Full opinion text
MEMORANDUM OPINION MIHM, District Judge. I. INTRODUCTION This is an antitrust case. The Plaintiff, the State of Illinois, is suing in its proprietary capacity on behalf of certain state facilities, in its parens patriae capacity on behalf of all natural persons in the certified class below, and in its representative capacity on behalf of other indirect purchasers. This class was certified by the Court pursuant to Rule 23, Federal Rules of Civil Procedure, and described as follows: All indirect purchasers of natural gas from Panhandle Eastern Pipe Line Company (“PEPL”) who reside in or are located in those Illinois counties or parts of Illinois counties served exclusively by PEPL’s interstate natural gas transmission system. The area exclusively served by Panhandle involves part or all of 37 counties. Most of the indirect purchasers involved in this case were supplied their natural gas in those areas by three local distribution companies (“LDC’s”): Central Illinois Light Company (“CILCO”), Central Illinois Public Service Company ("CIPS”), and Illinois Power Company (“IP”). The Defendant, Panhandle Eastern Pipe Line Company (“Panhandle” or “PEPL”), a Delaware corporation, is an interstate pipeline company. Panhandle’s pipeline system moves natural gas from a number of collection points outside the State of Illinois and distributes the gas elsewhere along its system, in Illinois and other states, primarily to LDC’s. The Plaintiff charges that during the time in question, 1981 to the time of trial in 1986/1987, Panhandle engaged in conduct which constituted violations of federal and state antitrust laws. More specifically, Count I (Monopolization of Gas Sales), Count 3 (Attempted Monopolization of Gas Sales), Count 5 (Monopoly Leveraging), Count 7 (Essential Facility), and Count 9 (Illegal Tying) allege violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and pray for damages pursuant to Section 4 of the Clayton Act, 15 U.S.C. § 15. Counts 2, 4, 6, 8, and 10 allege corresponding violations of Section 3 of the Illinois Antitrust Act, Ill.Rev.Stat. ch. 38, ¶ 60-3. Section 1 of the Sherman Act provides in pertinent part as follows: Every contract ... in restraint of trade or commerce among the several state ... is declared to be illegal. 15 U.S.C. § 1. Section 2 of the Sherman Act provides in pertinent part as follows: Every person who shall monopolize ... any part of the trade or commerce among the several states ... shall be deemed guilty.... 15 U.S.C. § 2. Section 4 of the Clayton Act provides as follows: Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee. 15 U.S.C. § 15. Prior to trial, Panhandle moved to dismiss all indirect purchaser claims on grounds that such indirect claims were barred by the Illinois Brick doctrine, which prohibits most antitrust claims by indirect purchasers. Illinois Brick v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). This Court denied the Motion to Dismiss, citing the “cost plus exception” to the Illinois Brick doctrine. On interlocutory appeal, a panel of the Seventh Circuit Court of Appeals reversed the Court’s denial of the Motion to Dismiss on January 22, 1988. State of Illinois ex rel. Hartigan v. Panhandle Eastern, 839 F.2d 1206 (7th Cir.1988). However, in an en banc decision dated July 18, 1988, the Seventh Circuit held that, while industrial indirect purchasers did not fall within the “cost plus exception” to the Illinois Brick rule, residential/commercial indirect purchasers did, and therefore claims on their behalf would not be dismissed. State of Illinois ex rel. Hartigan v. Panhandle, 852 F.2d 891 (7th Cir.1988), cert. denied, — U.S. -, 109 S.Ct. 543, 102 L.Ed.2d 573 (1988). This lawsuit was filed on February 7, 1984. On December 13, 1984, after extensive hearing, the Court denied a Motion for Preliminary Injunction filed by Plaintiff. The trial on the merits on the bifurcated issue of liability was heard by the Court from November 17, 1986 to January 30, 1987. The Court stayed the matter during much of the time after trial when the interlocutory appeal was pending. For the reasons stated in this Opinion, the Court finds in favor of the Defendant and against the Plaintiff on all claims. This is a complex ease, and the Court’s ruling on the issue of liability will of necessity involve hundreds of specific findings of Fact and Law. The Opinion is structured in the following way: I. Narrative (historical background of the natural gas industry and the events leading up to the disputes between the parties in this case). II. Findings of Fact (more specific discussion of certain factual bases for the legal conclusions). III. Conclusions of Law. NOTE: All matters contained in this Memorandum Opinion are to be considered as findings of the Court, whether the same are found in the Narrative or in the formal Findings of Fact or Conclusions of Law. References to the injunction hearing and trial testimony are by witness and transcript page number; the injunction hearing and trial transcript have been numbered as one consecutive transcript by the parties. Citations to depositions are to the witness’ name and page number. PX citations refer to Plaintiff’s Exhibits; DX citations refer to Defendant’s Exhibits. II. NARRATIVE A. Historical Background of the Natural Gas Industry Natural gas has for some time been a major source of inexpensive energy in this country. Over time most homeowners, small businesses, and industrial facilities came to meet their heating needs with gas heat. An interstate pipeline industry developed. Pipeline companies purchased natural gas from producers at the wellhead and moved the gas from the well to distant customers by way of their pipeline sys-terns. Panhandle, for example, purchases gas from extensive acreage located in Texas, Oklahoma, New Mexico, Colorado, Wyoming and offshore in Texas and Louisiana from Trunkline Gas Company (“TKL”). Panhandle’s pipeline, with lateral and gathering lines, runs northeastward generally from Oklahoma and Texas .to the Detroit, Michigan area. Panhandle sells virtually all of the natural gas it purchases to interstate pipeline companies, industrial end-users, and investor-owned and municipally-owned LDC’s serving several states including Central Illinois. Until 1977, the regulatory agency supervising the natural gas industry was the Federal Power Commission (“FPC”). In that year, the FPC was replaced by the Federal Energy Regulatory Commission (“FERC” or “Commission”). The statutory framework for regulatory control of the industry until 1978 was the Natural Gas Act (“NGA"), 15 U.S.C. §§ 717-717w. Under the NGA, every sale of natural gas for resale and every transportation of natural gas in interstate commerce was subject to federal regulatory oversight. The NGA required that a regulatory body (the FPC) review each sale of gas to ensure that the price was “just and reasonable” and review all transportation facilities and transports of gas in interstate commerce to assure that they were “in the public convenience and necessity.” 