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TETCO Seeks Systemwide Rate Cut

TETCO Seeks Systemwide Rate Cut

In a refreshing change of pace, Duke Energy's Texas Eastern Transmission Corp. (TETCO) asked FERC last week for a system-wide rate reduction --- yes, reduction --- of about $137 million annually for its interstate pipeline customers.

TETCO was able to seek the rate reduction because it completed recovery of its gas supply realignment (GSR) costs, about $390 million excluding interest, "several years ahead" of the timetable that was originally projected, said Richard Kruse, senior vice president of Duke Energy Gas Transmission, which includes TETCO. It even finished ahead of its revised recovery target day of Jan. 1, 2001, he noted.

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

The annual rate savings would be "uniformly spread" throughout each month of the year, enabling TETCO's firm and interruptible shippers to benefit from lower rates going into this winter heating season, Kruse said.

TETCO's hastened recovery of its Order 636 transition costs was attributed to the company's rate initiative agreed to in a 1998 amended global settlement, which was approved by all of its customers, the Duke Energy pipeline said. In addition to the accelerated recovery of transition costs, TETCO agreed in the settlement to lower its book depreciation expense by $34 million on an annual basis.

"We are extremely pleased to have completed the recovery of our Order 636 transition costs, thereby removing these costs from our rates," said Robert B. Evans, president of Duke Energy Gas Transmission. "Our customers will see a significant reduction in rates starting this winter and TETCO will have the benefit of more attractive rates, making its services more competitive. This is truly a win-win situation for TETCO and its customers."

Susan Parker

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