to Order No. 528, Columbia proposes to flowthrough these costs on an "as-billed" basis under which Columbia would use the identical allocation method that the upstream pipeline supplier used to allocate the costs to Columbia. However, where the upstream supplier is exempt from Order No. 528, Columbia would allocate costs based on its own customers' current daily total firm contract demand for both sales and transportation. Columbia requests waiver of the 30-day notice provision of Natural Gas Act (NGA) section 4 to permit the tariff sheets to become effective on December 17, 1990. The Commission accepts and suspends Columbia's filing to become effective January 6, 1991, and establishes a conference at which parties should be prepared to discuss settlement of the issues raised in the protests.

Background

The purchase deficiency allocation method used by Columbia in all its Order No. 500 filings [FERC Statutes and Regulations

30,761] flowing through fixed charges billed by upstream pipelines has been found by the United States Court of Appeals for the District of Columbia to violate the filed rate doctrine.3 On October 9, 1990, the United States Supreme Court denied the requests for certiorari of the AGD II decision, and the Court of Appeals' mandate issued on October 17, 1990.

On November 1, 1990, the Commission issued Order No. 528 in which it addressed the issue of the collection by interstate pipelines of the take-or-pay costs included in their fixed charges in light of the Court's decision. The Commission stayed the tariff provisions of all pipelines, except those specifically excluded, to collect fixed charges based on the purchase deficiency allocation method. The stay became effective on December 16, 1990. In addition, the Commission permitted pipelines subject to Order No. 528 to file new tariff provisions to replace the stayed provisions, and the Commission adopted certain principles under which those proposals will be evaluated.

Columbia is currently billed fixed take-orpay charges by five upstream pipeline suppliers: Texas Gas Transmission Corporation (Texas Gas), Texas Eastern Transmission Corporation (Texas Eastern), Tennessee Gas Pipeline Company (Tennessee), Panhandle Eastern Pipe Line Company (Panhandle), and Transcontinental Gas Pipe Line Corporation (Transco). Transco is exempt from Order No. 528, since its recovery of its take-or-pay costs is

3 Associated Gas Distributors v. FERC (AGD II), 893 F.2d 349 (D.C. Cir. 1989).

4 The fourth pipeline, Texas Eastern, did not file to recover take-or-pay costs of its own under Order

governed by a settlement which the Commission has approved and Transco has accepted. The other four pipelines, however, are all subject to Order No. 528. Three of these four pipelines have made filings, as permitted by Order No. 528, proposing revised allocation methods.4

Tennessee filed on November 16, 1990, in Docket No. RP91-29-000 et al., primary and alternate proposals to revise the allocation of its take-or-pay settlement costs. On December 14, 1990, the Commission accepted and suspended Tennessee's alternate proposal allocating its fixed take-or-pay charge based on its firm sales customers' Annual Quantity Limitations; the primary proposal was rejected. On December 17, 1990, Panhandle filed, in Docket No. RP91-53-000, primary and alternate tariff sheets setting forth revised allocation methods for its fixed take-or-pay charges. On December 26, 1990, in Docket No. RP91-61-000, Texas Gas also filed to revise the method it uses to allocate its fixed take-or-pay charges. The Panhandle and Texas Gas filings are pending before the Commission.

None of the orders approving Columbia's flowthrough of its upstream suppliers' fixed take-or-pay charges has become final and nonappealable. Nor is Columbia's flowthrough of those fixed charges subject to an approved settlement. Therefore, Order No. 528 applies to Columbia's flowthrough of all fixed charges billed by its upstream suppliers, including those billed by Transco, and Columbia accordingly, on December 6, 1990, made a filing pursuant to Order No. 528 to revise the method by which it allocates these costs.

The instant filing reflects only the upstream pipeline supplier costs billed to Columbia by Transco. Since none of the four upstream pipelines which are subject to Order No. 528 had obtained Commission approval of revised allocation methods by December 6 when Columbia made this filing, Columbia did not include in this filing any costs associated with those four pipelines. However, Columbia did propose tariff language providing that it will flowthrough fixed charges billed by the pipelines subject to Order No. 528 on an as-billed basis. Thus, Columbia would use whatever allocation method the Commission accepts for the upstream pipeline. Columbia states that it will make filings to recover the fixed charges billed by the upstream pipelines subject to Order No. 528 after the Commission authorizes those suppliers to recommence billings pursuant to

