FERC Rules That Kern River Is Justified to Apply a Collateral Requirement of More than Three Months' Reservation Charges for Non-Creditworthy Shippers

摘要

FERC issued an order on 6/25/10 finding that Kern River Gas Transmission Co.'s (RP09-466) lending documents support a collateral requirement of more than three months' reservation charges for non-creditworthy shippers. The Commission finds that Kern River's lending documents warrant an exception to the general policy that pipeline tariffs may not impose on new, non-creditworthy shippers a collateral requirement of more than three months' reservation charges. As a prior Ozark decision made clear, "it is unreasonable for the Commission to expect pipelines to renegotiate their lending agreements to comply with a later-approved Commission policy." Because pipelines and their lending institutions have a reliance interest in the collateral pledged for expansion or construction projects, it is unreasonable for the Commission to question such collateral requirements after financing has been obtained and the project is completed. Here, Kern River relied on the revenue stream from future shippers in obtaining financing, as demonstrated by its lending agreements. The Commission therefore accepts the parameters of Kern River's collateral requirements for new, non-creditworthy shippers.