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Regulators Again Seek Appellate Review of MoGas Pipeline Rates

The Missouri Public Service Commission (MoPSC) has petitioned the federal court of appeals in Washington, DC, to review FERC orders that allow MoGas Pipeline LLC -- an interstate pipeline system that was created in 2007 as a result of the consolidation of three pipeline affiliates -- to include "acquisition premium" costs in the pipeline's initial rates.

MoPSC is challenging the Federal Energy Regulatory Commission's March 2013 order on initial decision, which found that MoGas can continue to include the full purchase price of certain pipeline assets in its rate base because the record demonstrates that the acquisition of the facilities at more than their net book value resulted in substantial benefits to ratepayers [CP06-407-007].

A Commission administrative law judge issued the initial decision in November 2011 after the case was remanded by the appeals court. This marks the second time that the Missouri agency has appealed the case in court.

MoPSC claims that the proposed rates passed on to consumers contain certain acquisition premium costs related to asset purchases by Missouri Interstate Gas LLC (MIG), as well as acquisition premiums associated with Missouri Gas Co. LLC (MGC) and Missouri Pipeline Co. (MPC) -- the three affiliate pipelines that combined to form MoGas Pipeline.

The U.S. Court of Appeals for the District of Columbia Circuit agreed with MoGas Pipeline in the first decision, which it issued in April 2010. "FERC's action is plainly inconsistent with its own precedent," the three-judge panel said at the time.

"Because the agency's decision is the antithesis of 'reasoned decision-making,' we grant the petition for review, vacate FERC's order with respect to the alleged acquisition premium issue regarding MIG, and remand the case for prompt resolution of the question of the alleged acquisition premium," wrote Judge Harry T. Edwards, who filed the opinion for the court (seeDaily GPI, April 14, 2010).

In April 2007 FERC gave the green light to the three pipeline affiliates to combine their facilities to form one new interstate system to better serve the Missouri and Illinois gas markets (see Daily GPI,April 20, 2007). MIG, MGC and MPC created a 263-mile, up to 16-inch diameter interstate system delivering gas to the two Midwest states.

All three pipelines are based in St. Peters, MO, and are wholly owned subsidiaries of United Pipeline Systems LLC.

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