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GTN will place new rates into effect, subject to refund, on January 1, 2007. GTN had hoped to be well into settlement discussions by now, but the path that this case has taken will not provide for such opportunities until after the new rates take effect. The new recourse rate for annual long-term firm service is about 70 percent higher than our current rate, and the brief information below may help you plan your business accordingly. This letter does not set forth all the changes that will go into effect on January 1, but rather highlights some of the more important changes that you might want to pay particular attention to as we approach the New Year. We are waiting for an order from FERC regarding the technical conference held September 26-27, and it is possible that the order, if issued prior to January 1, 2007, will alter what you see below.
Daily rates : GTN will convert from monthly rates to daily rates. The tariff sheets will look different, but this change has little practical impact on shippers. I have attached a revised summary rate sheet, and it has also been posted on our website.
Long-term firm transportation service (including capacity release) : GTN's new recourse rate for long-term firm service will go into effect on January 1, 2007, subject to refund and based upon the ultimate outcome of this proceeding. The reservation charge of those contracts with fixed-rate discounts will be unaffected by changes occurring January 1, but the delivery charge will increase to the level reflected in GTN's general rate filing. Contracts with reservation charges discounted by a percentage to the recourse rate will see a proportionate increase in reservation rates.
In the event of a curtailment of firm service, service priority rights will be allocated pro rata regardless of rate just as it is done today. Short-term firm transportation service : GTN will implement flexible service rates that are capped at two-and-one-half times the maximum recourse rate for annual long-term firm service. The reservation components of current fixed-rate discounts are unaffected by this change, but the delivery charge will increase to the level reflected in GTN's general rate filing.
Interruptible transportation service : GTN will not implement market-based rates for IT service on the Kingsgate-to-Malin path until such time as the Commission approves market-based rates.
GTN will implement flexible-service rates on all IT paths (including backhauls) that are capped at two-and-one-half times the maximum recourse rate for annual long-term firm service. Blanket discounts posted on GTN's website for primary paths are unaffected by this change. For other paths, the new maximum flexible service rate will be in effect unless otherwise negotiated with your account manager or if GTN adds a blanket discount to its website posting that is specific to a particular path.
In addition, the current floor rate for IT discounts on paths to Malin as stipulated by our last Settlement [1] will be removed.
Finally, in the event of a curtailment of interruptible transportation, service priority rights will be allocated via economic dispatch, just as it is done today.
Parking and lending service : The maximum rate for both parking and lending services will increase to $0.353377 per Dth/day, but we expect to discount these services to meet competition. Current negotiated-rate parking contracts are unaffected by this change.
Fuel : GTN will not implement roll-in of incremental fuel until such time as the Commission approves it, which means that incremental fuel rates will continue to apply to certain shippers.
Credit : Consistent with the rate increase, credit assurances for non-creditworthy shippers will also increase. If your credit assurances are affected, your account manager or Ken Nichols , GTN's director of credit, will contact your company regarding your new requirement this week. Increases in assurances are due to GTN by January 1, 2007 .
Some of these changes are significant. Your account manager is versed in the new tariffs and can help you make sure you are ready to do business on January 1. We look forward to working with you in the New Year.
Best Regards,
Leslie
[1] Refer to Article III, paragraph 4, of GTN's March 21, 1996 Stipulation and Agreement in Docket Nos. RP94-149-000, et al ., which states that the IT floor shall remain in effect until the termination of Period II rates. Article III, paragraph 1 provides that Period II rates shall be effective until superseded by rates made effective in a subsequent general rate proceeding. |
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