FINNEGAN, CONRAD & PETERSON L.C.

Kansas Ad Valorem Tax Recovery
Iowa

Roughly 20 years ago, Kansas natural gas producers included severance taxes in the cost of the natural gas that they sold to interstate pipelines.  Those charges were challenged and ultimately resulted in court determinations that the inclusion of these taxes violated the maximum lawful price ceiling.  There ensued a significant amount of litigation culminating in United States Supreme Court confirmation of the violation.

Upon remand to FERC, each of the interstate pipelines that had purchased gas engaged in a process of collecting the overcharges from the various producers and refunding that money, as it was collected, to the local distribution companies that had purchased the gas.  Obviously this process was strenuously resisted by the producers.

Finnegan, Conrad & Peterson is representing a group of customers in Iowa who were customers of the local distribution companies during this period but are now transportation customers.  It was first necessary to establish their entitlement to their share of these refunds.  Then it was necessary to address the largest interstate pipeline serving the respective LDC's, Northern Natural Gas.

Successful negotiations have reached pending solutions of both problems.  A settlement was filed and recently approved at the FERC level for Northern.  Earlier decisions from the Iowa Utility Board and negotiations with the local distribution companies allowed these customers the choice of using their current transportation usage, or provable usage from the actual period of the overcharges.

At present, the matter is awaiting finalization at FERC.  Following the final refunds by Northern, the LDC refunds should begin with the entire process being completed by first or second quarter of 2001.  The federal settlement provides for some residual recovery by Northern on a shared basis with the customers.  For further information regarding the current status of this matter, please contact us.

Last Updated 05/17/06