TULSA, Okla.--(BUSINESS WIRE)--Williams (NYSE: WMB) announced today that it has filed a comprehensive Stipulation and Agreement (“Settlement”) with the Federal Energy Regulatory Commission (“FERC”), which would settle all aspects of the Transcontinental Gas Pipe Line Company, LLC (“Transco”) rate case currently pending before the FERC. The company anticipates FERC approval of the Settlement during the second quarter of 2020. The Settlement provides rate certainty for customers while allowing Transco to recover its costs, safely and reliably operate its infrastructure, and expand to meet the needs of its customers.
Including revenue impacts and other related accounting entries, Williams expects approximately $76 million favorable impact to EBITDA in 2020 versus 2018 (the last full year with no rate case effect), which was included in 2020 guidance provided at Williams’ Analyst Day on Dec. 5, 2019.
“Overall, we are pleased with the outcome of the Settlement and very appreciative of our customers’ interactions throughout the process,” said Micheal Dunn, Executive Vice President and Chief Operating Officer of Williams. “The Settlement provides a fair return to Transco on its base service and also provides value to shippers, as evidenced by the recent remarketing of available Transco capacity that resulted in a new 82-year commitment with the successful shipper.”
The Transco rate case was initiated in August 2018 to comply with a filing obligation under a prior settlement and to recover costs associated with increased capital expenditures and operations and maintenance expenses. As part of the Settlement, Transco and the interveners agreed to a comprehensive “black box” resolution for the cost of service, rate design, cost classification and allocation to achieve an acceptable outcome for all parties. While the Settlement includes a 12.5% ROE for cost-based recourse rates offered on future infrastructure expansions projects, the Settlement does not impact Transco’s existing negotiated rate contracts, which make up 51% of 2019 revenue, or Transco’s ability to offer negotiated rate contracts for future infrastructure expansion projects that can exceed 12.5% return on equity.
Under the terms of the Settlement, Transco and the parties have agreed to a rate moratorium through Aug. 31, 2021. In addition, Transco has agreed to file a new rate case no later than Aug. 30, 2024. The Settlement also provides that following implementation of the Settlement, a Technical Working Group comprised of shippers and Williams representatives will address, among other things, emissions reductions and modernization on the Transco system, and Transco can propose a surcharge mechanism with shipper and FERC agreement without a rate case after the moratorium.
Williams recognizes the important role natural gas plays in addressing environmental concerns regarding air quality and climate change, particularly when it comes to displacing or providing alternatives to more polluting fuels. Natural gas is a flexible, lower-emission fuel compared to other hydrocarbons such as coal or heating oil. And, because the U.S. has an abundant supply of natural gas, using this local, cleaner resource has significantly reduced U.S. emissions. As one of the nation’s largest gatherers, processors and transporters of natural gas, Williams plays a critical role in bringing this clean and affordable resource to electric generation, industry and homes, resulting in cleaner air.
Williams (NYSE: WMB) is committed to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy. Headquartered in Tulsa, Oklahoma, Williams is an industry-leading, investment grade C-Corp with operations across the natural gas value chain including gathering, processing, interstate transportation and storage of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams connects the best supplies with the growing demand for clean energy. Williams owns and operates more than 30,000 miles of pipelines system wide – including Transco, the nation’s largest volume and fastest growing pipeline – and handles approximately 30 percent of the natural gas in the United States that is used every day for clean-power generation, heating and industrial use. www.williams.com
Portions of this document may constitute “forward-looking statements” as defined by federal law. Although the company believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Any such statements are made in reliance on the “safe harbor” protections provided under the Private Securities Reform Act of 1995. Additional information about issues that could lead to material changes in performance is contained in the company’s annual and quarterly reports filed with the Securities and Exchange Commission.