Application of Transcontinental Gas Pipe Line Company, LLC for an order approving the abandonment by sale of certain pipeline facilities located offshore Texas extending from Matagorda Island Block 669 to Brazos Block A-133, under CP15-536.

UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION El Paso Natural Gas Company ) Docket No. RP10-1398-000 BRIEF ON EXCEPTIONS OF TEXAS GAS SERVICE COMPANY, A DIVISION OF ONEOK, INC. Kathleen L. Mazure Jason T. Gray Natalie M. Karas Duncan, Weinberg, Genzer & Pembroke, P.C. 1615 M Street, NW Suite 800 Washington, DC 20036 (202) 467-6370 telephone (202) 467-7379 facsimile Submitted August 7, 2012 TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................... iii I. STATEMENT OF THE CASE.............................................................................1 II. SUMMARY ............................................................................................................4 III. STANDARD OF REVIEW ...................................................................................9 IV. NUMBERED EXCEPTIONS .............................................................................10 V. POLICY CONSIDERATIONS WARRANTING FULL COMMISSION REVIEW...................................................................................12 VI. ARGUMENT........................................................................................................15 A. Article 11.2 of the 1996 Settlement. ........................................................15 1. Consistent with Commission precedent, the Commission should reject the ALJs finding that there is no Article 11.2(a) shortfall. ....................................................................................................18 2. The ALJ erred in failing to address, and reject, EPNGs proposed bifurcated cost of service. .......................................................25 3. The Commission should hold that EPNG may not collect from eligible Article 11.2 contracts rates that exceed the Article 11.2 rate due to any rate design changes for non-Article 11.2 contracts....................................................................................................27 4. It was error and not the product of reasoned decisionmaking for the ALJ to fail to address Issue IX.F, i.e., whether EPNG has satisfied the 4,000 MMcf/day Article 11.2(b) presumption. ..........30 5. The ALJ erred in failing to determine that EPNG did not demonstrate that it has otherwise met the requirements of Article 11.2(b)...........................................................................................33 6. It was error and not the product of reasoned decisionmaking for the ALJ to fail to establish a revenue credit given that EPNG failed to satisfy the 4,000 MMcf/day presumption....................37 7. The Commission should reject EPNGs proposal regarding the Article 11.2(b) rights of successors-in-interest to Article 11.2 contracts....................................................................................................40 a. Consistent with the finding in the March 20 Order that Article 11.2(b) applies to shippers and not to