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The Process of Negotiating Settlements at FERC

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  • Stephen Littlechild

    (University of Birmingham, Judge Business School, University of Cambridge)

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). The conventional regulatory litigation process is now only an occasional means of dispute resolution. This paper explains the settlement process, illustrating with the 12 section 4 rate cases brought by pipelines from 2008 and 2009. The paper also discusses and illustrates why parties prefer settlement to litigation, what difference it makes, which cases tend to settle, what might account for the increasing frequency of settlements over time, the recent phenomenon of pre-filing settlements and the recent settlement of section 5 cases brought by FERC. In contrast to many other regulatory jurisdictions, FERC Trial Staff play an active role in facilitating negotiation and settlement. They make an initial analysis 3 months after a pipeline files for a tariff rate increase. Thereafter, the regulatory aim is to bring the parties into agreement, not to determine an outcome and impose it upon them. This is a different role for the regulatory body than was previously apparent.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Stephen Littlechild, 2011. "The Process of Negotiating Settlements at FERC," Working Papers EPRG 1105, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1105
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    References listed on IDEAS

    as
    1. Doucet, Joseph & Littlechild, Stephen, 2006. "Negotiated settlements: The development of legal and economic thinking," Utilities Policy, Elsevier, vol. 14(4), pages 266-277, December.
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    7. Bordignon, Stephen & Littlechild, Stephen, 2012. "The Hunter Valley access undertaking: Elements of a negotiated settlement," Transport Policy, Elsevier, vol. 24(C), pages 179-187.
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    9. Doucet, Joseph & Littlechild, Stephen, 2009. "Negotiated settlements and the National Energy Board in Canada," Energy Policy, Elsevier, vol. 37(11), pages 4633-4644, November.
    10. Stephen Littlechild, 2009. "Stipulated settlements, the consumer advocate and utility regulation in Florida," Journal of Regulatory Economics, Springer, vol. 35(1), pages 96-109, February.
    11. Littlechild, Stephen, 2009. "The bird in hand: Stipulated settlements in the Florida electricity sector," Utilities Policy, Elsevier, vol. 17(3-4), pages 276-287, September.
    12. Thomas C. Gorak & Dennis J. Ray, 1995. "Efficiency and Equity in the Transition to a New Natural Gas Market," Land Economics, University of Wisconsin Press, vol. 71(3), pages 368-385.
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    Citations

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    Cited by:

    1. Boffa, Federico & Pingali, Viswanath & Sala, Francesca, 2015. "Strategic investment in merchant transmission: The impact of capacity utilization rules," Energy Policy, Elsevier, vol. 85(C), pages 455-463.
    2. Littlechild, Stephen C., 2012. "Australian airport regulation: Exploring the frontier," Journal of Air Transport Management, Elsevier, vol. 21(C), pages 50-62.
    3. Eskesen, Anita, 2021. "A contract design perspective on balancing the goals of utility regulation," Utilities Policy, Elsevier, vol. 69(C).
    4. Littlechild, Stephen, 2018. "Regulation and the nature of competition," Journal of Air Transport Management, Elsevier, vol. 67(C), pages 211-223.
    5. Stephen Littlechild, 2011. "Regulation, customer protection and customer engagement," Working Papers EPRG 1119, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    6. Bordignon, Stephen & Littlechild, Stephen, 2012. "The Hunter Valley access undertaking: Elements of a negotiated settlement," Transport Policy, Elsevier, vol. 24(C), pages 179-187.
    7. Andrzej T. Szablewski, 2018. "Kolejny etap ewolucji koncepcji i praktyki regulacji ekonomicznej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 2, pages 49-72.
    8. Chakravorty, Shourjo, 2015. "A study of the negotiated-settlement practice in regulation: Some evidence from Florida," Utilities Policy, Elsevier, vol. 32(C), pages 12-18.
    9. Stephen Littlechild, 2012. "Regulation and Customer Engagement," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    10. Stern, Jon, 2014. "The British utility regulation model: Its recent history and future prospects," Utilities Policy, Elsevier, vol. 31(C), pages 162-172.
    11. Havyatt, David, 2022. "Toward consumer-centric energy network regulation: Australia's experience," Utilities Policy, Elsevier, vol. 78(C).
    12. George Briden & Jonathan Lesser, 2017. "Regulatory arbitrage and the FERC rate settlement process," Journal of Regulatory Economics, Springer, vol. 51(2), pages 184-196, April.
    13. Stephen Littlechild, 2012. "Merchant and regulated transmission: theory, evidence and policy," Journal of Regulatory Economics, Springer, vol. 42(3), pages 308-335, December.
    14. Davies, Ryan J. & Hevert, Kathleen T., 2020. "Stay-out adjustments and multi-year regulatory rate plans," The Quarterly Review of Economics and Finance, Elsevier, vol. 76(C), pages 105-114.
    15. Biggar, Darryl, 2022. "Seven outstanding issues in energy network regulation," Energy Economics, Elsevier, vol. 115(C).
    16. Jon Stern, 2012. "The relationship between regulation and contracts in infrastructure industries: Regulation as ordered renegotiation," Regulation & Governance, John Wiley & Sons, vol. 6(4), pages 474-498, December.
    17. 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.

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    More about this item

    Keywords

    Regulation; negotiated settlement;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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