based on new and untested data.”
“Certainly, if it is improper for a pipeline to change the basis of its rates at hearing, then it is equally improper for the Carriers to present new data, and indeed new rates, in a compliance filing, i.e. after the hearing, after the initial decision and after the Commission’s order,” Anadarko wrote.
Shipper says rehearing requests lack merit In a separate filing Aug. 5, Anadarko also sought permission to “answer” the requests for rehearing filed in July by the owners and BP.
The shipper said it recognized that FERC’s rules generally prohibit answers to requests for rehearing, but the rules allow the commission to accept answers that assist in understanding and resolution of issues.
Anadarko said the owners’ claim that the commission raised a new issue when it ordered uniform rates lacks merit.
“The Commission properly found that the Carriers provide the same service using the same facilities for virtually the same cost of service, and, therefore, should charge a uniform rate. … The record in this case overwhelmingly supports the Commission’s conclusion,” Anadarko wrote.
The shipper also outlined a number of reasons why using individual rates is a flawed approach and why a system-wide approach to establishing rates is best.
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