A FERC administrative law judge (ALJ) has approved an uncontested settlement between Viking Gas Transmission and its shippers resolving charges that the company over-recovered costs, resulting in unjust and unreasonable rates for shippers

“The settlement agreement is an uncontested offer of settlement that reflects a just and reasonable negotiated resolution of the issues set for hearing in this (Section 5) proceeding…The settlement agreement is in the public interest; and it is recommended that the Commission approved it without modification,” said ALJ Michael J. Cianci Jr. The settlement was negotiated between Federal Energy Regulatory Commission (FERC) staff, Viking and 16 shippers, and was filed on Aug. 29 [RP13-185]. FERC can either approve or reject the ALJ’s decision in full or in part.

FERC’s charges were based on Viking’s Form 2 cost and revenue information from 2010, which FERC staff said showed that the pipeline had substantially over-recovered its cost of service. Since 2009, FERC has initiated several Section 5 Natural Gas Act (NGA) investigations into interstate pipelines for potentially over-recovering rates (see Daily GPI, Nov. 16, 2012, Feb. 8, 2012, Nov. 20, 2009).

FERC staff estimated Viking’s ROE at 21.39% for 2010 and 21.75% for 2011. Viking’s current rates were established in a November 2002 settlement.

The latest settlement requires Viking to reduce all of its base tariff rates, which were in effect on Nov. 14, 2012, by 2% and to file changes to its FERC gas tariff to place into effect the reduced base settlement rates within 15 days following FERC’s issuance of a final order. The reduced base settlement rates would take effect on Jan. 1, 2014, and must remain in effect for a minimum of one year.

The settlement also calls on Viking to provide an update of its cost and revenue study on or before Dec. 31, 2018, unless, prior to that date, Viking has filed a rate change under Section 4 of the NGA or FERC has initiated a new investigation of Viking’s rates under Section 5 of the NGA.

The terms of the settlement between Viking and its shippers “1) raises no issues of material face and is uncontested; and 2) the terms of the settlement are non-severable; and 3) if the Commission accepts the settlement with any condition, clarification or modification, including the severance of any party or issues, Viking has the right to terminate the settlement within 30 days following the date of the Commission order containing such condition, clarification or modification, or to seek rehearing of such Commission order,” the certified settlement said.

Viking, which is owned by Oneok Partners, has a design capacity of 0.5 Bcf/d. It receives Canadian gas at the Manitoba/Minnesota border and connects with four major pipelines serving markets in North Dakota, Minnesota and central Wisconsin.