15 U.S.C. §§ 717c, 717f. The principal functions of the FERC in rate-making are to determine the costs the pipeline should be allowed to recover from its jurisdictional businesses, to apportion the costs on an equitable basis among the different services that are provided, and to develop rates that will give the pipeline a reasonable opportunity to recover those costs, including an appropriate return on the investment in facilities used to provide the services. (Williams 6365). The NGA gave the FPC/FERC broad powers to regulate both price and non-price activities of interstate pipelines, defined as “natural gas companies” by 15 U.S.C. § 717a(6). Panhandle is such a natural gas company. In the years leading up to 1978, Panhandle sold natural gas to LDC’s such as CILCO, CIPS, and IP pursuant to tariffs approved by the FPC/FERC, and in conformance with long-term service contracts. In the late 1960’s, a natural gas shortage developed and spread throughout the natural gas industry. This shortage continued into the 1970’s and on occasion caused curtailment of delivery of natural gas to LDC’s because there was not enough natural gas available to meet demand. Naturally, in such an environment, LDC’s and the customers behind them clung to the pipelines serving their customer area. Pursuant to typical contract and tariff arrangements, LDC’s such as CILCO agreed that they would normally purchase all of their natural gas from a single interstate pipeline, such as Panhandle, and in return the pipeline agreed to give its “best efforts” to see that the LDC received whatever amount of natural gas was needed to meet its customers needs. In furtherance of those long-term commitments to the LDC’s, pipelines entered into long-term contracts with natural gas producers to ensure an adequate flow of gas. Very often these pipeline/producer contracts, because of the oil shortage and tightly regulated price, contained provisions that guaranteed a certain level of “take” from the producer. In other words, the pipeline would guarantee to take a set amount of gas during a 12 month period. If the pipeline did not take the guaranteed amount of gas, it was still obligated to pay the producer for that amount of gas. These “take-or-pay” provisions were common in most contracts between pipelines and producers of natural gas from the mid-1970’s until the early 1980’s. In 1978, Congress changed the “rules of the game” by passing the Natural Gas Policy Act (“NGPA”), 15 U.S.C. §§ 3301-3432. The NGPA provided for gradual deregulation of the wellhead price of certain natural gas and for significant deregulation effective January 1,1985. One goal of the NGPA in deregulating gas producer prices was to provide sufficient incentive for increased exploration and development of new supplies. With respect to sales of gas, the NGPA largely eliminated the requirement that gas be sold at “just and reasonable” rates and created instead several categories of gas, establishing for many a “maximum lawful price,” referred to commonly as a ceiling price. 15 U.S.C. §§ 3312-3319. Ceiling prices were established for, among others, the following categories of gas: “raw material gas,” referred to in the NGPA as “102 gas.” “new, onshore production wells,” referred to in the NGPA as “103 gas,” “high-cost natural gas,” referred to in the NGPA as “107 gas.” Under the NGPA, gas in these categories, commonly referred to as “new gas,” could be sold at any price up to the ceiling price without regulatory review. The ceiling prices for 102, 103 and 107 gas were eliminated by the NGPA on January 1, 1985. 15 U.S.C. § 3331. Section 311 of the NGPA authorized the FERC to implement procedures that would facilitate the movement of gas between the intrastate and interstate markets without being subject to the requirements of Section 7 of the NGA. The FERC implemented procedures under Part 284 of its regulations to permit that type of transportation. This involved transportation by intrastate pipelines for interstate pipelines and LDC’s, and also by interstate pipelines on behalf of intrastate pipelines and LDC’s. (Williams 6386-6387, DX 1467). Almost immediately thereafter, the FERC issued Order 60 under the NGA permitting interstate pipelines to perform the same type of service for one another that they could perform for intrastate pipelines. (Williams 6387, DX 1467). Under Order 63 the FERC permitted Hin-shaw companies, i.e., primarily distribution companies that pick up gas and transport it within a state but don’t move it outside the state, to perform the same operations permitted intrastate pipelines. (Williams 6387, DX 1467). Under the increased ceiling prices and monthly escalation mechanism in the NGPA, the producer price of natural gas rose steadily and gas supplies increased. However, because of a general decline in economic conditions, conservation efforts, and some limited amount of switching to alternative fuels, interstate gas industry sales to industrial consumers decreased. As the country entered the 1980’s, a natural gas surplus developed, due to a combination of a shrinking market and the availability of new and increasing gas supplies. This surplus of gas led to the growth of a “spot market,” that is, lower priced gas available for purchase from natural gas producers by any willing buyer. The only rub was that the gas had to be moved from the well (producer) to the delivery point (purchaser), and the only way to move the gas was through the natural gas pipeline system. In a sense, this litigation started with the passage of the NGPA. B. FERC Transportation Authorization For many years pipelines such as Panhandle purchased natural gas and sold it to their LDC customers without those customers’ actively considering whether there was more than one product involved. In other words, the industry was regulated so strictly that there was no real opportunity for other alternatives, such as a transportation service only, to develop. Departing from its historic policies, in 1975 the FPC responded to the gas shortage by establishing a general policy of permitting interstate pipelines with specific prior authorization to transport gas purchased directly from producers to industrial consumers in certain restricted circumstances. In 1979, the FERC expanded the direct purchase program to include essential agricultural users, use by schools and hospitals, and oil displacement use. The FERC in 1982 instituted the Blanket Certificate Program. The blanket certificate program utilized Section 7(c) of the Natural Gas Act which provides that no natural gas company, or a company which will upon commencement of the relevant activities become a natural gas company, may commence any jurisdictional activities or construct any jurisdictional facilities without receiving a Section 7(c) certificate in advance. The FERC in its various blanket certificate programs designated categories of potential pipeline activities, including the transportation of natural gas, in which individualized FERC authorization would not be required so long as the pipeline first received a Blanket Certificate of Public Convenience and Necessity. The Certificate required such activity to be performed in compliance with conditions stated in the underlying regulations. In 1983, responding this time to the deregulation of wellhead gas prices, a decline in demand for gas, and price competition from alternative fuels and resultant loss of industrial load, the FERC, through Orders No. 234-B and 319, authorized self-implementing transportation under a blanket certificate for any end-user, to become effective on or about August 1, 1983. The FERC acknowledged that this experimental program was undertaken in order to add “flexibility to the market and thereby partially mitigate market distortions that currently may exist or that may emerge in the near future.” 