Brief On Exceptions of Commission Staff Counsel under RP10-1398.

FEDERAL ENERGY REGULATORY COMMISSION OFFICE OF ADMINISTRATIVE LITIGATION WASHINGTON, D.C. 20426 August 7, 2012 By Electronic Filing The Honorable Kimberly D. Bose, Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, D.C. 20426 Re: El Paso Natural Gas Company Docket No. RP10-1398-000 Dear Madam Secretary: Attached for electronic filing is the Brief on Exceptions of the Commission Trial Staff in the captioned proceeding. Please contact the undersigned Trial Staff counsel at (202) 502-8783, if you have any questions. Respectfully submitted, /s/ Hollis J. Alpert Hollis J. Alpert Commission Trial Staff Counsel /s/ William J. Collins William J. Collins Commission Trial Staff Counsel Enclosure cc: The Honorable H. Peter Young Presiding Administrative Law Judge All Parties on RP10-1398 Service List UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION El Paso Natural Gas Co. ) Docket No. RP10-1398-000 BRIEF ON EXCEPTIONS OF THE COMMISSION TRIAL STAFF Hollis J. Alpert William J. Collins Commission Staff Counsel Washington, D.C. August 7, 2012 Docket No. RP10-1398-000 ii TABLE OF CONTENTS I. INTRODUCTION AND STATEMENT OF THE CASE.................................. 1 II. LIST OF EXCEPTIONS .................................................................................. 10 III. POLICY CONSIDERATIONS WARRANTING FULL COMMISSION REVIEW ........................................................................................................... 12 IV. SUMMARY OF ARGUMENT ........................................................................ 14 V. ARGUMENT.................................................................................................... 19 A. Return and Capital Structure. ................................................................ 19 1. Credit rating agencies reports are used and relied upon by investors and should be accorded significant weight in assessing EPNGs risk................................................................................................... 22 2. The record shows that EPNGs financial risk is not highly unusual or anomalous. .................................................................................. 33 3. The record shows that EPNGs business risk is not highly unusual or anomalous. .................................................................................. 34 a. The average remaining life of EPNGs contracts does not render EPNGs business risks highly unusual or anomalous. ............. 36 b. EPNGs declining throughput does not render EPNGs business risks highly unusual or anomalous. .......................................... 38 c. EPNGs gas supply and fuel costs do not render EPNGs business risks highly unusual or anomalous............................. 42 d. EPNGs regulatory risks in conjunction with its competitive risks do not render EPNGs business risks highly unusual or anomalous..........................................................