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Williams files settlement with FERC for rate case, cost recovery at Transco

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Williams files settlement with FERC for rate case, cost recovery at Transco

Williams Cos. Inc. filed a settlement with the Federal Energy Regulatory Commission that would allow natural gas pipeline subsidiary Transcontinental Gas Pipe Line Co. LLC to resolve a pending rate case and recover costs on capital expenditures, operations and maintenance.

Williams said it expects to receive FERC's approval of the settlement during the second quarter. The settlement will resolve the company's, or Transco's, pending rate case from August 2018 and is expected to provide rate certainty for customers, according to a Jan. 2 news release.

Under the settlement's terms, Transco and all associated parties agreed on a comprehensive resolution for the cost of service, rate design, cost classification and allocation, as well as a rate moratorium until Aug. 31, 2021. Transco will also file a new rate case before Aug. 30, 2024.

The settlement also provides for a technical working group composed of shippers and Williams representatives tasked to address emissions reductions and modernization of Transco's system. After the moratorium, Transco can propose a surcharge mechanism with agreements from shippers and FERC without a rate case.

The settlement, which includes a 12.5% return on equity for cost-based recourse rates on future infrastructure projects, will not affect Transco's existing or future rate contracts that can exceed 12.5% return on equity, according to the release. If approved, it is anticipated to positively impact its EBITDA for 2020 by roughly $76 million, Williams said.