No. 500. However, it does flowthrough take-or-pay costs from a number of upstream pipeline suppliers. 5 Tennessee Gas Pipeline Co., 53 FERC 161,379 (1990).

ised allocation methods under Order No. 536

in the instant filing, Columbia has proposed allocate the Transco costs on an other than e-billed basis; the purchase deficiency method ed by Transco is not available to Columbia. olumbia's total fixed monthly charge related Transco is $225,053 per month. Under olumbia's proposed revised allocation method, lese costs would be allocated to all its firm ales, transportation, and storage customers. The costs would be allocated based on those ustomers' November 1, 1990, total firm daily ntitlements under all of Columbia's firm sales, ransportation, and storage rate schedules Rate Schedules CDS, SGS, WS, FSS, and FTS). Columbia states that this allocation method is consistent with the examples of acceptable allocation methods set forth in Order No. 528 which included current contract - demand.

The filing contains a reconciliation of the Transco costs actually paid by each customer over the period May 1988 through October 1990 under the purchase deficiency method, as compared to what each customer would have paid based on the proposed revised allocation method. Columbia states the collections from its underpaid customers under the revised allocation will be used to fund refunds due other customers. Columbia proposes to amortize each customer's underpaid or overpaid amount over the 30 month period November 1990 through April 1993, which corresponds to the remainder of Transco's amortization period for the vast majority of its flowthrough amounts in the instant filing. This extended amortization period for the over/under collections is intended to mitigate any sharp increases in the monthly billings to customers whose revised allocations result in a larger share of the takeor-pay costs. Columbia proposes that periodic adjustments will be made annually on November 1 of each year.

Public Notice and Intervention

Public notice of the instant filing was issued on December 10, 1990 providing for protests, motions or notices to intervene to be filed on or before December 18, 1990. Timely notices or motions to intervene were filed by the parties listed in the appendix to this order. Pursuant to

"The upstream supplier fixed monthly demand surcharges previously reflected in Columbia's filings are: Texas Eastern, $2,724,524; Texas Gas, $988,343; Tennessee, $6,844,098; and Panhandle, $1,185,838,

'The remaining amortization period in Transco's Docket No. RP88-68-000 extends for thirty more months and this docket represents approximately 94% of its Order No. 500 recovery amounts contained in the instant filing.

Rule 214 (18 C.F.R. § 385.214 (1990)), any timely filed motions to intervene are granted unless an answer in opposition is filed within 15 days of the date such motion is filed. Any timely filed motions or notices not listed in the appendix are also granted in accordance with the conditions of Rule 214.

As further indicated in the appendix, a number of the intervenors included protests in their filings, outlining numerous objections to Columbia's proposed methodology. The major issues raised include whether: (1) Columbia's proposal to flow through the costs billed by pipelines subject to Order No. 528 on an asbilled basis is appropriate; (2) Columbia should be required to absorb a share of upstream takeor-pay costs; (3) Columbia's proposed method of allocating the Transco costs fails to minimize burdens on small customers consistent with Order No. 528; (4) Columbia's revised allocation method continues to violate the filed rate doctrine in various ways; (5) Columbia should be denied recovery of its upstream takeor-pay costs because Columbia's incurrence of these costs is directly attributable to its own imprudent purchasing practices, and (6) Columbia's recovery of these upstream supplier costs is prohibited by Columbia's PGA settlement with its customers in Docket No. TA82-1-21-000 et al., and should be subject to the outcome of Baltimore Gas & Electric Company v. FERC (D.C. Cir. No. 88-1779).8

Discussion

The Commission accepts and suspends Columbia's filing to become effective January 6, 1991 because the filing generally follows the guidelines set forth in Order No. 528. The Commission also directs staff to convene a conference at which parties should be prepared to discuss settlement.

In Order No. 528, the Commission sought to encourage pipelines and their customers to reach settlements concerning revised methods for allocating the settlement costs included in their fixed charges. Furthermore, the Commis. sion stated that in order to accommodate settlement discussions, it might, among other things, convene conferences. A number of protesters have either requested, or expressed a willingness to participate in, a technical or other conference to discuss settlement.

8 In Baltimore Gas and Electric v. FERC, Columbia's customers are challenging the Commission's orders which held that article IV of Columbia's PGA settlement does not prevent Columbia from flowing through upstream fixed take-or-pay costs. See, e.g., Columbia Gas Transmission Corp., 46 FERC 61,266, at pp. 61,782-84 (1989).