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Gud 00004866 Michael J. Tomsu [email protected] Tel +1.512.542.8527 Fax +1.512.236.3211 October 9, 2020 Via RRC CASES & Courier Ms. Kari French Director, Oversight & Safety Division Railroad Commission of Texas 1701 N. Congress Avenue, 9th Floor Austin, TX 78701 Re: Gas Utilities Docket No. 00004866; Statement of Intent to Increase and Consolidate Gas Utility Rates for Hooks Gas Pipeline, LLC, Texas Gas Pipeline Company, LLC, and 1486 Gas Pipeline, LLC Dear Ms. French: Hooks Gas Pipeline, LLC (“Hooks”), Texas Gas Pipeline Company, LLC (“TGPC”), and 1486 Gas Pipeline, LLC (“1486”) hereby electronically file their Statement of Intent to Increase and Consolidate Gas Utility Rates for Hooks Gas Pipeline, LLC, Texas Gas Pipeline Company, LLC, and 1486 Gas Pipeline, LLC and supporting exhibits (the “Statement of Intent”). In addition to the e-filing, we are providing four physical copies of the Statement of Intent as well as four electronic copies on flash drives for delivery to you via courier. Vinson & Elkins LLP Attorneys at Law 2801 Via Fortuna, Suite 100 Austin Dallas Dubai Houston London New York Austin, TX 78746-7568 Richmond Riyadh San Francisco Tokyo Washington Tel +1.512.542.8400 Fax +1.512.542.8612 velaw.com Ms. Kari French October 9, 2020 Page 2 If you have questions regarding this matter, please feel free to contact the undersigned. Respectfully submitted, Vinson & Elkins LLP Michael J. Tomsu ATTORNEYS FOR HOOKS GAS PIPELINE, LLC, TEXAS GAS PIPELINE COMPANY, LLC, AND 1486 GAS PIPELINE, LLC Enclosures cc: Mark Evarts, RRC Market Oversight Section Director GAS UTILITIES DOCKET NO. 00004866 STATEMENT OF INTENT TO § BEFORE THE INCREASE AND CONSOLIDATE § GAS UTILITY RATES FOR HOOKS § RAILROAD COMMISSION GAS PIPELINE, LLC, 1486 GAS § PIPELINE, LLC, AND TEXAS GAS § OF TEXAS PIPELINE COMPANY, LLC § STATEMENT OF INTENT TO INCREASE AND CONSOLIDATE GAS UTILITY RATES FOR HOOKS GAS PIPELINE, LLC, 1486 GAS PIPELINE, LLC, AND TEXAS GAS PIPELINE COMPANY, LLC Hooks Gas Pipeline, LLC (“Hooks”), 1486 Gas Pipeline, LLC (“1486”), and Texas Gas Pipeline Company, LLC (“TGPC”) (each an “Applicant” and together, “Applicants”), each of which is a “gas utility” under Texas Utilities Code § 101.003(7), jointly file this Statement of Intent, pursuant to Subchapter C of Chapter 104 of the Texas Utilities Code and the rules of the Gas Services Department of the Railroad Commission of Texas (“Commission”). Applicants are affiliated companies that each provide regulated natural gas transportation service in Texas by transporting gas to gas utilities that distribute the gas to the public. Applicants are also affiliates of Texas Gas Utilities Services, Inc. (“Texas Gas”), a separate entity that provides centralized management and operations services to each Applicant. Applicants and Texas Gas are members of the Centric Gas Services, LLC (“Centric”) family of companies. In order to reduce regulatory and administrative complexity and simplify operations, Applicants seek to consolidate their corporate and regulatory structures—including all of their assets and liabilities—into Hooks as the surviving entity. For ease of reference, Applicants will refer to the consolidated transmission pipeline entity as “Consolidated Hooks” and to the proposed 1 transaction as the “TransCo Consolidation.”1 This proposed TransCo Consolidation would establish a system-wide rate and tariff for all customers of Consolidated Hooks. It would reduce the number of regulated entities under Commission‘s original jurisdiction from three (3) to one (1). Accordingly, Applicants propose to simultaneously increase and consolidate their transportation rates into a single system-wide rate governing Consolidated Hooks’ entire system going forward. Applicants developed their proposed rates based on the cost of providing service to all customers served by Applicants. Applicants request that the proposed rate schedule and tariff, attached as Exhibit A to this Statement of Intent and incorporated herein by reference, become effective on November 14, 2020, which is 36 days from the date of this filing. In support of these requests, Applicants respectfully shows as follows: I. INTRODUCTION AND SUMMARY OF THE RATE REQUEST Applicants calculated the revenue requirement for this filing using the system-wide cost of providing service to all customers served by Applicants. The proposed new rate will apply to all of Applicants’ existing or future customers throughout Texas. Applicants’ sole existing customers are (1) an affiliate gas distribution company, and (2) an affiliate marketing company that procures and transports gas for Applicants’ affiliated gas distribution companies.2 For the 12-month period ended June 30, 2020, Applicants’ overall combined annual revenue requirement on a system-wide basis totaled approximately $2.600 million, as adjusted. The total base revenue Applicants 1 Similarly, references to “system-wide” refer to Applicants’ collective systems that would be combined into Consolidated Hooks. 