Williams has filed a comprehensive stipulation and agreement with FERC that the company said would settle all aspects of the pending Transcontinental Gas Pipe Line Co. (Transco) rate case, providing rate certainty for customers while allowing the natural gas pipeline to cover its costs.
Under terms of the settlement, Transco and the parties involved have agreed to a rate moratorium through Aug. 31, 2021. In addition, Transco has agreed to file a new rate case by Aug. 30, 2024. Transco anticipates approval by the Federal Energy Regulatory Commission during 2Q2020.
Williams expects to see around $76 million in 2020 from favorable impacts to earnings before interest, tax, depreciation and amortization versus 2018, the last full year with no rate case effect.
“The settlement provides a fair return to Transco on its base service and also provides value to shippers, as evidenced by the recent remarketing of available Transco capacity that resulted in a new 82-year commitment with the successful shipper,” said Williams COO Micheal Dunn.
The Transco rate case was initiated in August 2018 to comply with a filing obligation under a prior settlement and to recover costs associated with increased capital expenditures, and operations and maintenance expenses.
Transco and the interveners agreed in the settlement to a comprehensive “black box” resolution for the cost of service, rate design, cost classification and allocation to achieve an acceptable outcome for all parties.
The settlement includes a 12.5% return on equity (ROE) for cost-based recourse rates offered on future infrastructure expansions projects. However, it would not impact Transco’s existing negotiated rate contracts, which make up 51% of 2019 revenue, or its ability to offer negotiated rate contracts for future infrastructure expansion projects that can exceed 12.5% ROE, the company said.