A FERC administrative law judge (ALJ) last Thursday certified an uncontested offer of settlement that reduces by about 20-25% the transportation rates for shippers on Iroquois Gas Transmission System’s Eastchester extension that went into service earlier this year.

Iroquois elicited shipper protests when it sought to double its certificated initial rate of $0.4234/Dth to $0.8444/Dth to account for significant cost overruns incurred during the construction of the 36.5-mile pipeline that extends from Iroquois’ existing mainline at North Point, Long Island, across the Long Island Sound to Hunts Point to the South Bronx, north of Manhattan.

But the uncontested settlement submitted to FERC cuts the 100% load factor interzone rate for primary access service on Eastchester to $0.6600/Dth effective July 1 of this year, with a step-down to $0.6350/Dth on Jan. 1, 2008 [RP04-136].

As the Commission staff said, “the settlement results in rates that are 20-25% less than those originally filed by Iroquois in this proceeding,” and “provides Iroquois’ customers with immediate rate relief, a prohibition against Iroquois recovering future legal costs related to the construction of the Eastchester project, rate certainty for an extended period of time, and the avoidance of the costs of litigation,” ALJ Bruce L. Birchman said.

The settlement bars Iroquois from seeking an increase in the settlement rates prior to July 1, 2011, and from putting any subsequent rate hike into effect before Jan. 1, 2012. Shippers are prohibited from asking for a reduction in the settlement rates prior to March 1, 2011.

Both New York regulators and Consolidated Edison Co. of New York Inc., a key shipper on the extension, protested Iroquois’ efforts to win higher rates for the Eastchester line. The proposed rate increase was due to the “stunning” cost overruns for the Eastchester project, Con Edison said at the time. It noted the construction costs for the project, which initially were estimated at $174 million, had soared to approximately $334 million.

The extension of the Iroquois system, which went into operation in February, supplies up to 230,000 Dth/d of Canadian gas to generation customers and traditional gas users in the New York City market.

Iroquois Gas Transmission, a partnership of 10 U.S. and Canadian energy firms, owns and operates a 375-mile interstate pipeline extending from the U.S.-Canadian border at Waddington, NY, through western Connecticut to Long Island.

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