FERC to investigate rates at two Kinder Morgan natural gas pipes

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By Scott DiSavino

<span class="articleLocation”>U.S. federal energy regulators said Thursday
they would investigate rates charged by two natural gas
pipelines operated by Kinder Morgan Inc to determine if
they may be over-recovering costs, resulting in unjust and
unreasonable rates.

The U.S. Federal Energy Regulatory Commission (FERC) said it
reviewed cost and revenue information provided by the Natural
Gas Co of America (NGPL) and the Wyoming Interstate Co pipelines
in their publicly available annual reports for 2014 and 2015.

In response to the FERC investigation, Tom Martin, president
of Kinder Morgan Natural Gas Pipelines, said in a statement, “The FERC has chosen to interject itself in an unwarranted and
unfair manner in the productive relationships between the
companies and their customers.”

“FERC is launching this effort based on stale data in a
rapidly evolving environment, and without a full understanding
of the facts and the changing market conditions faced by the
pipelines that could have been gained through engagement with
the companies prior to taking any action,” Martin said.

Based on its review of the data, FERC said it estimates
NGPL’s return on equity for those calendar years to be 28.5
percent and 20.8 percent, respectively.

The commission said it estimates Wyoming Interstate’s return
on equity for those calendar years to be 17.7 percent and 19.0
percent, respectively.

Based on these figures, FERC said it was concerned that both
pipelines’ earnings may exceed their actual cost of service,
including a reasonable return on equity.

FERC directed each pipeline to file a cost and revenue study
for the latest available 12-month period within 75 days.

The commission also said it set each case for evidentiary
hearings before a FERC administrative law judge.

Kinder Morgan said it would review the FERC orders and reply
in accordance with procedural requirements, noting “they fully
expect the evidence to show that the rates charged by (the
pipelines) have been and continue to be just and reasonable.”

NGPL, which is jointly owned by Kinder Morgan and Brookfield
Infrastructure Partners LP, is one of the largest interstate
systems in the country with about 9,200 miles (14,805
kilometers) of pipeline and 288 billion cubic feet of working
gas storage.

Wyoming Interstate is an 850-mile pipeline system, wholly
owned by Kinder Morgan, that provides takeaway capacity from the
Overthrust, Piceance, Uinta, Powder River and Green River basins
in Wyoming, Utah and Colorado.

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