WILLIAMSVILLE, N.Y., November 17 /CNW/ - National Fuel Gas Supply
Corporation ("Supply Corporation"), the wholly-owned interstate pipeline
subsidiary of National Fuel Gas Company (NYSE: NFG) ("the Company"), today
announced that it has filed at the Federal Energy Regulatory Commission
("FERC") a stipulation and agreement as an offer of settlement of a complaint
filed in April 2006 under Sections 5(a) and 13 of the Natural Gas Act. The
filed stipulation states that the settlement is supported by all the parties
who brought the complaint (the Public Service Commission of the State of New
York, the Pennsylvania Public Utility Commission and the Pennsylvania Office
of Consumer Advocate) and several other active parties.
The filing states that Supply Corporation believes the proposed
settlement will be uncontested, and asks FERC to approve it without
modification after a comment period that will run through December 18, 2006.
The terms of the proposed settlement would be effective following approval by
FERC. The settlement makes no change to Supply Corporation's rates except for
an agreed-upon change in its gas retention allowances. Other features of the
settlement include:
-- All participants have reached a negotiated resolution of all the
issues raised or which could have been raised in the proceeding.
-- Supply Corporation's gas retention allowances on transportation
services will decrease from 2% to 1.4%, amounting to a reduction in excess
"efficiency gas" quantities of approximately 1,500,000 dekatherms ("dth") per
year.(x) With respect to the period of time between December 1, 2006 and the
effective date of the settlement, Supply Corporation will refund the value of
the additional gas retained under its current transportation retention
allowances (i.e., the difference between 2% and 1.4%). Supply Corporation is
authorized to continue to sell efficiency gas and retain the proceeds.
-- After a five-year general rate case moratorium, Supply Corporation
will make a rate case filing to be effective December 1, 2011.
-- Supply Corporation's annual depreciation rate for transmission plant
will decrease to 2.9%, and its annual depreciation rate for storage plant will
decrease to 2.23%, which will decrease annual depreciation expense by about
$5.63 million.(x)
-- Supply Corporation's rate allowance for post-retirement medical
expenses will increase from about $4.7 million per year to $11 million per
year, including the five-year amortization of a related regulatory asset that
had built up to approximately $12.43 million since a previous rate settlement.
This increase in rate allowance will be an increase in annual expense. The
entire rate allowance will continue to be set aside in designated funds for
the sole purpose of paying Supply Corporation's post-retirement medical
expenses. Depending on actual post-retirement medical expense going forward, a
new regulatory asset or liability will be created over the next five years to
be recovered or credited in the next rate case.
-- Supply Corporation's tariff provisions on discounting gas retention
allowances will be amended so as to be consistent with FERC's current policy
limiting "fuel discounts."
The earnings guidance for the 2007 Fiscal Year included in the Company's
November 9, 2006 earnings report took into account the expected impact of this
settlement and, therefore, no changes to that earnings guidance are necessary
as a result of this filing.
Supply Corporation comprises the largest portion of the Pipeline and
Storage segment of National Fuel Gas Company. The operations of Empire State
Pipeline are also part of National Fuel Gas Company's Pipeline and Storage
segment, but Empire State Pipeline was not cited in these pleadings. Supply
Corporation owns and operates 2,972 miles of natural gas pipelines and 32
natural gas storage fields, including four that are co-owned with
non-affiliated companies.
National Fuel Gas Company is an integrated energy company with $3.7
billion in assets comprised of the following five operating segments: Utility,
Pipeline and Storage, Exploration and Production, Energy Marketing, and
Timber. Additional information about National Fuel Gas Company is available on
its Internet Web site: http://www.nationalfuelgas.com or through its investor
information service at 1-800-334-2188.
(x) - Certain statements contained herein, including those which are
designated with an asterisk ("(x)") and those which use words such as
"anticipates," "estimates," "expects," "intends," "plans," "predicts,"
"projects," and similar expressions, are "forward-looking statements" as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve risks and uncertainties which could cause
actual results or outcomes to differ materially from those expressed in the
forward-looking statements. The Company's expectations, beliefs and
projections contained herein are expressed in good faith and are believed to
have a reasonable basis, but there can be no assurance that such expectations,
beliefs or projections will result or be achieved or accomplished. In addition
to other factors, the following are important factors that could cause actual
results to differ materially from those discussed in the forward-looking
statements: changes in laws and regulations to which the Company is subject,
including changes in tax, environmental, safety and employment laws and
regulations; changes in economic conditions, including economic disruptions
caused by terrorist activities, acts of war or major accidents; changes in the
availability and/or price of natural gas or oil; inability to obtain new
customers or retain existing ones; governmental/regulatory actions,
initiatives and proceedings, including those involving acquisitions,
financings, rate cases (which address, among other things, allowed rates of
return, rate design and retained gas), affiliate relationships, industry
structure, franchise renewal, and environmental/safety requirements;
significant changes in tax rates or policies or in rates of inflation or
interest; or changes in accounting principles or the application of such
principles to the Company. The Company disclaims any obligation to update any
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
