FERC-547 Refund Requirements Sample FERC Order

107 FERC ¶ 61,249
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Pat Wood, III, Chairman;
Nora Mead Brownell, Joseph T. Kelliher,
and Suedeen G. Kelly.

Southern Star Central Gas Pipeline, Inc.

Docket No. RP93-109-020

ORDER ACCEPTING REFUND REPORT OF ENVIRONMENTAL PROCEEDS
(Issued June 2, 2004)
1.
On November 20, 2003, Southern Star Central Gas Pipeline, Inc. (Southern Star),
filed its refund report of environmental proceeds from third-party insurers in accordance
with Article III, Paragraph D of the Stipulation and Agreement (Settlement) of
January 31, 2001, approved in Docket No. RP93-109-017. Williams Gas Pipelines
Central, Inc., 94 FERC ¶ 61,364 (2001). Southern Star asserts that it did not receive any
insurance proceeds for environmental clean-up costs during the twelve months ended
September 30, 2003, and that, consequently, no refunds are due to its customers. The
Commission finds that this filing satisfies the reporting requirements of the Settlement.
Accordingly, the Commission accepts the instant refund report as consistent with the
terms of the Settlement.
Background
2.
The Settlement required Southern Star to, first, refund to customers 90 per cent of
environmental insurance proceeds received from third-party insurers by January 31 of
each year following the twelve-month period ending on September 30 during which
Southern Star receives such payments. Second, Southern Star must allocate such refunds
to customers based on firm reservation revenues for this twelve-month period. Third, the
Settlement requires Southern Star to file a refund report consistent with this allocation
mechanism no less than 30 days prior to January 31 of each year.
3.
Southern Star previously submitted two refund reports to comply with the terms of
the Settlement, which were both accepted by the Commission. The first refund report,
submitted on December 11, 2001, in Docket No. RP93-109-018, provided that Southern

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Star would refund $1,713,200 to its customers for the period ending September 30, 2001,
Unpublished Director Letter Order issued January 23, 2002, in Docket No. RP93-109018. The second refund report submitted on December 17, 2002, in Docket No. RP93109-019 committed Southern Star to refund $17, 686 for the period ending September 30,
2002, Unpublished Director Letter Order issued January 23, 2003 in Docket No. RP93109-019.
Notice, Intervention, and Protests
4.
Public notice of the filing was issued on November 26, 2003. Interventions and
protests were due as provided in section 154.210 of the Commission’s Regulations,
18 C.F.R. § 385.210 (2002). Pursuant to Rule 214, 18 C.F.R. § 385.214 (2002), all
timely filed motions to intervene and any motions to intervene out-of-time filed before
the issuance of this order are granted.
5.
On December 3, 2003, the Missouri Public Service Commission, (MoPSC) filed a
protest. MoPSC contends that Southern Star, which was recently purchased by a member
of the American International Group (AIG), an insurance company, may no longer seek
recovery of environmental insurance proceeds from insurers affiliated with AIG because
the pursuit of such claims from affiliated insurance companies conflicts with the financial
interests of its new parent company. Further, MoPSC contends that Southern Star may
not seek to recover claims from unaffiliated insurers insofar as there may exist an
informal agreement among insurance company not to pursue claims against one another.
For the reasons discussed below, the Commission rejects MoPSC’s protest and accepts
Southern Star’s refund report.
Discussion
6.
In the instant filing, Southern Star submitted the required refund report, which
demonstrates that it has not recovered any environmental insurance proceeds during the
12 months ending September 30, 2003, and, consequently, that no customer refunds are
due for this period. The Commission accepts the instant refund report as complying with
the Settlement.
7.
The Commission finds MoPSC’s protest lacks merit. MoPSC contends that
Southern Star’s purchase by Southern Star Central Corporation, a wholly-owned
subsidiary of an affiliate of AIG, which is one of the world’s largest insurance
companies, gives rise to a conflict of interest between Southern Star’s ratepayers and its
corporate parent, AIG. MoPSC argues that the corporate affiliation inhibits Southern Star
from filing claims for environmental clean-up costs from its corporate parent and its
insurance affiliates. Since an AIG affiliate may be liable for payment of such proceeds,
MoPSC alleges that Southern Star now has a “disincentive for pursuing recovery from

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remaining policies under which additional claims could or should be made.” MoPSC
Rehearing Request at 4. MoPSC further alleges that Southern Star may not be willing to
seek recovery from any insurance companies, whether or not they are affiliated with AIG,
because “there is likely an informal understanding or code of conduct among insurance
companies that discourages pursuit of such indemnifications from another insurance
company.” Id.
8.
MoPSC’s claims are speculative and unsupported. MoPSC fails to present any
evidence to substantiate its allegation that Southern Star’s parents or its affiliates prevent
Southern Star from seeking recovery of environmental insurance proceeds or that there is
an informal code among insurance companies generally that discourages the filing of
claims against each other. The Commission finds that such mere allegations do not
warrant further investigation or an order directing Southern Star to respond to MoPSC’s
information requests.
The Commission orders:
Southern Star’s November 20, 2003 refund report is accepted.
By the Commission.
(SEAL)

Linda Mitry,
Acting Secretary.