Transcontinental Gas Pipe Line’s proposed rate case, in which it is seeking a 58% increase in overall cost of service, has been met with a barrage of protests at the Federal Energy Regulatory Commission.

Transco customers, ranging from large local distribution companies to small municipal distributors, have asked FERC to suspend Transco’s rate proposal for the maximum five months allowed under the Natural Gas Act (NGA). The pipeline has called on the Commission to approve the proposal to take effect on Oct. 1. Transco shippers also have urged FERC to schedule an evidentiary hearing to investigate the issues that Transco claims support its request for the major rate hike.

The Williams’ pipeline estimates that its proposal would increase annual revenues from jurisdictional services by $281.5 million.

Transco contends that proposed changes on its system — an increase in operation and maintenance expense, an increase in depreciation expense, the inclusion of costs for asset retirement obligations, a higher rate base resulting from additional plant, and an increase in rate of return and related taxes — justify its proposal for a total cost of service of $1.131 billion compared to $717 million four years ago. The pipeline also claims that its throughput is lower than it was in 2002.

But Transco shippers disagree. Transco’s proposed rates “have not been shown to be just and reasonable and likely will be found by the Commission to be unjust, unreasonable, unduly discriminatory or otherwise unlawful,” said a group of subsidiaries of KeySpan Corp.

“The sheer magnitude [of the proposed rate hike] requires that the Commission exercise its statutory authority to suspend the rate increase for the maximum period allowed under the NGA, to condition its acceptance of the tariff sheets so the rates remain subject to refund, and to set the case for hearing,” said the Municipal Gas Authority of Georgia, Patriots Energy Group and the Transco Municipal Group.

“Moreover, the very large rate increase warrants immediate scrutiny to ascertain whether the questionable justifications for the proposed rate increase can be dealt with and disposed of in an expedited fashion to avoid placing Transco’s shippers in the untenable position of paying the grossly excessive rates subject to refund,” they noted.

“Transco’s filing reveals many disturbing additions to its cost of service. Closer scrutiny of the proposed cost increases raises serious questions about their legitimacy,” the trio said.

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