TETCO Seeks Systemwide Rate Cut
In a refreshing change of pace, Duke Energy's Texas Eastern
Transmission Corp. (TETCO) asked FERC last week for a system-wide
rate reduction --- yes, reduction --- of about $137 million
annually for its interstate pipeline customers.
TETCO was able to seek the rate reduction because it completed
recovery of its gas supply realignment (GSR) costs, about $390
million excluding interest, "several years ahead" of the timetable
that was originally projected, said Richard Kruse, senior vice
president of Duke Energy Gas Transmission, which includes TETCO. It
even finished ahead of its revised recovery target day of Jan. 1,
2001, he noted.
The lower rates would become effective Dec. 1, and would remain
frozen through the end of 2003, Kruse said. A typical TETCO
customer transporting gas from Louisiana to the Northeast would
realize a rate reduction of about 19% (or $8.32/Dth), he noted,
while short-haul transportation customers would see their rates
drop even more sharply. All of TETCO's customers --- about 120
primary shippers --- will see a change in their rates.
The annual rate savings would be "uniformly spread" throughout
each month of the year, enabling TETCO's firm and interruptible
shippers to benefit from lower rates going into this winter heating
season, Kruse said.
TETCO's hastened recovery of its Order 636 transition costs was
attributed to the company's rate initiative agreed to in a 1998
amended global settlement, which was approved by all of its
customers, the Duke Energy pipeline said. In addition to the
accelerated recovery of transition costs, TETCO agreed in the
settlement to lower its book depreciation expense by $34 million on
an annual basis.
"We are extremely pleased to have completed the recovery of our
Order 636 transition costs, thereby removing these costs from our
rates," said Robert B. Evans, president of Duke Energy Gas
Transmission. "Our customers will see a significant reduction in
rates starting this winter and TETCO will have the benefit of more
attractive rates, making its services more competitive. This is
truly a win-win situation for TETCO and its customers."
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