USE OF U.S. ECONOMY UPHELD FOR EQUITY CALCULATIONS
The Federal Energy Regulatory Commission, in seven rate cases involving interstate natural gas pipelines, has upheld a new policy on the appropriate long-term growth rate to be used in computing their return on equity. Five of the pipelines contested FERC's new policy, as announced in Opinion 396-b.
The Commission defended the rate-setting method, but decided to allow the pipelines a chance to prove why the rules should not apply to them. The contesting pipelines are: Trailblazer Pipeline Co. (Docket No. rp97-408-002); CNG Transmission Co. (Docket Nos rp97-406-001 and rp96-144-001); Equitrans, LP (Docket Nos. rp97-346-003 and tm97-324-001); Koch Gateway Pipeline Co., (Docket No. rp97-373-001); and Wyoming Interstate Co., Ltd. (Docket No. rp97-375-001).
On June 11, the FERC had applied the long-term growth rate for the U.S. economy, as measured by the gross domestic product, to use with the discounted cash flow method to set rate of return on equity for Northwest Pipeline Corp. (Opinion No. 396-b, Docket Nos. rp93-5-025 and rp93-96-005) and Williston Basin Interstate Pipeline Co. (Docket Nos. rp92-163-007 et al.). The Commission used an average of GDP projections from well-known forecasting firms: DRI/McGraw Hill's Energy Review and the DOE's Energy Information Administration's Annual Energy Outlook.
FERC Chair Hoecker said he plans to call a mid-winter conference to discuss the relationship between the evolving gas business and financial markets, including Wall Street.
FERC APPROVES AMEREN MERGER
The FERC has approved the merger of Union Electric Co. and Central Illinois Public Service Co., a subsidiary of CIPSCO, to form a new holding company, Ameren Corp. (Docket Nos. ec96-7-000 et al.).