A FERC administrative law judge (ALJ) has certified an uncontested partial rate settlement that he says could net shippers on Transcontinental Gas Pipe Line millions of dollars in savings.
ALJ Steven A. Glazer last Wednesday forwarded the partial settlement to the Federal Energy Regulatory Commission (FERC), which can accept or reject the agreement in full or in part [RP06-569, RP07-376].
The settlement "provides significant benefits to consumers in the form of much lower rates and refunds with interest," he said in his ruling. The cost of service in the agreement is $959.4 million, substantially below the $1.1 billion that Transco sought. As a result, "customers on the Transco system will enjoy more than $172 million in cost savings per year."
In addition, Glazer said Transco shippers should receive millions more from the sale of base gas at the pipeline's Hester storage facility. He conservatively estimated that the sale of Hester base gas could produce more than $47 million in revenue, which would be shared between Transco and its customers. Customers would get 45% of the revenue, or more than $21 million, he said.
The settlement, which was supported by Commission staff, also would provide a 50-50 sharing of the revenues from the sale of more than 7.8 MMDth of top gas from Transco's Eminence storage facility in Covington County, MS.
In December, Transco asked FERC to approve the agreement, saying it would resolve all cost of service, reservation and throughput quantities issues; numerous cost classification, cost allocation and rate design issues; and various tariff issues and other matters.
Supporters of the settlement include the Easton Utilities Commission in Easton, MD; Transco Municipal Group, Patriots Energy Group (a joint natural gas purchasing agency) and the Municipal Gas Authority of Georgia in Kennesaw, GA; the New York Public Service Commission and the North Carolina Utilities Commission.
The 10,500-mile Transco pipeline system extends from the Gulf Coast region to key markets in the Southeast and East Coast.
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