National Fuel Pipeline Unit Files Settlement of Complaint at FERC
November 17 2006 - 5:15PM
Business Wire
National Fuel Gas Supply Corporation (�Supply Corporation�), the
wholly-owned interstate pipeline subsidiary of National Fuel Gas
Company (NYSE: NFG) (�the Company�), today announced that it has
filed at the Federal Energy Regulatory Commission (�FERC�) a
stipulation and agreement as an offer of settlement of a complaint
filed in April 2006 under Sections 5(a) and 13 of the Natural Gas
Act. The filed stipulation states that the settlement is supported
by all the parties who brought the complaint (the Public Service
Commission of the State of New York, the Pennsylvania Public
Utility Commission and the Pennsylvania Office of Consumer
Advocate) and several other active parties. The filing states that
Supply Corporation believes the proposed settlement will be
uncontested, and asks FERC to approve it without modification after
a comment period that will run through December 18, 2006. The terms
of the proposed settlement would be effective following approval by
FERC. The settlement makes no change to Supply Corporation�s rates
except for an agreed-upon change in its gas retention allowances.
Other features of the settlement include: All participants have
reached a negotiated resolution of all the issues raised or which
could have been raised in the proceeding. Supply Corporation�s gas
retention allowances on transportation services will decrease from
2% to 1.4%, amounting to a reduction in excess �efficiency gas�
quantities of approximately 1,500,000 dekatherms (�dth�) per year.*
With respect to the period of time between December 1, 2006 and the
effective date of the settlement, Supply Corporation will refund
the value of the additional gas retained under its current
transportation retention allowances (i.e., the difference between
2% and 1.4%). Supply Corporation is authorized to continue to sell
efficiency gas and retain the proceeds. After a five-year general
rate case moratorium, Supply Corporation will make a rate case
filing to be effective December 1, 2011. Supply Corporation�s
annual depreciation rate for transmission plant will decrease to
2.9%, and its annual depreciation rate for storage plant will
decrease to 2.23%, which will decrease annual depreciation expense
by about $5.63 million.* Supply Corporation�s rate allowance for
post-retirement medical expenses will increase from about $4.7
million per year to $11 million per year, including the five-year
amortization of a related regulatory asset that had built up to
approximately $12.43 million since a previous rate settlement. This
increase in rate allowance will be an increase in annual expense.
The entire rate allowance will continue to be set aside in
designated funds for the sole purpose of paying Supply
Corporation�s post-retirement medical expenses. Depending on actual
post-retirement medical expense going forward, a new regulatory
asset or liability will be created over the next five years to be
recovered or credited in the next rate case. Supply Corporation�s
tariff provisions on discounting gas retention allowances will be
amended so as to be consistent with FERC�s current policy limiting
�fuel discounts.� The earnings guidance for the 2007 Fiscal Year
included in the Company�s November 9, 2006 earnings report took
into account the expected impact of this settlement and, therefore,
no changes to that earnings guidance are necessary as a result of
this filing. Supply Corporation comprises the largest portion of
the Pipeline and Storage segment of National Fuel Gas Company. The
operations of Empire State Pipeline are also part of National Fuel
Gas Company�s Pipeline and Storage segment, but Empire State
Pipeline was not cited in these pleadings. Supply Corporation owns
and operates 2,972 miles of natural gas pipelines and 32 natural
gas storage fields, including four that are co-owned with
non-affiliated companies. National Fuel Gas Company is an
integrated energy company with $3.7 billion in assets comprised of
the following five operating segments: Utility, Pipeline and
Storage, Exploration and Production, Energy Marketing, and Timber.
