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Utility Request to Raise Transco Rates Rejected

November 26, 2012
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A FERC judge has rejected a joint challenge of two utilities to Transcontinental Gas Pipe Line's proposed incremental rates for services on its SunBelt, Pocono, Sundance, Momentum and Potomac expansions.

In mid-October, Consolidated Edison Co. of New York Inc. (ConEdison) and Philadelphia Gas Works (PGW) filed a motion for partial summary disposition in the case, arguing that Transco's proposed incremental rates for the expansion services are "unjust and unreasonable" because they are lower than Transco's proposed rates for its Rate Schedule FT services.

"ConEdison/PGW's assertions of Transco's discriminatory treatment are too vague at this juncture to warrant summary disposition," said Federal Energy Regulatory Commission (FERC) Administrative Law Judge (ALJ) Steven A. Glazer in the order addressing the request for partial summary disposition [RP12-993]. "Transco has never suggested that the customers of the expansion services differ in any material way from the customers of the Schedule FT services."

But "at the end of the day...ConEdison/PGW may have a point that the large urban markets that they [utilities] serve, which were the historically intended beneficiaries of the original Transco pipeline system, deserve to be accorded rates that rest on the same level of the newer gas markets served by the expansion projects that have subsequently emerged...For now, however, the facts relied upon by ConEdison/PGW in their motion do not suffice to reach this far as a matter of law. Therefore, summary disposition at this juncture is unwarranted."

The Commission ordered an ALJ hearing to be held in a September order, which accepted and suspended Transco's proposed tariff rates for some services, including the proposed incremental rate changes for its SunBelt and Momentum projects, to be effective March 1, 2013; and accepted, without suspension, the proposed rates for other Transco services, including the proposed incremental rate changes for its Pocono, Sundance and Potomac projects that went into effect on Oct. 1.

Several shippers on the Transco system opposed the request of ConEdison/PGW, including the Municipal Gas Authority of Georgia (Gas Authority) and the Transco Municipal Group (TMG), Piedmont Natural Gas Co. Inc. and South Carolina Electric and Gas Co.

"In their joint motion, ConEd and PGW argue that the facility costs and billing determinants of [the] five expansion projects -- the Pocono, SunBelt, Sundance, Momentum and Potomac expansions -- should be 'rolled into' system rates and that shippers using those services should pay the rolled-in system rates, or that the expansion shippers should otherwise have their rates increased to the system rates," said the Gas Authority and TMG, which represent municipal shippers on Transco's system.

The annual cost increase for affected members of TMG, which primarily use the SunBelt, Sundance and Momentum expansions, would have been $3.1 million if the request had been granted, the two groups told the Commission. "Likewise, the Gas Authority and one of its members use the SunBelt, Sundance and Momentum expansion services. If the proposed system rates were imposed on those services instead of the proposed incremental rates, the annual cost increase for Gas Authority would be more than $600,000, which significantly adds to the 20% rate increase it would experience under the rates Transco proposed in this case."

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