Excessive Rates of Return

AGIA darling TransCanada has some explaining to do - The Federal Energy Regulatory Commission (FERC) is investigating (LINK-From Reuters):

FERC said the alleged higher rates of return were as follows:

* Great Lakes' 2,100-mile system transports natural gas through Minnesota, Wisconsin and Michigan. FERC staff calculated Great Lakes' total adjusted 2008 revenue to be US$290-million, which appears to yield an estimated earned return of 20.83%.

*Northern Natural Gas' 15,141-mile system extends from the Permian Basin in Texas to the upper Midwest. FERC staff calculated Northern's total adjusted 2008 revenue to be US$726-million, which appears to yield an estimated earned return on equity of 24.36%.

* Natural Gas Pipeline's 9,700-mile system consists primarily of two interconnected transmission pipelines, the Amarillo and Gulf Coast lines, which terminate in Chicago. FERC staff calculated Natural Gas' total adjusted 2008 revenue to be US$656-million, which appears to yield an estimated earned return of 24.5%.

FERC ordered that an administrative law judge convene within 30 days a prehearing conference to clarify the positions of the pipeline companies and the agency and consider any procedural issues and discovery dates necessary for the hearing.

Natural Gas Pipeline, FERC said, appears to be over-recovering fuel and lost and unaccounted for gas from its customers.

FERC said its staff calculated an over-recovery of 30.9 million dekatherms of gas.

Keep in mind that FERC (not the State of Alaska) will ultimately allow or disallow construction of the Alaska Gas Pipeline.

Take a look at those rates of return. Wow - lets' hope Alaska works a better deal - Oh wait the TransCanada money pipeline is already flowing out from Alaska.