Natural Gas Pipeline Company of America (NGPL) and two other interstate pipeline companies have been notified by the Federal Energy Regulatory Commission (FERC) of a separate proceeding against each interstate pipeline company pursuant to section 5 of the natural gas act on November 19, 2009.

The proceeding intends to set the matter for hearing and determine whether NGPL’s current rates, which were approved by the FERC in NGPL’s last rate case settlement, remain just and reasonable. The FERC made no findings in its order as to what would constitute just and reasonable rates or a reasonable return for NGPL.

The proceeding under section 5 of the natural gas act is prospective in nature. Any potential change in rates charged customers by NGPL can only occur after the FERC has issued a final order.

Prior to that, an administrative law judge will preside over an evidentiary hearing and make an initial decision (which the FERC has directed be issued within 47 weeks). The final FERC decision will be based on the record developed before the Administrative Law Judge.

NGPL provides transportation and storage services in accordance with its FERC gas tariff and the rates established in its last rate case settlement, which was approved by the FERC.

As part of the section 5 proceeding, FERC has directed NGPL to file a cost and revenue study within 45 days of the date the order was issued. The substantial work involved in that filing, on November 20, NGPL, together with the other two gas pipeline companies that are part of separate section 5 proceedings, filed a joint motion for a 30-day extension to file the cost and revenue studies. On November 23, the FERC granted the 30-day extension and the cost and revenue study is now due by February 4, 2010.

NGPL provides transportation and storage services in accordance with its FERC Gas Tariff and the rates established in its last rate case settlement, which was approved by the FERC. In that settlement, NGPL and its customers agreed to the currently effective rates and fuel percentages.

Additionally, in that settlement, NGPL, took the substantial risk of capacity de-contracting and under collection of its fuel gas and lost and unaccounted for gas costs.