Sonat’s proposed $82 million rate hike hit a major snag lastweek as FERC suspended any increase from occurring until March 1and called for a hearing where opposition to the proposal canpresent information.

“Based upon a review of the filing, the Commission finds thatthe proposed tariff sheets..have not been shown to be just andreasonable, and may be unjust, unreasonable, unduly discriminatory,or otherwise unlawful. Accordingly, the Commission shall acceptsuch tariff sheets for filing and suspend their effectiveness..”

The Commission said that Sonat had not produced enoughinformation about certain provisions in the proposal, and that ahearing was needed so that “parties may fully ventilate all thefacts related to the issue.”

The ruling fell on the side of the opposing parties, whichincluded Atlanta Gas Light, Alabama Gas Corp., Dynegy, Shell EnergyServices Co., and the GASP Coalition. They petitioned FERC lastmonth to suspend the rate increase.

In the filing, Southern proposed a cost of service increase of$82 million to $363 million. The company wanted to increase is ratebase by $433 million because of pipeline and compressorreplacements and relocations, a new $29 million computer system andGISB compliance, and $272 million in expansion costs, including$103.5 million for its North Alabama expansion project which went50% over budget. Southern also proposed an increase in its rate ofreturn to 10.81%, predicated on a 13% return on equity, which isone percentage point higher than Sonat’s existing ROE and slightlyhigher than FERC typically has allowed for other pipes.

FERC ordered that a prehearing conference will take place by theend of the month. An administrative law judge has yet to beassigned to the case.

John Norris

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