Tom C. Clark

“ Tennessee Gas does not have a system-wide rate applicable to all services regardless of where performed. It has since the early 1950's, with Commission approval, divided its extensive pipeline system into six rate zones with rate differentials. ”

“ Accordingly, the Commission issued an interim order which disallowed the 7% return, required Tennessee Gas to file appropriate lower rates retroactively to the effective date of the increased rates and ordered refunds of the differences collected since that time. Tennessee Gas does not contest the Commission's determination that a 6 1/8% return on its net investment is just and reasonable. It does contend that to require the refunds prior to a determination of cost allocation among its zones of operation might result in its being unable to realize this return during the refund period. ”

“ It is true that none of these cases involved an undecided cost allocation issue applicable retroactively. However, in Natural Gas Pipeline Co. this Court took pains to point out the fact that 'establishment of a rate for a regulated industry often involves two steps of different character, one of which may appropriately precede the other.' 315 U.S., at p. 584, 62 S.Ct., at p. 742. Significantly, that case also involved the issue of a fair rate of return and 'the adjustment of a rate schedule * * * so as to eliminate discriminations and unfairness from its details.' Ibid. ”