Viking Begs FERC Not to 'Silence Debate' on Pricing Plan
Viking Gas Transmission has appealed to FERC not to "silence
debate" on a limited Section 4 proposal that would allow it to
charge higher incremental rates for historically lower-priced
capacity as it opens up on its system, without having to file a
full-scale rate case.
The Commission overwhelmingly rejected the pipeline's proposal
in November, saying it was barred by a rate settlement that Viking
had worked out with its customers last May. Under the settlement,
"Viking agreed with its customers to a gradual rolling-in of the
costs of Viking's expansion facilities with a specific rate
schedule," and it agreed to freeze rates until the pipeline filed
its next general rate case" in 2001, the FERC order said. As a
result, it "appears" Viking's incremental pricing proposal, the
Commission concluded then, can only be implemented by filing a
general Section 4 rate case.
In seeking rehearing, Viking contends FERC has misread the terms
of its settlement. "The settlement contains a broad reservation ---
which the Commission did not consider --- permitting Viking to make
limited Section 4 changes to rates, terms or conditions in its
tariff during the term of the settlement, providing such changes,
as here, do not interfere with the phased roll-in of two expansions
agreed to under the settlement."
The Commission's suggestion that Viking's proposal would be
"best suited" for implementation in a general Section 4 rate case
not only conflicts with FERC regulations, but has the "unintended
perverse consequence" of barring the implementation of the
Commission's new policy statement for new pipeline construction.
Under that policy statement, FERC indicated it would be appropriate
for pipelines' that have multiple levels of rates for firm capacity
to "roll-up" the rates over time as new expansion projects are
built, according to Viking.
Viking said its proposal sought to do just that. It would
incrementally price turned-back capacity, permanent capacity
releases, contract renewals and right-of-first-refusal capacity at
a level warranted by the market. The price for such capacity would
be capped at the FT-D rate of 45.01 cents/Mcf, Viking's highest.
The pipeline had fetched that rate for firm service from the
Canadian border to Marshfield, WI, on its latest expansion.
"While the 45.01 cent rate is significantly higher than the
system average rate of 11.57 cents established in Viking's
settlement, a full roll-up would only increase the system average
rate from 11.57 cents to 12.87 cents because the investment in the
FT-D expansion is relatively small compared to the overall
investment in Viking," the pipeline told the Commission [RP00-35].
Viking currently has four different levels of firm rates on its
system, and it says it offered the proposal in an attempt to
achieve some form of uniformity in firm rates, as well as in its
rates for interruptible, capacity release and authorized overrun
transportation (AOT) services. The pipeline proposed to refund 90%
of the excess revenues to shippers paying the higher incremental
rates for the firm, IT and AOT services. With temporary releases,
the releasing shippers would keep whatever additional revenues they
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