Texas Eastern Transmission (Tetco) on Tuesday submitted to FERCan offer of settlement that it insists will save pipeline customersmore than $260 million over the next five to six years.

The proposed settlement calls for Tetco to assume the “solerisk” for all existing and potential turned-back pipeline capacityon its system until at least Dec. 31, 2003. Based on notices ofcontract termination to date, the risk to Tetco is expected to be$15 million this year and will grow to $135 million in 2003.However, the maximum risk to the pipeline potentially could climbto more than $460 million in 2003, according to Tetco.

The Duke Energy pipeline faces about 70,000 Mcf/d of turned-backcapacity this year. This likely will increase to 500,000 Mcf/d in2003, or about 15% of Tetco’s system.

In addition, the proposed settlement calls for customers toreceive a reduction of 10 cents/Dth in long-haul FT-1 rates on a100% load factor basis, and it would provide a $59 million decreasein net customer funding of non-spot costs – the difference betweenspot prices and contract prices in gas supply contracts – under thepipeline’s 1985 global settlement.

“We think [this] package will provide the tools so we canremarket the [idled] capacity. We’re very much trying to anticipatethe problem” before it worsens around the year 2000, said TetcoVice President and General Counsel Richard J. Kruse.

The offer has been seconded by the majority of customers onTetco’s system. The pipeline urged the Commission to approve theproposed settlement, without modification or condition, by July 1of this year for it to be implemented on Aug. 1.

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