UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
DATE OF REPORT: September 26, 2000
(Date of the earliest event reported)
Commission File Number 333-88577
NORTHERN BORDER PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
Texas 74-2684967
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1111 South 103rd Street
Omaha, Nebraska 68124-1000
(Address of principal executive (Zip code)
offices)
(402) 398-7700
(Registrant's telephone number, including area code)
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NORTHERN BORDER PIPELINE COMPANY
ITEM 5. Other Events
On September 26, 2000, Northern Border Pipeline filed a
stipulation and agreement that documents the settlement of its
pending rate case. The settlement was reached between Northern
Border Pipeline, the majority of its customers and the FERC staff
and will become effective if and when approved by the FERC. We
anticipate the FERC will act on the settlement in the first
quarter of 2001.
Among the key provisions of the proposed settlement is the
conversion of Northern Border Pipeline's form of tariff from cost
of service to stated rates based on a straight- fixed variable
rate design. Under the existing cost of service tariff, firm
transportation shippers contract to pay for a proportionate share
of the pipeline's cost of service. If the proposed settlement is
approved, shippers will pay stated transportation rates. Under
the straight fixed- variable rate design, approximately 98% of
the payments are attributable to demand charges, based upon
contracted capacity, and 2% to commodity charges based on the
volumes of gas actually transported on the system. On a per unit
basis, the rates under the new tariff are approximately equal to
the previous level. As of June 30, 2000, Northern Border
Pipeline had a reserve for rate refunds of $16.1 million, which
substantially reflects the terms of the settlement.
In the proposed settlement, Northern Border Pipeline,
through November 1, 2003, must credit to its firm customers half
of all revenues received from interruptible transportation
services and firm backhaul transportation services, and
thereafter it will be permitted to retain all of such revenues.
The proposed settlement provides for an annual depreciation rate
on transmission plant in service of 2.25% and resolves
outstanding issues relating to The Chicago Project, with all of
the construction cost of The Chicago Project remaining in its
rate base. Under the proposed settlement, Northern Border
Pipeline will continue to have "rolled-in rates" resulting in
uniform, system-wide mileage based rates. The proposed
settlement provides that neither Northern Border Pipeline nor its
existing customers can seek rate changes until November 1, 2005,
at which time Northern Border Pipeline must file a new rate case.
Northern Border Pipeline will not be permitted to increase rates
if its costs increase, nor will it be required to reduce rates
based on cost savings. Its earnings and cashflow will depend on
its future costs, contracted capacity, the volumes of gas
transported and its ability to recontract capacity at acceptable
rates.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
NORTHERN BORDER PIPELINE COMPANY
(A Texas General Partnership)
Date: October 3, 2000 By: JERRY L. PETERS
Jerry L. Peters
Vice President, Finance and
Treasurer
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