The process of negotiating settlements at FERC
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.
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