NGPC TOP ACCORD APPROACHES $600 MILLION

June 10, 1991

Natural Gas Pipeline Co. of America (NGPC) has reached a comprehensive settlement with all its utility customers to recover about $582.9 million plus interest in take or pay (TOP) contract reformation costs. The settlement resolves all issues of NGPC's transition costs. Those costs were incurred as a result of buying out or buying down producer supply contracts in the pipeline's transition to a transporter role from a merchant function under federal pipeline access deregulation efforts.

The settlement resolves all issues of NGPC's transition costs. Those costs were incurred as a result of buying out or buying down producer supply contracts in the pipeline's transition to a transporter role from a merchant function under federal pipeline access deregulation efforts.

NGPC had sought to pass through about $1.2 billion in TOP expenses in its original submission to the Federal Energy Regulatory Commission for recovery of transition costs in November 1990.

Last December it began collections under that procedure, calling for a 50-50 cost sharing with customers. Several parties objected and requested rehearing on several points of the plan, leading to the current settlement proposal.

The proposed settlement, filed last week, awaits FERC approval.

In addition, NPGC soon will file with FERC for an extension of its gas inventory demand charge (GIDC) to 5 years from the 2 years FERC approved last fall, as it requested and its customers approved.

NGPC said the extension filing will provide a forum for issues related to comparability of service as well as prevent buildup of future TOP exposure.

NGPC and its parent MidCon Corp., Lombard, Ill., are units of Occidental Petroleum Corp.

SETTLEMENT DETAILS

Under the proposed settlement NGPC will:

Recover through direct billing almost $564.1 million in transition costs.
Be reimbursed for 100% of all transition costs paid to upstream pipeline suppliers.
Make its firm transportation service more comparable with firm sales by increasing flexibility of certain firm transportation services.
Defer collection of another $11.8 million for inclusion as a cost of service item in NGPC's next rate case.
Have a 1 year extension to file its next rate case, to Dec. 1, 1992, from Dec. 1, 1991. The earlier date had been part of NPGC's GIDC settlement approved in late 1990.

Under the agreement, all appeals and requests for rehearing are withdrawn, and NGPC won't seek to recover the remaining 50% of jurisdiction transition costs not covered by the settlement.