Wyoming Interstate Co. LLC (WIC) pipeline has asked FERC to approve an offer of settlement and an accompanying stipulation and agreement (S&A) resolving allegations that it was over-recovering its costs, resulting in unjust and unreasonable rates for its shippers.
In November 2012, the Federal Energy Regulatory Commission (FERC) opened a Section 5 Natural Gas Act into charges that it had been over-recovering its actual cost of service. Based on a Form 2 report, FERC staff estimated WIC’s return on equity to be 19.55% for 2010 and 18.51% for 2011, significantly higher than what FERC typically allows for interstate gas pipelines (see Daily GPI, Nov. 16, 2012). WIC is owned by Houston-based Kinder Morgan.
Because all of the participants in the proceeding were given the opportunity to revise and comment on the S&A, WIC requested that the comment period be shortened to five days following the filing of the S&A.
Parties to the settlement include Commission trial staff, Anadarko Energy Services, Bill Barrett Corp., BP Energy Co., Chevron U.S.A. Inc., Occidental Energy Marketing Inc., Public Service of Colorado, Pioneer Natural Resources USA Inc., Shell Energy North America (US) L.P. and WPX Energy Marketing LLC.
“The active participants reached an agreement in principle in late April” of this year, the pipeline said. It establishes new base rates, which will become effective on July 1 and Jan. 1, 2014. If the S&A becomes effective after the settlement base rates should have been charged, WIC said it will pay refunds on a customer-by-customer net basis and issue invoice credits with interest within 60 days of the S&A becoming effective.
Moreover, the settlement calls for the costs associated with the Echo Springs Lateral to be rolled into the cost-of-service for WIC’s mainline service effective Feb. 1, 2015.
To the extent WIC has not filed a system-wide rate case or FERC has not initiated an investigation into the pipeline’s rates, the settlement requires WIC to file a cost-and-revenue study with the Commission on or before July 3, 2018, based on the actual costs, revenues sand volumes for a 12-month period.
With approximately 800 miles of pipeline, the WIC mainline extends from western Wyoming to northeast Colorado (the Cheyenne Hub) and several lateral pipeline systems that extend from various interconnections along the WIC mainline into western Colorado and northeast Wyoming and into eastern Utah.
WIC is one of the primary interstate natural gas transportation systems providing takeaway capacity from the Overthrust, Piceance, Uinta, Powder River and Green River basins. CIG is the operator of the WIC system pursuant to a service agreement with WIC.
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