Cost Management Services, Inc. v. Washington Natural Gas Company

In this action brought under the Sherman Act by an unregulated competitor against a natural gas distributor, we must explore the interplay between state public utility regulation and federal antitrust law.

I

Cost Management Services, Inc. (“CMS”) is a Seattle-based company that purchases natural gas on the open market and sells it to various commercial and industrial consumers. In the trade area in which CMS sells gas, Washington Natural Gas Company (“WNG”) owns the only delivery facilities capable of transporting gas from the interstate pipeline to end users. Accordingly, customers who buy gas from CMS must obtain delivery of that gas through WNG’s delivery facilities. WNG charges those customers, who are known as “transporters,” a “transport charge” for the use of its facilities. Customers who purchase gas from WNG are known as “system sales” customers.

WNG is subject to regulation by the Washington Utilities and Transportation Commission (‘WUTC”). The WUTC has approved two tariffs which' are relevant to this ease. The first, Tariff 57,- applies when customers purchase gas from a source other than WNG. According to CMS, Tariff 57 dictates the terms and conditions which WNG…