Pipeline reduces rate proposal by $193M

Bryan Cohen Oct. 24, 2011, 12:28pm


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Friday that a natural gas pipeline company has agreed to reduce its proposed rate increase by $193 million.

Tennessee Gas Pipeline Company requested a $350 million rate increase on Nov. 30 to transport natural gas across the country to serve local distribution companies and large customers. The proposal was opposed by a coalition made up of northeastern states. After almost one year of litigation and settlement discussions, TGP agreed to the reduction.

"Although natural gas pipeline companies have an obligation to maintain their systems to ensure safe and reliable transportation of their product, the original rate request was excessive," Coakley said. "If approved, this settlement lessens the impact of those higher costs on consumers."

On Thursday, Coakley and the Massachusetts Department of Public Utilities filed comments with the Federal Energy Regulatory Commission in support of a proposed settlement to reduce the rates. TGP's requested rate increase raised the gas supply costs on a typical residential customer's annual bill by $12 to $53 and the total cost to Massachusetts ratepayers was approximately $58.8 million annually.

The settlement will reduce the increase to state ratepayers by approximately $30.2 million annually. Under federal law and FERC regulations, the rates originally sought by TGP took effect on June 1, but were subject to a refund.

Local natural gas distribution companies, such as National Grid or Bay State Gas, receive natural gas transportation service from TGP to supply their customers. They file for approval twice a year with the DPU to adjust rates for wholesale transportation and commodity cost changes. If the settlement is approved by FERC, the reduction in transportation rates could be included in rates on May 1.

Coakley and the DPU were among the lead litigants on behalf of the coalition, which included the New York State Public Service Commission, the New Jersey Board of Public Utilities, the Connecticut Department of Public Utility Control, the Rhode Island Division of Public Utilities, the Rhode Island Attorney General, the New Hampshire Public Utilities Commission, the Vermont Department of Public Service, the New England Conference of Public Utilities Commissioners, the New York State Consumer Protection Board and the Public Advocate of Maine.

TGP is an interstate gas transportation company with a pipeline system that extends from Louisiana and Texas through Arkansas, Alabama, Mississippi, Tennessee, Kentucky, Ohio, West Virginia, Pennsylvania, New York, New Jersey, Connecticut, Massachusetts and New Hampshire.

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