Southern Union Co. renegotiated its franchise agreement with thecity of El Paso, TX, last week, the company said. Under the termsof the deal, Southern Union will receive a cost-of-service revenueincrease of $650,000, but it did not disclose the deal’s totalvalue. The agreement was unanimously approved by the El Paso CityCouncil on Feb. 22.

“This settlement is truly a ‘win-win’ for Southern Union and ourEl Paso customers,” said Peter H. Kelley, president of SouthernUnion. “We remain committed to providing our customers with thelowest natural gas rates in the country.” Southern Union saidmultiple studies, including an annual survey done by the TexasRailroad Commission (RRC), have said that Southern Union hasprovided the city with the lowest rates in the country for six outof the last seven years.

The terms of the renewal were forged in a settlement SouthernUnion made with the city, incorporating a rate change, a new ratedesign, and a new 30-year franchise agreement. The old franchiseagreement was set to expire later this year. Southern Union said150,000 customers will be affected by the new rate design, whichwill lower winter bills and slightly increase summer bills.

Jay Cummings, a Southern Union spokesman, said the averagemonthly residential bill will be 45 cents more. By raising therates during the summer, Southern Union said it could benefit froma 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 overintrastate transportation, citygate sales for resale and retailrates outside of city limits, but individual communities andmunicipalities regulate retail natural gas service within theirboundaries. As a result, communities such as El Paso can form theirown arrangements with their LDCs.

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

As an additional service, Southern Union said it will continueto work on projects in El Paso that promote a higher quality oflife for its citizens. Such projects include a program to extendservice to the city’s colonias, low-income substandard areas thatdo not have running water, wastewater service, and natural gasservice.

John Norris

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