48 Fed.Reg. 34872 (Aug. 1, 1983). Transportation under Orders No. 234-B and 319 was voluntary. Under Order 234-B, “low priority” end-users, as defined by the FERC, could purchase gas from producers and arrange for transportation by pipelines. The transportation was self-implementing for the first 120 days. After 120 days, the transportation was conditioned on FERC authorization and was subject to a notice and protest procedure. Order 234-B, by its terms, was effective only through June 30, 1985. Order 319 permitted “high priority” end-users, as defined in the Order, to purchase natural gas and arrange for transportation. It permitted purchase contracts of up to five years. Prior to Orders 234-B and 319, the FERC had approved the transportation of natural gas purchased by an end-user only on a case-by-case basis. This required obtaining a Section 7(c) Certificate. On or about January 10, 1983, Panhandle was granted a blanket certificate of authority by the FERC pursuant to its Section 7(c) blanket certificate program. In August 1983, this blanket certificate automatically became usable under Orders No. 234-B and 319. Order No. 234-B, as amended by Order No. 234-C, and the transportation-related portions of Order 319, as amended by Order No. 319-A, terminated on October 31, 1985 after the United States Court of Appeals for the District of Columbia in Maryland People’s Counsel v. FERC, 761 F.2d 780 (D.C.Cir.1985) (MPC II), vacated the Orders. Thereafter, Order No. 436, established new regulatory requirements applicable to self-implementing transportation. (Stipulation ¶ 32). On June 23,1987, in the case of Associated Gas Distributors v. FERC, 824 F.2d 981 (D.C.Cir.1987) (“AGD ”), the court sent Order 436 back to FERC with directions to factor the take-or-pay problem into the equation of change in regulations and also to rectify some procedural problems regarding the contract demand reduction formula. On August 7, 1987, the FERC, in response to AGD, promulgated Order 500 (Interim Rule and Statement of Policy, Docket No. RM 87-34-000). Order No. 500 essentially re-adopted the regulations originally contained in Order No. 436 but with modifications to address take-or-pay problems. Order 500 has now been remanded for further consideration by the FERC. American Gas Association v. FERC, 888 F.2d 136 (D.C.Cir.1989). C. Events Leading Up To This Litigation Much of the focus of this litigation is on the relationship which existed between Panhandle and the three LDC’s (CILCO, CIPS, and IP) which supplied natural gas to the relevant portions of the 37 county area of Illinois served exclusively by Panhandle. At the trial of this case, the major focus of evidence was on the conduct of Panhandle and CILCO. Most of the Memorandum will discuss that conduct as well. CILCO, IP, CIPS, and United Cities Gas Company are local distribution companies served by Panhandle. However, portions of the service areas of CILCO, IP, and CIPS are served by other pipelines, and Panhandle serves two portions of the Illinois portion of United Cities’ service area. (Stipulation ¶ 22). CILCO has two service areas for gas distribution. One is a corridor connecting the Peoria area with the Springfield area representing 98% of CILCO’s sales; the second is around the town of Tuscola, representing 2% of CILCO’s sales. (Yergon 2837, 2344). CILCO bought gas entirely from Panhandle for the Peoria/Springfield service area and from Panhandle, TKL, Natural Gas Pipeline Company (“NGPL”) and Midwestern Gas Transmission Co. for the Tuscola area. (Vergon 2844). For the calendar years 1983, 1984, and 1985, 98% of CILCO’s total natural gas purchases were from Panhandle. (Stipulation H 23). CIPS has three distinct service areas for gas distribution. The western division of the Northern Area encompasses the west-central portion of Illinois and is exclusively served by Panhandle. The eastern division of the Northern Area is located in the east central portion of Illinois. This division was served by TKL, NGPL, and Midwestern, with each pipeline exclusively serving a part of the division. The Southern Area encompasses an area of southern Illinois around Marion and Carbondale and is served by TKL, Texas Eastern, and NGPL with each pipeline exclusively serving a distinct area. Approximately 54% of CIPS service area, by volume, was exclusively served by Panhandle. (Houvenagle dep. 13-18). IP has numerous service areas throughout Illinois, which were served by five interstate pipelines: NGPL, ANR Pipeline Company (“ANR”), MRT, TKL, and Panhandle. Two of the service areas were served exclusively by Panhandle, that being the areas around the towns of Jacksonville and Danville. These areas represent less than 10% of IP’s total service area, by volume. (Brodsky dep. 15, 19-20, 22, 24-25, 36-40, 44-45; DX 1246). Panhandle sells gas to numerous municipal LDC’s throughout Illinois. These LDC’s typically only serve one town or city and purchase much smaller volumes of gas than the larger LDC’s. These LDC’s purchase gas under Panhandle’s SG tariff which is available to purchasers who purchase less than 10,000 Mcf per month and purchase gas exclusively from Panhandle. (PX 1006, Sixth Revised Sheet No. 33 and Twenty-Sixth Revised Sheet No. 47-A). A tariff generally consists of a number of different parts. First, there are rate schedules which spell out the different authorized services that the pipeline provides. Second, the tariff contains terms of service which have general applicability. Third, there are forms of service agreements that apply to each rate schedule. Finally, there is generally a tariff sheet that summarizes all of the rates applicable to the separate services. A customer which wants to contract for service under a rate schedule would contract in accordance with that form of service agreement. Thus, the tariff spells out the services that are provided, the general terms and conditions applicable to those services, the persons eligible to contract for the services, and a summary of all of the rates charged under the separate rate schedules for the different services. (Williams 6363-6364). Panhandle sells natural gas to its LDC’s, such as CILCO, under various FERC approved rate schedules. The general service, or “G,” tariff rate schedule was for those LDC’s which generally purchased their full requirements of natural gas from Panhandle. Under this rate schedule, Panhandle was to be the sole supplier of the LDC’s gas, except in circumstances where the LDC requested an increase in contract demand (gas supply) that Panhandle was unable to provide. Generally, Panhandle’s obligation was limited to “its best effort.” Further consistent with the “best efforts” nature of Panhandle’s relationship with its LDC customers, was Section 6.2 of its G tariff: If during one or more days in the billing month Seller is unable to deliver to Buyer, for any cause whatsoever, natural gas up to the Billing Demand established for the month, then the total Demand Charge shall be reduced by an amount computed as follows: Determine for each such day the number of Mcf which the Seller was unable to deliver as above stated and multiply the sum of all such days' deficiencies by the currently effective charge. In other words, if Panhandle failed to deliver “for any cause whatsoever” its customer was entitled only to a credit against the Demand Charge (or reservation fee) for the gas not delivered. (PX 1006). Panhandle’s G and SG customers (including those located within the Central Illinois Market) purchased their gas from Panhandle under tariffs that on their face prohibit gas purchases from any “natural gas company” other than Panhandle. Panhandle and CILCO have had a business relationship for many years. Since 1951, Panhandle has sold gas to CILCO under the G tariff. The G and SG tariffs do not specify the prices to be paid by the LDC’s for their gas purchases from Panhandle. (PX 168; PX 169). Rather, the actual gas prices are determined through a special billing procedure whereby the cost of gas to Panhandle simply flows through to the LDC customer as a separate billing charge as the gas is actually purchased. Actual purchase quantities are likewise not spelled out in the G or SG tariffs; rather, they are determined as the LDC makes purchases. (Vergon 3120; PX 168; PX 169). The maximum quantity, or contract demand level, that a customer can purchase is set out in the service agreement. When the purchases exceed 90% of the CD, the demand charge is based on the actual amount of gas taken. (DX 73). The separate contract or “Service Agreement” entered into between Panhandle and each LDC does contain a contract demand or “CD” level. (PX 169). The CD levels do not necessarily reflect actual expected purchase levels; they are instead used to calculate a “reservation” or “demand” charge for pipeline capacity payable regardless of how much gas is actually taken. (Vergon 3169, 4411-4412, 4464, 4474-4475). Panhandle’s tariff obligation with respect to the demand charge was to make that amount of pipeline capacity available if requested by CILCO; Panhandle’s supply obligation with respect to the gas was itself a “best efforts” obligation, with the tariff containing explicit language excusing failure to deliver for any reasonable cause. (Vergon 4464-4465; PX 1006). The CD levels contained in Panhandle’s service agreements with its G and SG customers were for the most part negotiated between Panhandle and the customers in about 1970, under long-term (twenty year) contracts, with a 10% reduction occurring in 1984 as a result of settlement of a rate dispute between Panhandle and its customers. (Vergon 3022-3024, 4401). As of 1970, when the CD levels were set, gas prices were still regulated at the wellhead by the FPC. (Tussing 4222-4223; Vergon 3029). The advantage of the G rate to the LDC was that it provided for a variable monthly demand level, no minimum commodity bill, and a 90% ratchet on demand charges. Much less natural gas is consumed in the summer than in cooler seasons, since air conditioning is normally powered by electricity. Therefore, it was very much in the LDC’s interest to have a variable monthly demand level. The disadvantage to the LDC of the G rate was that, unless the LDC made a demand for more natural gas than Panhandle could expect to provide, the LDC would be required to purchase all of its natural gas from Panhandle. In the late 1960’s and 1970’s, with a shortage of available natural gas available to consumers, LDC’s such as CILCO normally had no substantial interest in avoiding the sole provider provision of the G tariff. CILCO knew that Panhandle, in reliance on their long term contract and the G tariff, would make its “best efforts” to supply whatever amount of natural gas CILCO needed for its customers. CILCO had anticipated some growth in sales at the time it entered into the October 1970 sales agreement with Panhandle. (Vergon Trial Tr. 4403). In the market of the 1960’s and 1970’s, the only advantage of having access to another pipeline (transportation service alone did not exist at that time except for unusual circumstances requiring specific prior FERC approval) was that, if the gas shortage were to become so acute that a curtailment of natural gas from Panhandle to CILCO occurred, the possibility existed that the other pipeline might be able to make up the difference. All things considered, at the end of the 1970’s, CILCO had no substantial incentive to attempt to deal with anyone other than Panhandle. This was especially true for two other reasons: 1. CILCO’s only alternative to the G tariff was the “limited service” (“LS”) schedule. The LS tariff was a partial requirements rate schedule for the LDC’s which obtained a portion of their natural gas from natural gas companies other than Panhandle. The advantage of the LS tariff to the LDC was that it allowed the LDC to obtain natural gas from any other source. The disadvantage of the LS tariff to the LDC was that it provided for a level (year round) demand level, a minimum commodity bill, and no ratchet on demand charges. Again, because the contract demand was used as the basis for determining the minimum payment under the contract, an LDC such as CILCO (being situated in an area of the country with traditionally harsh winters) would have to have the contract demand set at such a high level to meet winter demands that the much lower summer consumption rate would cost CILCO millions of dollars for gas not purchased by customers in the summer. So long as the natural gas market did not include as a component a spot market offering natural gas at a price substantially below the regular market price, there was no financial incentive to an LDC such as CILCO to consider switching to the LS rate. Also, because of the substantial payout resulting from the single (year round) contract demand charge, even if much cheaper natural gas were available from another company, the cost of paying the demand charge component would have outweighed (at least in 1982-1984) any savings resulting from the purchase of cheaper gas from someone other than Panhandle. 2. Because of the degree of regulation of. the natural gas industry by statute and regulatory agency, an LDC such as CILCO, which did not have immediate physical access to the gas pipeline of another natural gas company, could not simply agree with another company to have it build a pipeline to CILCO’s service area and start pumping natural gas to CILCO for its system supply. Rather, such interconnects could only occur with the approval of the FERC, and then only after extended proceedings during which everyone, including Aunt Mary, could object to the new interconnect and supply. This regulatory review of such requests was not intended by FERC to be obstructionist. Rather, it existed to serve the public interest. The delivery of natural gas to the local communities of this country was considered by Congress and FERC too sensitive a matter to be left solely to the good intentions of a profit-motivated industry. A G tariff was much to Panhandle’s liking, for obvious reasons. Because of the combination of the G tariff and long-term service contracts, Panhandle, in dealing with a G customer, did not have to worry about significant competition in making its business decisions. As long as the world stayed right side up, LDC’s such as CILCO would be satisfied with the long term commitment of Panhandle to provide the natural gas needs of CILCO’s customers. Under the NGA, as of 1978, the price of gas was strictly controlled, and a lower priced spot market supply did not exist. In reliance on the assured business of the G tariff LDC, Panhandle could and did enter into many long term contracts with producers. Most of those contracts contained take-or-pay provisions. In