The Federal Energy Regulatory Commission (FERC) has approved a settlement involving Transwestern Pipeline Co. (TP) that puts both the pipeline and its customers at risk for relinquished pipeline capacity, and ties future rate increase to inflation. The settlement puts TP and its customers at risk for the 457 million cubic feet per day (Mmcf/day) of capacity that Southern California Gas Co. (SCG) will give up starting November 1, 1996. Firm customers will provide a short-term subsidy through a cost-sharing formula for the first five years. After that period, TP will assume total responsibility for all unsubscribed capacity.
Instead of future rate proceedings, a mechanism based on a government inflation-measuring index will become effective on November 1, 1996. A base rate will be set, and future increases will be based on 60 percent of the inflation rate, with a floor increase of 2 percent a year and a maximum of 5 percent from the current base.
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