The Federal Energy Regulatory Commission today affirmed a May 2007 Administrative Law Judge ruling that interstate rates charged on the Trans-Alaska Pipeline System in 2005 and 2006 were not just and reasonable and ordered limited refunds to shippers who had overpaid. The order, which the five-member commission approved without comment, establishes the basis for new just and reasonable rates that will go into effect on a prospective basis.
FERC said the order affirms, clarifies and modifies an initial decision that Judge Carmen A. Cintron issued May 17, 2007, regarding the pipeline carriersí 2005 and 2006 interstate rate filings. The order affirms Cintronís finding that pipeline owners BP Exploration (Alaska) Inc., ConocoPhillips Alaska, ExxonMobil Production Co., Unocal Pipeline Co. and Koch Alaska Pipeline Co. LLC, failed to prove the proposed rate increases in their 2005 and 2006 tariffs were just and reasonable, and ordered limited refunds to all TAPS shippers.
The order also clarifies provisions in Cintronís order regarding the appropriate dismantlement, removal and restoration expenses and modifies the return on equity component of the capital structure, consistent with FERCís new policy on proxy groups for pipelines.
The new rate, based on FERC Opinion No. 154-B methodology, is prospective, and will be determined after the TAPS carriers make a compliance filing. The refunds for 2005 and 2006 are limited to the difference between the 2005-06 proposed rates and the 2004 rate, the commission said.
For the complete story see the June 22 edition of Petroleum News available to subscribers online Friday, June 20 at noon at www.PetroleumNews.com