Southern Union Renews El Paso Franchise
Southern Union Co. renegotiated its franchise agreement with the
city of El Paso, TX, last week, the company said. Under the terms
of the deal, Southern Union will receive a cost-of-service revenue
increase of $650,000, but it did not disclose the deal's total
value. The agreement was unanimously approved by the El Paso City
Council on Feb. 22.
"This settlement is truly a 'win-win' for Southern Union and our
El Paso customers," said Peter H. Kelley, president of Southern
Union. "We remain committed to providing our customers with the
lowest natural gas rates in the country." Southern Union said
multiple studies, including an annual survey done by the Texas
Railroad Commission (RRC), have said that Southern Union has
provided the city with the lowest rates in the country for six out
of the last seven years.
The terms of the renewal were forged in a settlement Southern
Union made with the city, incorporating a rate change, a new rate
design, and a new 30-year franchise agreement. The old franchise
agreement was set to expire later this year. Southern Union said
150,000 customers will be affected by the new rate design, which
will lower winter bills and slightly increase summer bills.
Jay Cummings, a Southern Union spokesman, said the average
monthly residential bill will be 45 cents more. By raising the
rates during the summer, Southern Union said it could benefit from
a more even flow of payments that is less weather-sensitive.
While no deregulation laws exist for the state gas industry,
Texas is somewhat unique in that the RRC has jurisdiction over
intrastate transportation, citygate sales for resale and retail
rates outside of city limits, but individual communities and
municipalities regulate retail natural gas service within their
boundaries. As a result, communities such as El Paso can form their
own arrangements with their LDCs.
Cummings said that while several transmission lines have
franchise agreements with the city of El Paso, Southern Union is
the sole distributor with that distinction.
As an additional service, Southern Union said it will continue
to work on projects in El Paso that promote a higher quality of
life for its citizens. Such projects include a program to extend
service to the city's colonias, low-income substandard areas that
do not have running water, wastewater service, and natural gas
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