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Southern Union Renews El Paso Franchise

February 28, 2000
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Southern Union Renews El Paso Franchise

Southern Union Co. renegotiated its franchise agreement with the city of El Paso, TX, last week, the company said. Under the terms of the deal, Southern Union will receive a cost-of-service revenue increase of $650,000, but it did not disclose the deal's total value. The agreement was unanimously approved by the El Paso City Council on Feb. 22.

"This settlement is truly a 'win-win' for Southern Union and our El Paso customers," said Peter H. Kelley, president of Southern Union. "We remain committed to providing our customers with the lowest natural gas rates in the country." Southern Union said multiple studies, including an annual survey done by the Texas Railroad Commission (RRC), have said that Southern Union has provided the city with the lowest rates in the country for six out of the last seven years.

The terms of the renewal were forged in a settlement Southern Union made with the city, incorporating a rate change, a new rate design, and a new 30-year franchise agreement. The old franchise agreement was set to expire later this year. Southern Union said 150,000 customers will be affected by the new rate design, which will lower winter bills and slightly increase summer bills.

Jay Cummings, a Southern Union spokesman, said the average monthly residential bill will be 45 cents more. By raising the rates during the summer, Southern Union said it could benefit from a more even flow of payments that is less weather-sensitive.

While no deregulation laws exist for the state gas industry, Texas is somewhat unique in that the RRC has jurisdiction over intrastate transportation, citygate sales for resale and retail rates outside of city limits, but individual communities and municipalities regulate retail natural gas service within their boundaries. As a result, communities such as El Paso can form their own arrangements with their LDCs.

Cummings said that while several transmission lines have franchise agreements with the city of El Paso, Southern Union is the sole distributor with that distinction.

As an additional service, Southern Union said it will continue to work on projects in El Paso that promote a higher quality of life for its citizens. Such projects include a program to extend service to the city's colonias, low-income substandard areas that do not have running water, wastewater service, and natural gas service.

John Norris

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