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The Process of Negotiating Settlements at FERC

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  • Littlechild, S.

Abstract

Interstate gas pipelines and their customers presently settle about 90% of the rate cases set for hearing before the Federal Energy Regulatory Commission (FERC). In recent years, the median time for negotiating settlements and having them approved is about 11 months, compared to several years to complete litigated hearings. This paper explores how this is achieved. FERC has a tight schedule for the hearing process. In contrast to other jurisdictions, FERC Trial Staff play an active role in facilitating negotiation and settlement. They propose a first settlement offer 3 months after a pipeline files for a tariff rate increase. An analysis of the 9 cases over the last two years where full and uncontested settlement was reached shows that discussions led by Trial Staff led to agreement in principle in a median time of 2 ½ months after this first offer, just before testimony would otherwise need to have been filed. It took a further 2 ½ months for the parties to finalise the wording of the settlement and to obtain the judge’s certification that it was uncontested, and 3 months for FERC formally to approve it. FERC’s settlement process has worked successfully and essentially unchanged for over 35 years. It suggests a more active role for the regulatory body than was previously apparent.

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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1116.

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Date of creation: 31 Jan 2011
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Handle: RePEc:cam:camdae:1116

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Web page: http://www.econ.cam.ac.uk/index.htm

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Keywords: Regulation; negotiated settlement;

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  1. Chermak, Janie M., 1998. "Order 636 and the U.S. natural gas industry," Resources Policy, Elsevier, vol. 24(4), pages 207-216, December.
  2. Doane, Michael J & Spulber, Daniel F, 1994. "Open Access and the Evolution of the U.S. Spot Market for Natural Gas," Journal of Law and Economics, University of Chicago Press, vol. 37(2), pages 477-517, October.
  3. De Vany, Arthur & David Walls, W., 1994. "Natural gas industry transformation, competitive institutions and the role of regulation : Lessons from open access in US natural gas markets," Energy Policy, Elsevier, vol. 22(9), pages 755-763, September.
  4. Carol A. Dahl & Thomas K. Matson, 1998. "Evolution of the U.S. Natural Gas Industry in Response to Changes in Transaction Costs," Land Economics, University of Wisconsin Press, vol. 74(3), pages 390-408.
  5. Doucet, Joseph & Littlechild, Stephen, 2009. "Negotiated settlements and the National Energy Board in Canada," Energy Policy, Elsevier, vol. 37(11), pages 4633-4644, November.
  6. Herbert, John H & Kreil, Erik, 1996. "US natural gas markets : How efficient are they?," Energy Policy, Elsevier, vol. 24(1), pages 1-5, January.
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Cited by:
  1. Littlechild, S., 2011. "Merchant and Regulated Transmission: Theory, Evidence and Policy," Cambridge Working Papers in Economics 1160, Faculty of Economics, University of Cambridge.
  2. Littlechild, Stephen C., 2012. "Australian airport regulation: Exploring the frontier," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 50-62.
  3. Littlechild, Stephen C., 2012. "German airport regulation: Framework agreements, civil law and the EU Directive," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 63-75.
  4. Littlechild, S., 2011. "Regulation, customer protection and customer engagement," Cambridge Working Papers in Economics 1142, Faculty of Economics, University of Cambridge.

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