FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 7, 1994
TRANSCO ENERGY COMPANY
(exact name of registrant as specified in charter)
Delaware 1-7513 74-1758039
(State or other (Commission (IRS
Employer
jurisidiction of File Number)
Identification No.)
Incorporation)
2800 Post Oak Boulevard, Houston, Texas 77056
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 439-2000
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Item 5. Other Events.
Transco Energy Company (TEC) and Transcontinental Gas Pipe Line
Corporation (TGPL), an indirect wholly owned subsidiary of TEC, along with
pipeline units of The Coastal Corporation, MidCon Corp. and Tenneco Inc.
announced that each have signed settlement agreements to resolve
litigation with Dakota Gasification Company (Dakota) and the Department of
Energy (DOE) related to their respective contracts, signed in 1982, to
purchase gas from the Great Plains Gasification Plant. The settlements
are subject to the approval of the Federal Energy Regulatory Commission
(FERC).
Located in Beulah, N.D., Dakota's plant produces synthetic natural
gas. Major disputes were based on the price to be paid by the pipelines
for the synthetic gas and the quantity of gas to be taken by the
pipelines.
The settlement agreements amend the price and quantity provisions of
the existing gas purchase agreements between the pipelines and Dakota.
Upon final non-appealable approval by FERC, the amended purchase
agreements provide for market-based pricing with monthly demand charges
payable for seven years. The demand charges to be paid by the four
pipelines combined will total $6 million per month. TGPL's share of these
demand charges is $1.5 million per month and is based on TGPL's purchase
agreement representing 25% of the plant's historical sales. Until final
approval of the settlements, each pipeline will pay $3.70 per million Btu
(MMBtu) for gas delivered from the plant. The court in which this
litigation is pending has stayed the litigation pending review of the
settlements by the FERC and once the necessary regulatory approvals are
obtained, the litigation will continue to be stayed until certain payments
under the settlement agreements have been made.
TGPL's settlement agreement is subject to a FERC ruling that TGPL's
existing authority to recover in rates certain costs related to the
purchase and transportation of gas produced by Dakota will pertain to gas
purchase and transportation costs TGPL will pay Dakota under the terms of
the settlement. In the event that the necessary regulatory approvals of
the settlement agreements are not obtained, TEC and TGPL intend to
vigorously defend the suit.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
TRANSCO ENERGY COMPANY
(Registrant)
By: /s/ Larry J. Dagley
Larry J. Dagley, Senior Vice President,
Chief Financial Officer and Controller
(Principal Financial Officer)
Dated: April 14, 1994