addition, because of the shortages and curtailments of the 1970’s, Panhandle, with the support of its LDC’s and the Illinois Commerce Commission, entered into two long term projects (the Algerian liquid natural gas project and the Canadian gas project) which would ensure a greater supply of gas to meet customer needs, but also would involve more expensive gas than what was currently being contracted for in the United States. Panhandle did not like the LS tariff. It did allow Panhandle to get “half a loaf” from LDC’s in markets where an LDC had access to more than one pipeline, but, according to the terms of the LS tariff, the customer could decide not to purchase any natural gas from Panhandle. In such event, the only payment that Panhandle would receive from the LDC would be the “minimum bill,” as determined from the flat contract demand. If the contract demand level was set relatively low, then such a customer could easily switch to another supplier which offered gas at a lower price. In addition to the rigors of competition, Panhandle disliked the LS tariff for another reason: The LS tariff made it much more difficult to know how much natural gas needed to be secured for the future by long term contracts with producers. From Panhandle’s point of view, it was like a chef going to the market to buy groceries for a dinner party when the chef really did not know how many people were going to show up. Certainly, the chef would much prefer to plan the dinner party armed with guaranteed reservations, so that the chef would be stuck with neither a needlessly big food bill nor leftovers. Similarly, it was important for Panhandle to know in advance the amount of natural gas that would be needed to satisfy its customers’ demands. D. Panhandle’s Gas Purchase Strategy Until 1977, the FPC, the predecessor agency of the FERC, set the price of gas at the wellhead, and every producer sale to interstate pipelines was subject to regulatory review. Spurred by dwindling supplies caused by artificially depressed gas prices, Congress, by means of the NGPA, enacted phased deregulation of the price of gas, and removed from the regulators the authority to review the prices passed through to customers. This legislation had the desired effect of spurring new exploration for and production of gas, both by major and independent producers. During the 1970’s, there was intense competition among pipelines for new gas reserves because it was a period of gas shortage. The competition continued until about the early 1980’s when the market changed to a buyer’s market. (Dixon 5829). The shortage of gas during the 1970’s caused pipelines to compete for gas reserves on non-price terms, such as take- or-pay provisions and fixed volume clauses, for new supplies. (Carpenter 1636-37). Price differentials between the system supply cost of pipeline gas and spot market gas emerged due to the NGPA’s decontrol of wellhead prices. (Carpenter 1638). In 1979, Panhandle entered into an aggressive gas purchase program in which it contracted for vast quantities of supplies at the NGPA ceiling, or the maximum allowable price. Initially, the program was a reaction to the curtailments of the mid-1970’s and was bolstered by internal company projections of high future sales. The purchasing program also reflected the projections of those LDC customers’ needs. A Planning Group (comprised of 10 LDC’s, six of whom were LS customers) at first projected huge future demand. CILCO was a member of Panhandle’s Planning Group and submitted information to Panhandle as to CILCO’s projected gas sales. In May 1981, CILCO submitted to Panhandle its projections on future gas requirements in the period 1981 to 1990. (DX 158; Vergon 4404-4407). CILCO projected that its annual gas requirements would be 50.4 billion cubic feet (“Bcf”) in 1981 and increase to 53.1 Bcf in 1990, with a peak of 54 Bcf in 1982. (Id.) CILCO also projected an increase in residential and commercial customers at the rate of 1.5% annually from 1981 to 1985 and 1% annually from 1986 to 1990, and an annual population increase at a rate of 0.8%. (Id.) CILCO expected Panhandle to contract for gas supplies to meet CILCO’s projected sales requirements or actual usage. (Ver-gon 4411; 4417; 4445-4446). During the five years preceding the trial, CILCO purchased 100% of contract demand on certain peak winter days. (Vergon 4417). But, as the 1980’s progressed, some LDC’s, including CILCO, began to warn the Planning Group that they would have to scale back their projections. The warnings did not deter Panhandle’s Gas Supply Committee, however. Through 1982, Panhandle continued to buy quantities pegged to the company’s and its customers’ (including the LS customers) most optimistic projections. With apparent disregard for what was happening in the marketplace, Panhandle agreed to significant take-or-pay provisions in virtually all of its purchase contracts, and demanded market-out clauses in virtually none of them. During the same time period, Panhandle committed itself to participation in a partnership that was constructing a pipeline that would deliver costly Canadian gas into its system, and Panhandle’s subsidiary and main supplier, TKL undertook the hugely expensive Algerian LNG project. TKL is the principal subsidiary of Panhandle and owns and operates an interstate natural gas transmission system. TKL purchased gas from extensive acreage located in, and offshore of, the states of Texas and Louisiana. TKL’s pipeline generally runs from the Gulf Coast northward to Jackson, Michigan. It interconnects with Panhandle’s pipeline at Tuscola, Illinois. TKL is a “Natural Gas Company” under § 2 of the NGA. The LNG project of TKL was certificated in 1977 after lengthy regulatory hearings. Panhandle’s Canadian gas purchases through Northern Border Pipe Line were approved in 1978. Both projects were initiated and approved during a period of intense curtailments. (Langenkamp 1511). Deliveries under these contracts did not commence until the Fall of 1982 due to the time necessary to construct transmission and other facilities. Other pipelines entered into similar long term gas supply contracts for Canadian gas and LNG. For example, NGPL vigorously pursued an LNG project but was unsuccessful in consummating the project. (Langenkamp 1512-1513). The FERC approved the purchase of liquefied natural gas from Algeria by Panhandle. The ICC supported this purchase. (Tussing 830). When the LNG project was approved by the FERC in the mid-1970’s, a period of curtailment, CILCO was neutral on the issue. (Vergon 3176-3177). In September of 1982 Panhandle was notified that Algerian LNG and Canadian gas would begin to flow. Panhandle had contracted for this gas during the 1970’s when the entire nation was experiencing a shortage of natural gas. The effect of these deliveries of new, high-priced gas was to change Panhandle’s gas supply from one of the cheapest in the Midwest to one of the most expensive. This caused many of Panhandle’s customers, as well as state commissions like the ICC, which had supported the LNG and Canadian gas projects when Panhandle contracted for them, to petition for immediate cancellation of the projects. This resulted in lengthy hearings before the FERC and the U.S. Economic Regulatory Agency (“ERA”) in the Fall and Winter of 1982. TKL was contractually obligated to receive LNG, and it began to do so in the Fall of 1982 while