Transcontinental Gas Pipe Line has not proven its case forrolled-in rates for a series of expansions of its Leidy Line andits southern system dating back to 1984, according to anadministrative law judge who found there wouldbe “substantial”cost shifting.

In an initial decision in a long-running rate case (RP95-197-000et al) Judge Ernst Liebman also saw “no enhancement of Transco’ssystem services” due to the added facilities. Incremental loadsaccompanied incremental capacity, and rather than addingflexibility and reliability “the increase in load was greater thanthe increase in line pack.

Liebman observed that Transco had initially filed to continueincremental rates and only later joined other parties in the casein requesting a switch to a rolled-in scenario. That strategyneatly circumnavigated the NGA Section 4 requirement that full andcomplete rate schedules for proposed changes be posted for publicinspection for at least 30 days. That being the case, the judgesaid Transco faced and failed the more rigorous test of NGA Section5, that is proving not only the new rolled-in scheme was just andreasonable, but also the old incremental rates were not

The ALJ said proponents of rolled-in rates failed to prove theincreases in delivery capacity gave the pipeline as a whole moreflexibility to meet swing loads. For instance there was no evidencethat during hurricanes and freezes the incremental servicesbenefited system customers. In at least one instance during atropical storm incremental users actually decreased systemflexibility. “Roll-in witnesses claiming benefits spoke ingeneralities and conclusions” that “did not withstand detailedexamination.

Proponents also failed to prove claimed savings in fuel costsdue to the incremental facilities. Transco argued that individuallynone of the 12 Leidy and southern system expansions even came closeto the Commission’s “bright line,” which requires only a generalshowing of system benefit for rate increases of less than 5%.Liebman, however, looked at the aggregate impact, citing testimonyshowing rate increases for some customers of as much as 16%, withan actual cost shift estimated by Transco at $17 million and byothers at between $40 million and $55 million. “Overall, I find thecost shift and rate impact to be substantial and significant,” thejudge said. He saw no reason for spreading the costs to systemcustomers since “the customers for whom each of the expansionprojects were built are still the principal beneficiaries of eachof the projects.”

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