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ALJ Certifies Great Lakes Section 5 Settlement
An administrative law judge (ALJ) Thursday certified to FERC an uncontested settlement that would provide customers on Great Lakes Gas Transmission LP pipeline an immediate rate reduction.
Staff of the Federal Energy Regulatory Commission estimates that “the resulting [rate] savings to those ratepayers will exceed $20 million. Moreover the settlement provides additional revenues to ratepayers, through revenue sharing, if Great Lakes’ jurisdictional revenues exceed $500 million, on a net basis, over a two-year period. Further the settlement provides rate certainty for at least one and a half years. [And] finally Great Lakes’ rates will be reexamined, in a Section 4 proceeding, within approximately three and a half years.”
ALJ David H. Coffman certified the Great Lakes settlement to the full Commission. FERC has the option to approve or reject it in full or in part.
The settlement resolves allegations that Great Lakes over-recovered its cost of service [RP10-149]. In November FERC initiated formal Section 5 investigations of three interstate pipelines, including Great Lakes, Natural Gas Pipeline Co. of America LLC (NGPL) and Northern Natural Gas (see Daily GPI, Nov. 20, 2009).
FERC staff’s preliminary investigation indicated that Great Lakes’ estimated return on equity (ROE) was 20.83% with an over-recovery of $56 million, while NGPL may have achieved a ROE of 24.5% based on an over-recovery of $149 million. Northern Natural Gas Co. had an estimated ROE of 24.36% with an over-recovery of $167 million,
FERC earlier this month terminated its Section 5 complaint proceeding against Northern Natural pipeline for the pipeline agreeing to a one-year rate freeze for shippers (see Daily GPI, June 3). NGPL has submitted a proposed settlement that would give its shippers an 8% reduction in firm transportation rates (see Daily GPI, June 16). FERC has not acted on it yet.
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