Additional information about National Fuel Gas Company is available
on its Internet Web site: http://www.nationalfuelgas.com or through
its investor information service at 1-800-334-2188. * - Certain
statements contained herein, including those which are designated
with an asterisk ("*") and those which use words such as
"anticipates," "estimates," "expects," "intends," "plans,"
"predicts," "projects," and similar expressions, are
"forward-looking statements" as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
risks and uncertainties which could cause actual results or
outcomes to differ materially from those expressed in the
forward-looking statements. The Company's expectations, beliefs and
projections contained herein are expressed in good faith and are
believed to have a reasonable basis, but there can be no assurance
that such expectations, beliefs or projections will result or be
achieved or accomplished. In addition to other factors, the
following are important factors that could cause actual results to
differ materially from those discussed in the forward-looking
statements: changes in laws and regulations to which the Company is
subject, including changes in tax, environmental, safety and
employment laws and regulations; changes in economic conditions,
including economic disruptions caused by terrorist activities, acts
of war or major accidents; changes in the availability and/or price
of natural gas or oil; inability to obtain new customers or retain
existing ones; governmental/regulatory actions, initiatives and
proceedings, including those involving acquisitions, financings,
rate cases (which address, among other things, allowed rates of
return, rate design and retained gas), affiliate relationships,
industry structure, franchise renewal, and environmental/safety
requirements; significant changes in tax rates or policies or in
rates of inflation or interest; or changes in accounting principles
or the application of such principles to the Company. The Company
disclaims any obligation to update any forward-looking statements
to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events. National Fuel Gas
Supply Corporation ("Supply Corporation"), the wholly-owned
interstate pipeline subsidiary of National Fuel Gas Company (NYSE:
NFG) ("the Company"), today announced that it has filed at the
Federal Energy Regulatory Commission ("FERC") a stipulation and
agreement as an offer of settlement of a complaint filed in April
2006 under Sections 5(a) and 13 of the Natural Gas Act. The filed
stipulation states that the settlement is supported by all the
parties who brought the complaint (the Public Service Commission of
the State of New York, the Pennsylvania Public Utility Commission
and the Pennsylvania Office of Consumer Advocate) and several other
active parties. The filing states that Supply Corporation believes
the proposed settlement will be uncontested, and asks FERC to
approve it without modification after a comment period that will
run through December 18, 2006. The terms of the proposed settlement
would be effective following approval by FERC. The settlement makes
no change to Supply Corporation's rates except for an agreed-upon
change in its gas retention allowances. Other features of the
settlement include: -- All participants have reached a negotiated
resolution of all the issues raised or which could have been raised
in the proceeding. -- Supply Corporation's gas retention allowances
on transportation services will decrease from 2% to 1.4%, amounting
to a reduction in excess "efficiency gas" quantities of
approximately 1,500,000 dekatherms ("dth") per year.* With respect
to the period of time between December 1, 2006 and the effective
date of the settlement, Supply Corporation will refund the value of
the additional gas retained under its current transportation
retention allowances (i.e., the difference between 2% and 1.4%).
Supply Corporation is authorized to continue to sell efficiency gas
and retain the proceeds. -- After a five-year general rate case
moratorium, Supply Corporation will make a rate case filing to be
effective December 1, 2011. -- Supply Corporation's annual
depreciation rate for transmission plant will decrease to 2.9%, and
its annual depreciation rate for storage plant will decrease to
2.23%, which will decrease annual depreciation expense by about
$5.63 million.* -- Supply Corporation's rate allowance for
post-retirement medical expenses will increase from about $4.7
million per year to $11 million per year, including the five-year
amortization of a related regulatory asset that had built up to
approximately $12.43 million since a previous rate settlement. This
increase in rate allowance will be an increase in annual expense.
The entire rate allowance will continue to be set aside in
designated funds for the sole purpose of paying Supply
Corporation's post-retirement medical expenses. Depending on actual
post-retirement medical expense going forward, a new regulatory
asset or liability will be created over the next five years to be
recovered or credited in the next rate case. -- Supply
Corporation's tariff provisions on discounting gas retention
allowances will be amended so as to be consistent with FERC's
current policy limiting "fuel discounts." The earnings guidance for
the 2007 Fiscal Year included in the Company's November 9, 2006
earnings report took into account the expected impact of this
settlement and, therefore, no changes to that earnings guidance are
necessary as a result of this filing. Supply Corporation comprises
the largest portion of the Pipeline and Storage segment of National
Fuel Gas Company. The operations of Empire State Pipeline are also
part of National Fuel Gas Company's Pipeline and Storage segment,
but Empire State Pipeline was not cited in these pleadings. Supply
Corporation owns and operates 2,972 miles of natural gas pipelines
and 32 natural gas storage fields, including four that are co-owned
with non-affiliated companies. National Fuel Gas Company is an
integrated energy company with $3.7 billion in assets comprised of
the following five operating segments: Utility, Pipeline and
Storage, Exploration and Production, Energy Marketing, and Timber.
Additional information about National Fuel Gas Company is available
on its Internet Web site: http://www.nationalfuelgas.com or through
its investor information service at 1-800-334-2188. * - Certain
statements contained herein, including those which are designated
with an asterisk ("*") and those which use words such as
"anticipates," "estimates," "expects," "intends," "plans,"
"predicts," "projects," and similar expressions, are
"forward-looking statements" as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
risks and uncertainties which could cause actual results or
outcomes to differ materially from those expressed in the
forward-looking statements. The Company's expectations, beliefs and
projections contained herein are expressed in good faith and are
believed to have a reasonable basis, but there can be no assurance
that such expectations, beliefs or projections will result or be
achieved or accomplished. In addition to other factors, the
following are important factors that could cause actual results to
differ materially from those discussed in the forward-looking
statements: changes in laws and regulations to which the Company is
subject, including changes in tax, environmental, safety and
employment laws and regulations; changes in economic conditions,
including economic disruptions caused by terrorist activities, acts
of war or major accidents; changes in the availability and/or price
of natural gas or oil; inability to obtain new customers or retain
existing ones; governmental/regulatory actions, initiatives and
proceedings, including those involving acquisitions, financings,
rate cases (which address, among other things, allowed rates of
return, rate design and retained gas), affiliate relationships,
industry structure, franchise renewal, and environmental/safety
requirements; significant changes in tax rates or policies or in
rates of inflation or interest; or changes in accounting principles
or the application of such principles to the Company. The Company
disclaims any obligation to update any forward-looking statements
to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
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