these hearings were taking place. TKL and Panhandle sought recovery of these gas costs immediately, but approval was denied pending the outcome of the hearings. The FERC and the ERA upheld the LNG certificate and permitted the gas to continue to be accepted. The cost of this gas was first reflected in rates in March 1983 due to the delay caused by the hearings, and by that time a substantial deferred gas cost balance had accumulated, which created a significant financial burden for Panhandle and TKL. (Langenkamp 1409-1415). On February 3, 1983, Phillip O’Connor, Chairman of the ICC, authored a letter to Congressman Edward R. Madigan regarding Algerian LNG. O’Connor was concerned with the ALJ’s decision of January 28, 1983 that there was no authority to revoke TKL’s importation certificate. He urged Congressman Madigan to have Congress act to stop the importation of LNG. O’Connor noted that the ICC supported the LNG program in the 1970’s but stated: It is evident to the Illinois Commerce Commission that the public interest in the LNG project has changed dramatically since the early 1970’s, and Algerian LNG is no longer needed. (DX 1098, emphasis in original). TKL’s contract for Algerian LNG was made with Sonatrach in the mid-1970’s. Deliveries finally commenced in September of 1982. The contract provided for full deliveries of about 450 Mcf a day, but at first the deliveries were reduced. There was a gradual increase until early 1983, at which time the Algerians were at their full contract volume. In the spring of 1983, TKL notified Sonatrach that it was unable to purchase the full contract quantities and that it wanted to renegotiate the contract quantity. As a consequence, a 40% decrease in the contract volume was agreed upon, effective approximately April 1983. TKL continued to purchase LNG at that reduced level until December 1983, at which time it suspended accepting deliveries of gas from Algeria. Sonatrach objected to the suspension and initiated arbitration proceedings for breach of contract. Those proceedings continued slowly until the middle of 1986, when the parties reached a settlement. As a result, TKL had no further obligation to buy Algerian LNG. (Dixon 5880-5881). Over the last few years, Panhandle renegotiated the Canadian gas supply contract two or three times to reduce the price and volume obligations. (Dixon 5835-5836). In all of these undertakings Panhandle was banking on its forecasts that the price of fuel oil would remain higher than the price of natural gas. However, to the extent that the purchase contracts and projects posed risks of unmarketability, Panhandle felt somewhat confident that its shareholders would not bear the financial consequences because, under the NGPA, all gas costs were passed through to the consumers, absent “fraud or abuse,” a never-applied standard. By 1982, the price of fuel oil had unexpectedly plummeted, and although lower-priced gas was available from newly developed independent supplies, Panhandle was selling gas for which it — or its affiliate TKL — had contracted at NGPA ceiling prices, which far exceeded the price of both independent supplies and fuel oil. Thus, in the fourth quarter of 1982 Panhandle's commodity rate suddenly jumped from $2.68 per million cubic feet (“Mcf”) to $3.83/Mcf in October 1982, and eventually to $4.64/Mcf. This increase was not unavoidable. Panhandle had inexpensive price-controlled gas under contract, but instead of purchasing it, Panhandle elected to purchase more costly gas. In addition, toward the end of 1982 Panhandle made the corporate decision, approved by its board of directors, to increase its purchases from TKL. TKL gas was even more expensive than that which Panhandle was purchasing from its producer suppliers, but TKL was facing serious take-or-pay problems. At about the same time the expensive Canadian gas came on line, and Panhandle chose to include this gas in its Purchase Gas Adjustments (“PGA’s”). The effects of all of these decisions combined to make Panhandle’s commodity rate very high. As a result, Panhandle’s prices during the time in question were above the market clearing level. (Carpenter 7138-7140; Still-man 3973; Tussing 3587, 3618, 3632). As of the time of trial, although Panhandle essentially sold gas only to its G and SG customers, Panhandle possessed the highest rate of return of all pipelines featured in a study of major pipeline companies. (Carpenter 6783-6785). A Panhandle memorandum dated February 10, 1984, described Panhandle gas as the 14th most expensive out of 15 major interstate pipelines that Panhandle analyzed. (PX 647). Panhandle’s prices were $1.00 or more per million cubic feet (“Mcf”) higher than NGPL’s prices on a comparable delivered basis to CILCO. (Vergon 2858-2859). The service agreement between CILCO and Panhandle in effect at the time of trial was entered on December 31, 1970, with an expiration date of October 31, 1988. CILCO, anticipating growth in sales, increased the contract demand at the time it entered into the service agreement with Panhandle in 1970. The agreement was amended on May 14, 1984 to reduce the contract demand by 10% and to extend the agreement to December 31, 1989. As of early 1981, CILCO was becoming disenchanted with Panhandle as its sole supplier. Likewise, CILCO’s industrial end-users, such as Keystone Steel & Wire Company and major hospitals in the Peoria area, were restless. The natural gas used to fuel their businesses was costing more and more. Industrial end-users were starting to consider the use of alternative fuels (such as coal and fuel oil) which, in the past, had been more expensive than natural gas. Energy conservation was also becoming a serious component of every company’s cost saving strategy. For years, under the NGA, the cost of natural gas had been a fairly predictable component of the cost of doing business. In the 1980’s, the ever-escalating cost of energy for many businesses meant the difference between surviving or not surviving. The cost of energy also became a very important factor, along with the cost of labor, in the struggle to compete with foreign companies. Neither CILCO nor Panhandle wanted any of its industrial customers to switch to an alternate fuel, because that would mean the loss of that customer for at least as long as the cost of the alternate fuel was less than the cost of purchasing natural gas from Panhandle through CILCO. In some cases, the loss might be permanent. The commercial/residential consumer, on the other hand, was typically a captive customer. As the cost of energy increased, the small business owner or residential customer could realize some savings by cutting back on the consumption of natural gas, but that was a limited alternative. The same customer could switch to electric heat or fuel oil, but usually, except in the case of new construction, the capital outlay was too great to be realistic or cost effective. The customer could also substitute for some natural gas by using a wood-burning stove and/or space heaters, but any resulting savings was limited. The cost of purchasing those items was prohibitive for some customers, and the perceived danger to health and safety from use of wood-burning stoves and space heaters detracted from their usefulness on a community wide basis. By November 1981, CILCO had determined to seek to interconnect with the next nearest interstate pipeline, NGPL. Under the