2 These four affiliated gas distribution companies—Universal Natural Gas, LLC d/b/a Universal Natural Gas, Inc., EnerTex NB, LLC, Consumers Gas Company, LLC d/b/a Consumers Gas Company, Inc., and Gas Energy, LLC— have concurrently filed a separate Statement of Intent with the Commission to increase and consolidate their rates in unincorporated areas of Texas. 2 received during the test year from transportation customers, as adjusted, was approximately $1.339 million, leaving a revenue deficiency on a system-wide basis of approximately $1.261 million. Adoption of Applicants’ proposed rates will increase Applicants’ aggregate revenues on a system-wide basis by approximately 94%. Because the proposed rates will increase Applicants’ total aggregate revenues by more than 2.5%, the proposed rate increase constitutes a “major change” in rates as that term is defined by Texas Utilities Code § 104.101. The rate schedule and tariff, attached hereto as Exhibit A to the Rate Filing Package and made a part hereof, evidences the rate changes proposed by Applicants. As part of this rate filing, Applicants propose to consolidate their rates and tariffs into a single system-wide rate and tariff for all transportation customers (both for gas distribution companies and all others). This proposed consolidation and system-wide rate would eliminate the separate transportation rate currently offered by Hooks for the Lake Creek Lateral Pipeline delivery point, and it would also eliminate 1486’s transmission sales customer class. Applicants also request Commission approval of: new depreciation rates for Consolidated Hooks as reflected in the depreciation study conducted by Mr. Dane A. Watson and attached to his testimony included in Exhibit D hereto; and the recovery of reasonable rate case expenses associated with this filing through a surcharge on rates.3 This rate filing will also determine the prudence of Applicants’ invested capital through June 30, 2020, and establish factors to be used in any future interim rate adjustment filing made pursuant to Section 104.301 of the Texas Utilities Code. Finally, Applicants requests a Commission determination that the proposed TransCo Consolidation described in the accompanying Direct Testimony of Mr. Robert S. Barnwell IV 3 The exact amount of rate case expenses will not be known until the case is complete. 3 included in Exhibit D is consistent with the public interest pursuant to Texas Utilities Code § 102.051. Additional proposed revisions to Applicants’ rate schedule and tariff are detailed in Section III.E of this Statement of Intent. II. JURISDICTION Applicants are each a gas utility as that term is defined in §§ 101.003(7) and 121.001 of the Texas Utilities Code. Pursuant to Texas Utilities Code § 102.001(a), the Commission has exclusive original jurisdiction to approve the rates and services of Applicants in transmitting, transporting, delivering or selling natural gas to a gas utility that distributes the gas to the public. Pursuant to Texas Utilities Code § 102.051 et seq., the Commission also has jurisdiction to consider the proposed consolidation transaction, make a public interest finding, and take the effect of the consolidation into account when approving rates. Consistent with such jurisdiction, Applicants propose the rates identified in Exhibit A for service provided by Consolidated Hooks. III. DETAILS OF PROPOSED CHANGES A. Rate Filing Package In addition to this Statement of Intent, Applicants’ Rate Filing Package consists of the following: SOI Exhibit A – Proposed Rate Schedule and Tariff SOI Exhibit B – Proposed Revenue Increase by Class SOI Exhibit C – Average Bill Impact by Class SOI Exhibit D – Direct Testimony SOI Exhibit E – Proposed Notice to Applicants’ Customers SOI Exhibit F – Proposed Protective Order SOI Exhibit G – Cost of Service Schedules SOI Exhibit H – Workpapers 4 B. Test Year Applicants’ proposed cost of service, as set forth in this Statement of Intent and Rate Filing Package, is based on the 12-month period ended June 30, 2020, updated for known changes and conditions that are measurable with reasonable accuracy. C. Effective Date Applicants request that the Commission order the proposed rates to be effective for service provided on and after November 14, 2020, the date that is 36 days after the filing of this Statement of Intent. D. Class and Number of Customers Affected The proposed changes to Applicants’ rates will affect all customers they serve. The table below shows the number of customers by class, as of June 30, 2020, that will
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