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North Carolina v. Farmers Chemical Association Inc.

Filed: August 21, 1979.


Appeal by petitioner from order of the North Carolina Utilities Commission entered 14 February 1978 in Docket No. G-21, Sub 148. Heard in the Court of Appeals 31 January 1979.

Erwin, Judge. Judge Mitchell concurs. Judge Martin (Robert M.) concurs in the result.


This Court remanded this case on its first appeal with the following instructions:

"In addition to those already discussed, the Commission made no findings and conclusions on the following important issues in the case:

1. Whether on November 6, 1975 Farmers Chemical and NCNG agreed that appellant would accept its fifty-five percent (55%) winter curtailment by operating at full capacity until January 3, 1976, and then closing down completely for various periods thereafter;

2. Whether the three Transco restorations permitted Farmers Chemical to operate at one hundred percent (100%) capacity throughout the 1975-76 winter without resorting to the use of any emergency gas;

3. Whether Transco Interim Settlement established prices for emergency gas volumes incrementally and treated such gas as being injected last into the pipeline system for the period covered by such settlement;

4. Whether Farmers Chemical put NCNG on notice in November and December, 1975 that it did not want any emergency gas; and

5. Whether residential customers should be excluded from paying their share of the emergency surcharge.

Such findings and conclusions are necessary to enable this Court to determine whether the Commission had performed the duty imposed by statute. The matter is remanded to the Commission to make necessary findings and conclusions on which it may base its order."

See Utilities Comm. v. Farmers Chemical Assoc., 33 N.C. App. 433, 446, 235 S.E.2d 398, 405, dis. rev. denied, 293 N.C. 258, 237 S.E.2d 539 (1977).

The Commission's findings and conclusions, if supported by competent, material, and substantial evidence, are conclusive on the appeal before us. See Utilities Comm. v. Telephone Co., 281 N.C. 318, 189 S.E.2d 705 (1972), and Utilities Commission v. Coach Co., 269 N.C. 717, 153 S.E.2d 461 (1967),.

The Commission found in the case sub judice that FCA directly benefited from the purchase of emergency gas in the amount of 273,073 Mcf which is supported by Nery's Exhibit No. 3. The Commission acknowledges that the figures shown on the exhibit are projections rather than actual usages. Projections are permitted to be used in some events over the actual experiences of the companies involved. See Utilities Comm. v. City of Durham, 282 N.C. 308, 193 S.E.2d 95 (1972).

Over objections of petitioner, the Commission adopted a price method somewhere between rolled-in pricing and incremental pricing that appears to be fair and equitable to the parties. We cannot conclude as a matter of law that the Commission

committed error in its method of reaching the price of the gas used in this event. The law imposes a duty on the Commission, and not the courts, to fix rates. Utilities Commission v. Telephone Co., 266 N.C. 450, 146 S.E.2d 487 (1966). We do not find the acts of the Commission to be unreasonable, but rather a legitimate use of its statutory authority. This assignment of error is without merit.

The second question presented by petitioner is: Did the Commission err in failing to make proper findings and conclusions about the 6 November 1975 agreement between NCNG and Farmers Chemical? The Commission made the following finding in response to our remand order:

"16. On November 6, 1975, representatives of NCNG and FCA met, pursuant to the Commission's directive (Decretal paragraph No. 4, Docket No. G-100, Sub 24), to discuss FCA's requirements for the winter season and how such requirements might be met. FCA was informed that it could be served 2,003,876 Mcf, or 45% of requirements. On the basis of 29,200 Mcf per day, this supply could serve FCA at 100% for 68.6 days of the 152-day winter period. It was agreed that FCA would be allowed to operate 100% from November 16, 1975, through January 3, 1976. If consumption averaged less than 29,200 Mcf per day, FCA would be served the unused portion for up to three days or through January 6, 1976. The Tunis plant would then shut down for three weeks and reopen and run until February 12 or the balance of the winter depending upon the availability of gas. It was understood that, if Transco made restorations to its gas supply and NCNG had not experienced an abnormally cold winter, FCA would be given further service depending on NCNG's flexibility. The meeting of November 6, 1975, primarily concerned days of service during the winter season. The discussion of purchase of emergency gas occurred near the end of the meeting. (FCA witness Lawrence; No. 7610UC825, R pp 63-64, 66.)

17. At the November 6, 1975 meeting, FCA's response to NCNG's question concerning the purchase of emergency gas referred to a direct purchase for FCA at incremental pricing to supplement ...

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