terms of CILCO’s tariff, if CILCO requested an increase in contract demand which Panhandle declined to meet, CILCO would then be free to purchase an amount of gas up to the requested demand increase from the second pipeline. On November 10, 1981, CILCO personnel met with Panhandle personnel. At that meeting, CILCO made an informal request for an increase in contract demand. According to CILCO officer Donald Samburg, CILCO did not need the increase in contract demand, nor did it anticipate using it. In other words, CILCO made a demand for an increase in gas which it knew was a sham. It did so in an attempt to trigger the sole supplier exception, be in a position to purchase a substantial amount of gas from NGPL, and still retain its G tariff status with Panhandle. Initially, Panhandle informally indicated that it would decline to meet the requested increase, but then Panhandle, to CILCO’s surprise, reversed itself and agreed to provide the demand increase. Ironically, Panhandle’s response was also a sham, since it was not capable of delivering the entire amount of gas requested by CILCO. So, in sum, the demand for increased gas supply by CILCO was phony, and the response of Panhandle was phony. Two corporations were playing out a bluff in a high stakes poker game. In April of 1982, Panhandle informed CILCO that it might be necessary to curtail deliveries to CILCO during the 1982-1983 winter. CILCO responded by again advising Panhandle of its desire to obtain gas from NGPL. Panhandle declined to respond. In spite of Panhandle’s failure to respond to CILCO’s request for increases of gas, CILCO and NGPL proceeded with plans for the interconnection. As early as the fall of 1981, at the same time that CILCO first approached Panhandle about the proposed interconnect with NGPL, CILCO also requested that Panhandle negotiate a new tariff or service contract with it. At that time CILCO was seeking flexibility to purchase from another interstate pipeline, which is prohibited under the terms of the G tariff. In December 1981, CILCO formally requested that Panhandle enter such negotiations, but Panhandle ignored CILCO’s request. CILCO responded by filing a complaint with the FERC in June 1982, requesting that the G tariff be stricken as anticompeti-tive. Panhandle elected to follow the advice of Truett Kennedy (a Vice President of Panhandle at the time), who suggested that Panhandle could “tough it out.” CILCO’s FERC complaint against Panhandle (Docket No. RP 82-105-000) stated that CILCO was seeking to purchase a portion of its supply of natural gas from NGPL; that if it did so it could not remain on the G rate schedule but would have to switch to the LS rate schedule; and that this would result in a dramatic rate increase for CILCO. CILCO further alleged that Panhandle’s tariff was unduly discriminatory, anticompetitive, and inconsistent with the NGPA’s purpose of furthering a competitive wellhead market for natural gas. CILCO requested the FERC to order amendments to the definition of “General Service Buyer” which would allow CILCO to remain on the G tariff while purchasing gas from a second interstate pipeline supplier. From Panhandle’s point of view, what CILCO wanted would spell disaster, since it would free CILCO of its obligation to purchase all of its gas needs from Panhandle. Not only would the sales volume be lost, but the reduced purchases by CILCO for its system supply would expose Panhandle to an avalanche of take-or-pay liability because of a resultant drastically reduced take from Panhandle’s producers. If that happened, the interests of Panhandle’s shareholders would be endangered. In the fall of 1982, NGPL filed a certificate of application with the FERC for approval of the interconnect. Panhandle intervened and opposed the certificate. In meetings related to that proceeding, Panhandle indicated that it would withdraw its opposition if CILCO would give Panhandle a right of first refusal on the sale of any gas transported to CILCO or CILCO’s customers through the interconnect. When CILCO declined to accede to the demand, Panhandle threatened to fight CILCO “to the death” over the issue. In reaction to Panhandle’s price increases, the LDC’s on the Panhandle system reacted in a variety of ways. Those who had more than one supplier began to increase their takes from their other suppliers. Those who had only Panhandle as a supplier began to locate available independent supplies and request that Panhandle transport those supplies under Section 311 of the NGPA. (One of the primary purposes of Section 311 was to facilitate the transportation of natural gas by interstate pipelines to end-users). At the same time, the more aggressive of the industrial customers, not content with the efforts of their LDC’s to obtain cheaper supply (and sometimes in economic desperation), began bombarding Panhandle with demands that it transport independent gas directly to them. In 1983, CILCO expressed concern to Panhandle about losing its industrial customers to alternate fuels due to increasing natural gas prices. CILCO estimated that this loss might approximate 20% of its annual sales. Based on discussions with Panhandle that went back into the fall of 1981, CILCO believed in March 1983 that Panhandle’s interpretation of the G tariff was that, if CILCO bought gas from someone other than Panhandle, such purchase would constitute a violation of the G tariff. CILCO’s internal documents indicated that it wanted Panhandle to work toward a temporary waiver of the G tariff in March 1983, subject to FERC approval, so that CILCO could purchase NGPA categories 102 and 103 gas. CILCO believed that such a result would be preferable to forcing the FERC to interpret the definition of “natural gas company” in CILCO’s pending FERC complaint case. On March 17, 1983, CILCO formally requested that Panhandle transport 102 and 103 gas, to be purchased from an independent producer, for its system supply under the authority of Section 311. Panhandle refused, because its top corporate officers had by then decided to refuse to transport independent gas for the system supply of LDC’s. Panhandle’s President, Richard O’Shields, and its Chief Executive Officer, Kenneth Kalen, acknowledged this policy, and Kalen justified it on this ground: “We have the commitment to supply these local distribution companies, we have an obligation to have long-term supply contract, and we need to be relieved from both of these obligations_” (Kalen dep. 34.) On March 22, 1983, Truett Kennedy informed Kalen that Kennedy had tentatively resolved to deny CILCO’s request because the transport would “displace volumes from Panhandle.” (PX 29) Kalen, noting to other corporate officers that “Truett has already declined the request,” responded, “We are most anxious to hold off this type of request in favor of providing our customers an opportunity to purchase necessary volumes from our suppliers.” (PX 31) Kennedy met with CILCO on April 11, 1983 and advised CILCO that Panhandle was not going to transport the requested volumes. CILCO asked that Kennedy put Panhandle’s position in writing. Informally, on April 12, Kennedy advised CILCO that Panhandle was “not going to transport volumes for customers since it was being swamped with such requests and it would make their own efforts meaningless.” (PX 35) On the same day Kennedy prepared a formal response. In a cover memo transmitting his draft to