Williams Gets One More Shot to Settle GSR Costs
FERC earlier this week gave Williams Gas Pipelines Central one
more chance to settle the lingering, controversial cost-recovery
issues arising from the reformation of three of its gas supply
contracts for production in Colorado.
The order, which was approved notationally on Wednesday,
assigned a settlement judge to the proceeding and gave Williams and
protesters 30 days to resolve the issues [RP99-257]. Reflecting
the sentiment of the entire Commission, Commissioner Curt Hebert
Jr. warned that he would not vote to grant an extension if a
settlement wasn't reached at the end of the 30-day period. Instead,
FERC said it "will promptly resolve the pending prudence and
eligibility issues" pertaining to Williams' request for recovery of
gas supply realignment (GSR) costs.
In September 1997, the Commission denied recovery of the costs
associated with the Colorado contracts, saying Williams had not
entered into them prudently. The company's request for rehearing of
that order is now pending before FERC in a related docket
An administrative law judge already has issued an initial
decision not favorable to Williams.
This week's "order does give the parties one more limited
opportunity to reach a settlement in not only this case, but in the
14 proceedings in which Williams' has sought recovery of pricing
differential costs and buyout costs associated with the Colorado
contracts," said Commissioner Linda K. Breathitt.
"These cases involve issues as to whether these contracts were
prudently entered into by Williams as well as whether the costs are
eligible for recovery as GSR costs," she noted. Breathitt estimated
the total GSR costs at stake are almost $180 million without
In March, Williams filed revised tariff sheets to recover about
$126 million of the GSR costs in connection with the three Colorado
contracts: the Lockridge contract, the Yuma County Oil Co. contract
and the JER Partnership contract.
About 95% of the GSR costs ($114.5 million) involve the
Lockridge contract. The Commission suspended the Williams' revised
tariffs, saying they "have not been shown to be just and
reasonable..." The tariffs are to become effective on the earlier
of Sept. 1 of this year or when the suspension is lifted by another
Williams contends that it prudently incurred the GSR expenses
when it assigned its obligation under the Lockridge contract to a
non-affiliated third party, and its other two supply contracts to
©Copyright 1999 Intelligence Press Inc. All rights reserved. The
preceding news report may not be republished or redistributed, in
whole or in part, in any form, without prior written consent of
Intelligence Press, Inc.