is not subscribed under firm contracts at the time CIG files to include the costs in its rates.5

This can be accomplished in various ways. For example, the Commission could limit a pipeline's cost recovery to only the capacity for which it has firm contracts for service to satisfy the at-risk condition. The Commission also could determine that it would set rates based on 100 percent of the capacity of the involved facilities irrespective of the subscribed volumes. These and other approaches would allow the Commission to ensure that ratepayers do not pay for unused capacity. However, it is not necessary at this time to conclude that one approach would be appropriate in all instances. The Commission will continue to look at this issue and will address it further in Docket No. RM90-1-000. But to provide certainty here to CIG, when the pipeline seeks to recover the costs of the facility, we will place it at risk by allowing it to recover only the costs associated with the capacity for which it has executed firm contracts. However, the pipeline may seek to satisfy the at-risk condition in a section 4 rate case seeking to include in rate base the costs of the facilities."

We consider the conversion of the Opal Lateral and related facilities from section 311 facilities to facilities operated under section 7(c) to be an administrative decision by CIG that relies on the use of existing facilities. Further, CIG has submitted to the Commission copies of relevant filings, which we have verified with the appropriate state commissions and the Bureau of Land Management. In a letter filed with the Commission on January 30, 1991, CIG agreed to implement certain mitiga

tion measures recommended by the Commission's staff in a letter dated January 29, 1991. In view of these considerations and the documentation, we conclude that the completed facilities are currently in compliance with the requirements of section 157.206(d) of the Commission's regulations and that certification of the Opal Lateral and related facilities is not a major federal action significantly affecting the quality of the human environment.

At a hearing held on February 13, 1991, the Commission, on its own motion, received and made a part of the record in this proceeding all evidence submitted, including the application and exhibits supporting the authorization sought, and after consideration of the record,

The Commission orders:

(A) CIG is issued a certificate of public convenience and necessity under section 7(c) of the NGA to continue the operation in interstate commerce of the Opal Lateral pipeline and the King, Blue Forest, and Bruff Meter Stations, all of which were constructed pursuant to section 311 of the NGPA.

(B) The certificate granted in Ordering Paragraph (A) is conditioned upon CIG's compliance with all applicable Commission regulations, particularly Part 154 and paragraphs (a), (c)(3), (e), and (g) of section 157.20 of said regulations.

(C) The authority granted herein is conditioned upon CIG's bearing the risk of underutilization of the facilities, as described in the text of this order.

5 The duration of these contracts would have to be at least equal to the term required to meet the Commission's contract standards in traditional 7(c) certificates. We note that most construction is supported by contracts with terms of 10 years or more. The only current contract that meets this requirement is the contract with Enron Oil & Gas. See supra note 3.

6 Arkla Energy Resources, a Division of Arkla, Inc., 54 FERC ¶ 61,033 (1991). See also Arkla Energy Resources, a Division of Arkla, Inc., Docket No.

sideration of the Commission's order issued December 6, 1990. The December 6 order

RP91-65-000 (decided January 31, 1991) [54 FERC ¶ 61,081].

718 C.F.R. § 157.206(d) (1990).

1 Trans-Appalachian Pipeline, Inc. 53 FERC ¶ 61,336 (1990). TAP framed its pleading as a request for rehearing and reconsideration. However, the issues raised in the pleading have already been addressed on rehearing and denied in our order of May 1988. It is inappropriate to consider the exact same issues continually in the context of rehearing. Accordingly, the

granted TAP a one-year extension of time within which to construct authorized facilities, but denied TAP's request for modification of the rate conditions in its certificate. For the reasons discussed below, we will deny TAP's request for reconsideration.

Background

In November 1986, the Commission issued a certificate authorizing TAP to construct and operate a 21-mile pipeline system designed to interconnect two of Columbia Gas Transmission Corporation's (Columbia) pipeline systems in West Virginia.2 The certificate authorizes transportation by TAP for Columbia only. However, while TAP's application stated that the interconnecting pipeline was needed to avoid a bottleneck on Columbia's Line No. 2,3 by diverting gas to another of Columbia's lines, the Commission determined that TAP's proposed interconnecting line was not necessary for Columbia to satisfy its own system supply requirements.

In view of this consideration, the Commission denied TAP's request for certificate authority to provide firm transportation service of up to 10,000 Mcf per day for Columbia. Because TAP's proposed firm service for Columbia was not approved, and TAP had no other identified customers, the Commission also denied TAP's proposed 100-percent demand charge rate for firm transportation service. Instead, since TAP would be limited under its certificate to providing interruptible service for Columbia, the Commission required TAP to file a volumetric, interruptible service rate derived using 90 percent of TAP's throughput capability and estimated costs of service. Because TAP had not demonstrated the need for its proposed facilities, the Commission included this rate condition to ensure that TAP would bear the risk of underutilization of its proposed facilities and thus have an incentive to seek additional customers if the facilities were not being fully utilized.

TAP requested rehearing of the conditions limiting it to providing interruptible transportation service under a volumetric rate. TAP asserted that the Commission's denial of authority for TAP to provide firm transportation service for Columbia and to charge the proposed 100-percent demand charge would make it impossible for TAP to obtain financing for the project. TAP also asserted that the Commission's action was inconsistent with pre(Footnote Continued)

Commission is treating the pleading as a request for reconsideration.

Trans-Appalachian Pipeline, Inc., 37 FERC 61,087 (1986).

vious decisions in which it had approved firm service and demand charges in recognition that such authority was essential to the applicants' securing project financing. Finally, TAP said that it would be required under its service agreement with Columbia to reserve all of its capacity for Columbia, so the Commission's conditions would not serve the intended purpose of providing an incentive for TAP to seek additional customers if necessary to achieve full utilization.

