EPRG 1105

Stephen Littlechild

The Process of Negotiating Settlements at FERC

EPRG 1105 | Non-Technical Summary | PDF

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). This paper sets out the process by which this is achieved, illustrating with the 12 rate cases from 2008 and 2009. In contrast to many 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. Thereafter, the regulatory aim is to bring the parties into agreement, not to impose an outcome upon them. This is a different role for the regulatory body than was previously apparent. The process has worked increasingly successfully and essentially unchanged for over 35 years. The conventional regulatory litigation process is now only an occasional means of dispute resolution. 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 settlement of section 5 (rate reduction) cases brought by FERC.

Keywords: Regulation, negotiated settlement

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