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Northern Natural slams FERC for refusing to drop rate proceeding

Northern Natural Gas Co. criticized the Federal Energy Regulatory Commission for not halting a Natural Gas Act Section 5 rate proceeding and instead moving on with an order that accepted and suspended certain tariff records and set a hearing and technical conference.

"After more than six months of consideration, the Federal Energy Regulatory Commission conceded that it significantly miscalculated Northern Natural Gas' rate of return when it initiated a Section 5 rate investigation against Northern in January 2019," the company said in an Aug. 2 email statement. "Although the commission conceded Northern's point and accepted Northern's stated rate of return, they failed to take the next logical step — to grant Northern's motion to terminate the Section 5 proceeding."

Northern said it initiated a Section 4 rate case after the commission decided not to drop the Section 5 investigation. The Section 4 rate case includes a rate increase of 91% for market area transportation, which is linked to Northern's investment in pipeline maintenance and modernization and to updates in depreciation rates. Northern said it had been willing to defer rate recovery for at least another year.

The Section 4 rate case is Northern's first rate case since 2004, Northern said. "Northern is proud that we have stayed out of a rate case while continuing to invest in our infrastructure," Laura Demman, vice president of customer service and business development, said in the statement. "In 15 years, we have doubled our rate base while keeping rates stable and providing industry-leading customer satisfaction."

On July 31, FERC issued an order that accepted and suspended certain tariff records, established a hearing and technical conference on rates, and rejected one tariff proposal. The commission said, despite its mistake in not deducting the correct amount of operational gas sales that led to an incorrect return on equity, an error that Northern pointed out, the evidence still supported its decision to proceed with the rate investigation.

The commission said it would leave the decision on whether to consolidate the Section 5 proceeding with Northern Natural Gas' Section 4 proceeding up to the discretion of the chief administrative law judge. (FERC dockets RP19-1353 and RP19-59)

On Jan. 17, FERC launched investigations and ordered hearings to look at the transportation rates of three interstate natural gas companies, one of which was Northern Natural Gas, to determine if the companies have been charging unreasonable rates. The other two companies involved were Panhandle Eastern Pipe Line Co. LP and Bear Creek Storage Co. The commission instructed each company to file a cost and revenue study for its latest 12-month period within 75 days of the order issuance.