For Immediate Release - October 21, 2011

Natural Gas Pipeline Company Agrees to Reduce Requested Rate Increase by $193 Million

BOSTON – After nearly a year of litigation and settlement discussions, Tennessee Gas Pipeline Company (TGP) has agreed to reduce the company’s proposed rate increase by $193 million, Attorney General Martha Coakley announced today.

“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,” said AG Coakley.  “If approved, this settlement lessens the impact of those higher costs on consumers.”

On November 30, 2010, TGP requested a $350 million rate increase in its costs to transport natural gas across the country to serve local distribution companies and large customers.  The proposal was opposed by a coalition of northeastern states.  Yesterday, Attorney General Martha Coakley and the Massachusetts Department of Public Utilities (DPU) filed comments with the Federal Energy Regulatory Commission (FERC) in support of a proposed settlement to reduce these rates. 

TGP’s requested rate increase raised the gas supply costs on a typical residential heating customer’s annual bill by $12 to $53, depending on the customer’s local distribution company.  Under the original rate increase, the total cost to Massachusetts ratepayers was approximately $58.8 million annually, but this settlement will reduce the increase to Massachusetts ratepayers by approximately $30.2 million annually.  Under FERC regulations and Federal law, the rates originally sought by TGP took effect on June 1, 2011, but were subject to a refund. 

“This settlement provides a critical rate reduction to Massachusetts consumers as we head into the winter months,” Massachusetts DPU Chair Ann Berwick said.  “Together with our neighboring northeast states and the Attorney General, we achieved an outcome that significantly mitigates the cost exposure to Massachusetts customers.”

Local natural gas distribution companies, such as Bay State Gas or National Grid, receive natural gas transportation service from TGP to supply their customers.  The local distribution companies file for approval twice a year with the DPU to adjust rates for changes in wholesale transportation and commodity costs.  If FERC approves the settlement, the reduction in transportation rates could be included in rates on May 1, 2012.

The Massachusetts Attorney General and the Massachusetts Department of Public Utilities were among the lead litigants on behalf of a coalition of northeast state consumer advocates and regulators, including the New York State Public Service Commission, New Jersey Board of Public Utilities, Connecticut Department of Public Utility Control, Rhode Island Division of Public Utilities, Rhode Island Attorney General, New Hampshire Public Utilities Commission, Vermont Department of Public Service, New England Conference of Public Utilities Commissioners, New York State Consumer Protection Board, and the Public Advocate of Maine.

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

The Attorney General’s Office of Ratepayer Advocacy is by statute the utility ratepayer advocate for Massachusetts and is authorized to intervene in or institute administrative and judicial proceedings on behalf of consumers in connection with any matter involving the rates, charges, prices or tariffs of any gas or electric company doing business in the Commonwealth.

The DPU is the state agency charged with general regulatory supervision over gas and electric companies in Massachusetts.  It frequently intervenes in and comments on decisions taking place at the regional and federal levels that directly affect wholesale natural gas and electricity costs for the Commonwealth’s residents and businesses.