In May 1988 [43 FERC ¶ 61,297], the Commission issued an order denying TAP's rehearing request. In view of its previous finding that TAP's proposed facilities and services were not needed to satisfy the system supply requirements of TAP's only identified customer, Columbia, the Commission affirmed its conclusion that the conditions limiting TAP to interruptible transportation service under a volumetric rate were appropriate to prevent the project's risks from being shifted away from TAP. Further, the order on rehearing clarified that, because of the Commission's rate conditions, TAP was required to file a revised contract reflecting interruptible service, rather than firm service, for Columbia and the volumetric rate conditions. Since TAP was required to file such a revised service agreement, TAP would no longer be required to reserve any capacity for Columbia. Thus, TAP would be free at any time to request additional certificate authority to provide service for other customers.

On December 6, 1990 [53 FERC ¶ 61,336], the Commission issued an order granting TAP a one-year extension in which to construct its facilities, but denied TAP's renewed request for modification of the certificate's rate conditions. TAP seeks reconsideration of the December 6, 1990 order's denial of TAP's request for authority to provide firm transportation service for Columbia under a 100-percent demand charge rate. Alternatively, TAP requests that the Commission approve the pro forma service agreement that TAP filed with its one-year construction extension, but which was not addressed by the Commission in its December 6, 1990 order. That pro forma service agreement provides for interruptible transportation service for Columbia, but includes a minimum annual throughput condition that would require Columbia to pay the interruptible transportation rate based on a 82 percent annual throughput level, regardless of whether Columbia used that much capacity. TAP

3 Line No. 2 feeds gas from Appalachian producers to Columbia's mainline system.

stated that Columbia had agreed to service under these terms. TAP argues that the Commission must grant one of these alternative requests so that TAP will be able to obtain financing.

On January 22, 1991, Columbia filed an answer to TAP's request for reconsideration. Columbia's answer is permitted under section 385.213(a)(3) of the Commission's Rules of Practice and Procedure. Columbia's answer states that, contrary to TAP's statement, it has not agreed to the terms of the pro forma service agreement.

On January 29, 1991, TAP filed an answer to Columbia's answer and a request for the Commission to convene a settlement conference. Section 385.213(a)(2) of the Rule's of Practice and Procedure permits an answer to an answer only if ordered by the decisional authority. TAP acknowledges that it has not yet obtained Columbia's agreement to all of the terms of the pro forma service agreement. However, if the Commission does not grant reconsideration to allow TAP to provide firm service for Columbia and charge a 100-percent demand charge rate, TAP asserts that the pro forma service agreement's minimum annual throughput condition would be appropriate to ensure that TAP will be able to obtain financing even though it is only authorized to provide interruptible service. TAP also asserts that the Commission's rate conditions, even if originally appropriate, are no longer justified in view of changes in market conditions and Columbia's operations since 1986.

Since TAP's answer will not delay this proceeding and will ensure a complete record, we will permit the answer. However, the Commission is denying TAP's request for a settlement conference, since TAP's only expressed reason for requesting the conference is to ascertain rate conditions that would be acceptable to TAP, Columbia, and the Commission. A conference is not necessary for the Commission to determine that it should affirm the existing rate conditions.

On February 11, 1991, TAP filed to request that the Commission suspend proceedings on its application for 30 days while TAP and Columbia pursue further negotiations. We are denying this request for the reasons discussed below.

Discussion

The Commission is denying TAP's request that the Commission grant reconsideration to modify the conditions of its certificate which limit TAP to providing interruptible service for Columbia under a volumetric rate. Based on the lack of record evidence with respect to the need for TAP's proposed project, the Commis

sion determined in November 1986 that these conditions were necessary to ensure that the economic risk of TAP's project would not be shifted inappropriately to Columbia's customers. Further, the Commission addressed and denied TAP's request for rehearing on these rate conditions in May 1988.

Rehearing no longer lies with respect to the conditions on TAP's initial rates for service under the certificate issued in this proceeding. Further, since TAP still has not identified any potential customers other than Columbia, and Columbia has never disputed our finding that its ability to satisfy its supply obligations is not dependent on service from TAP, we find no basis for reconsidering our denial of TAP's request for firm service authority and approval of a 100-percent demand charge rate. Reconsideration also would be inappropriate in view of the length of time that has passed since the Commission addressed these issues on rehearing and the record in this proceeding was closed. For example, even if TAP could now show that it should be authorized to provide firm service for some customer, TAP's estimated costs of service likely have changed. Therefore, it would be necessary for TAP to file new, current data.

In view of these considerations, we are denying TAP's request for reconsideration. However, TAP may file an application for a new or amended certificate which the Commission will review in light of any changed circumstances, such as a demonstrable need by Columbia or some other customer for firm service by TAP and any changes in TAP's estimated costs of service. However, in view of our policy against minimum bill provisions generally, we emphasize that we will not approve a proposal like TAP's alternative proposal in this proceeding for an interruptible rate schedule provision that would require Columbia to pay minimum annual charges based on 82 percent of TAP's capacity, regardless of how much gas Columbia has transported.

We are denying TAP's February 11, 1991 request that the Commission suspend proceedings in this docket for 30 days while TAP and Columbia pursue further negotiations. In view of our determination that any change in TAP's rate conditions would have to be based on a new application and record, so that TAP's estimated costs of service can be reviewed on a current basis, there is no need to delay issuance of this order while TAP and Columbia negotiate.

The Commission orders:

(A) TAP's requests for modification of its certificate conditions, for a settlement confer