Panhandle’s in-house counsel, Kennedy stated that he “did not respond directly to their transportation request.” (PX 1012) Indeed, the letter sent to CILCO, dated April 15, 1983, avoided discussion of CILCO’s request. On April 15, 1983, internal memoranda reported that the Panhandle’s “transportation strategy” was then “not [to] transport gas purchased from other than Panhandle’s eligible producers for customers of Panhandle.” (PX 72) This policy was again reflected in a document Panhandle filed with the FERC in April of 1983. Responding to a CILCO data request, Panhandle stated, “Under current transportation policy Panhandle and Trunkline would not be willing to transport gas purchased from third parties for CILCO’s overall system requirements.” (PX 36) On April 29, Wayne Slone of CILCO wrote to Kennedy and again requested that Panhandle transport Section 102 and 103 gas. Panhandle did not respond. During a July 1983 customers meeting in Springfield, Langenkamp told representatives of CILCO, CIPS, and IP that Panhandle would not transport gas from independent producers. A contemporaneous memo memorialized Panhandle’s decision to deny LDC and end-user requests for transportation of “non-Panhandle released gas.” (PX 217) In August 1983, Citizens Gas, a G customer of Panhandle, requested that Panhandle transport to it for its system supply 102 and 103 gas that Citizens would purchase from independent producers. Kennedy met with in-house counsel, Michael Kelley, on August 30 to discuss this request. Kelley informed Kennedy that this transaction was permissible under the G tariff. Nevertheless, a few days later, Kennedy and Kelley met with Citizens’ general counsel and informed him that the transaction was not permissible under the G tariff. In early 1983, both CIPS and IP made inquiries to Panhandle about Panhandle’s willingness to transport independent gas for their system supplies. With slight variations, Panhandle responded as it had responded to Citizens. Langenkamp wrote Illinois Power, “We are unable to provide a meaningful response.” He concluded with this statement: Certainly, interstate pipelines, most gas producers, and a number of local distribution companies are “natural-gas companies” as defined by Section 2(6) of the Natural Gas Act; and therefore, purchases from such natural-gas companies would be inconsistent with the longstanding terms of the G-2 Rate Schedule governing most of your purchases from Panhandle. (PX 581). He wrote CIPS that “any sale of gas would be in violation of our [G] tariff.” (PX 579) The facts dealing with CILCO’s March 17, 1983 request to transport gas and Panhandle’s response were presented to the FERC by CILCO during the proceedings on its complaint. CILCO thought it was in a “no-lose” situation in making its request on March 17, 1983 — it would either get the gas or use the refusal to help its FERC case. In 1983, FERC enacted Special Marketing Programs (“SMP’s”) in order to give selective price cuts to the customers with the most sensitive demand. In the latter part of 1982, the average cost of gas to many pipelines was approaching, and in some instances exceeding, the price of No. 6 fuel oil. As a result, pipelines and their customers were experiencing a reduced demand for gas, which was exacerbating the take-or-pay problem of some pipelines, including Panhandle. In a Transcontinental Gas Pipe Line rate case, it was proposed that the pipeline release higher priced gas to producers who were willing to sell their gas at market clearing prices and that the pipeline would transport the gas into its market areas to retain fuel switchable loads or acquire new loads. The FERC adopted the proposal and indicated that this appeared to be a reasonable approach to addressing both the rising cost of purchased gas and the take-or-pay problem faced by many pipelines. Thereafter, certain pipelines — including Panhandle and TKL through PanMark — adopted a similar arrangement. The FERC, in what where called “basket orders,” adopted the specific programs of certain pipelines and procedures but applied generic conditions to them. (Williams 6407-6408). Approximately 35 producers and marketers had SMP’s. Only five pipelines had SMP programs, and only three actually operated their programs. Panhandle’s reaction to these regulatory initiatives was mixed. It delayed making any decision about participating in the blanket certificate program for several months. By contrast, it eagerly embraced the SMP program, creating PanMark, which partially pacified certain of the industrial customers, while enabling Panhandle to obtain take-or-pay credit for each million cubic feet (“Mcf”) of gas it sold. Only “released gas” (or gas already under contract to Panhandle) was eligible for sale through SMP’s. Authorization for all SMP’s, including PanMark, was to expire on October 31, 1984. On September 26, 1984, the FERC extended SMP’s for another year and allowed LDC’s to participate in SMP’s for up to 10% of their contract demand for system supply gas. The FERC order specifically provided for a temporary limited waiver of the terms and conditions of the G tariff to allow purchases for system supply by a G customer such as CILCO. Interstate pipelines, such as Panhandle, were given 30 days in which to decide whether to accept or reject the FERC’s order. Panhandle filed comments with the FERC in which Panhandle argued that the 10% rule had been adopted by the Commission without sufficient research or basis and would increase the unit cost of gas and result in a build up of the deferred account. Nevertheless, Panhandle participated under the 10% rule because it wanted to continue its PanMark program. With the limited waiver of the G tariff, Panhandle transported gas for LDC’s system supply under the 10% feature. In 1984 and 1985, PanMark sold and Panhandle transported 31.9 billion cubic feet (“Bcf”) of natural gas to its LDC customers for system supply. This figure included 2.8 Bcf for CILCO, 1.2 Bcf for CIPS, and 3.9 Bcf for IP. In 1985, approximately 86% of the total volumes transported under Pan-Mark went to LDC customers. In addition, Panhandle transported 6.5 Bcf of gas from SMP’s other than PanMark to its LDC customers for system supply under the 10% rule. CILCO received 1.5 Bcf from the SMP’s of Yankee Resources (Yankee Resources’ SMP was called “YES”), City Service Oil and Gas Co. (“COGS”) and Entrade Corp. (“Enspeed”) during the period from July through October 1985. System supply gas purchased from SMP’s other than Pan-Mark by Panhandle’s LDC customers under the 10% rule was Panhandle-released gas for which Panhandle received take-or-pay relief. Ten percent of contract demand exceeded 10% of actual purchases by an LDC. In fact, in some months, 10% of contract demand turned out to be in excess of 100% of some of the LDC’s actual requirements. CILCO’s purchases from SMP’s represented from 14.7% to 59% of its actual monthly purchases. PanMark did not, however, provide a total solution. Industrial and other large consumers ineligible for PanMark continued to press for access to direct sale independent gas through the blanket certificate program. Thus, the stage had been set for crucial corporate decisions about whether to transport independent gas under the blanket certificate program (Market Area Program) (“MAT”), and if so, for which customers. Panhandle also had to decide how to fashion a transportation program