In a refreshing change of pace, Duke Energy’s Texas EasternTransmission Corp. (TETCO) asked FERC last week for a system-widerate reduction — yes, reduction — of about $137 millionannually for its interstate pipeline customers.

TETCO was able to seek the rate reduction because it completedrecovery of its gas supply realignment (GSR) costs, about $390million excluding interest, “several years ahead” of the timetablethat was originally projected, said Richard Kruse, senior vicepresident of Duke Energy Gas Transmission, which includes TETCO. Iteven finished ahead of its revised recovery target day of Jan. 1,2001, he noted.

The lower rates would become effective Dec. 1, and would remainfrozen through the end of 2003, Kruse said. A typical TETCOcustomer transporting gas from Louisiana to the Northeast wouldrealize a rate reduction of about 19% (or $8.32/Dth), he noted,while short-haul transportation customers would see their ratesdrop even more sharply. All of TETCO’s customers — about 120primary shippers — will see a change in their rates.

The annual rate savings would be “uniformly spread” throughouteach month of the year, enabling TETCO’s firm and interruptibleshippers to benefit from lower rates going into this winter heatingseason, Kruse said.

TETCO’s hastened recovery of its Order 636 transition costs wasattributed to the company’s rate initiative agreed to in a 1998amended global settlement, which was approved by all of itscustomers, the Duke Energy pipeline said. In addition to theaccelerated recovery of transition costs, TETCO agreed in thesettlement to lower its book depreciation expense by $34 million onan annual basis.

“We are extremely pleased to have completed the recovery of ourOrder 636 transition costs, thereby removing these costs from ourrates,” said Robert B. Evans, president of Duke Energy GasTransmission. “Our customers will see a significant reduction inrates starting this winter and TETCO will have the benefit of moreattractive rates, making its services more competitive. This istruly a win-win situation for TETCO and its customers.”

Susan Parker

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