FERC Thursday opened Section 5 Natural Gas Act (NGA) investigations into the rates charged by pipelines Wyoming Interstate Co. (WIC) and Viking Gas Transmission to determine if they are over-recovering their costs, resulting in unjust and unreasonable rates for their shippers.

The two orders issued by the Federal Energy Regulatory Commission (FERC) give each pipeline company 75 days to file a full cost and revenue study [RP13-184, RP13-185]. The investigations are based on Form 2 cost and revenue information that WIC and Viking filed for 2010, which FERC staff said indicated that the companies are substantially over-recovering their actual cost of service.

WIC’s current rates were established as part of a settlement approved by the Commission in September 2000, according to the agency. Based on the Form 2 reports, FERC staff estimates WIC’s return on equity (ROE) to be 19.55% for 2010 and 18.51% for 2011, significantly higher than what FERC typically allows for interstate gas pipelines. WIC is owned by Houston-based Kinder Morgan.

And based on a review of Viking’s Form 2 reports, FERC staff estimates the company’s ROE to be even higher than WIC’s: 21.39% for 2010 and 21.75% for 2011. Viking’s current rates were established in a November 2002 settlement.

In November 2009 FERC initiated formal Section 5 investigations of three pipelines: Natural Gas Pipeline Co. of America LLC, Northern Natural Gas and Great Lakes Gas Transmission Ltd. Partners based on preliminary studies that indicated the three may have over-recovered their cost of service by more than 20% (see Daily GPI, Nov. 20, 2009). All three cases have since been settled.

WIC, which has a throughput capacity of 3.34 Bcf/d, operates as one of the primary interstate systems providing takeaway capacity from the Overthrust, Piceance, Uinta, Green River and Powder River Basins in Wyoming, Utah and Colorado.

Viking, which is owned by Oneok Partners, has a design capacity of 0.5 Bcf/d. It receives Canadian gas at the Manitoba/Minnesota border and connects with four major pipelines serving markets in North Dakota, Minnesota and central Wisconsin.

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