Florida Gas Transmission Company; Notice of Filing of Report of Cash-Out Activity

Take notice that on December 22, 2000 Florida Gas Transmission Company (FGT) tendered for filing schedules detailing certain information related to the Cash-Out mechanism from October 1, 1999 through September 30, 2000. No tariff changes are proposed therein.

FGT states that it has experienced a revenue deficiency of $882,959 in the current Settlement Period. A total of $515,000 of this deficiency is related to the Cash-Out Mechanism. As shown on Schedule A, page 2 of 3, lines 1-14, even though the price paid by FGT was less than the price received by FGT for each month in the Settlement Period, the weighted average price paid by FGT for the Settlement Period was $3.1184 while the weighted average price received by FGT was $2.8874. This was a result of shippers generally overburning during periods of lower prices, thus using FGT as a source of supply, and underburning during periods of higher prices, when FGT's cash out indices made FGT a relatively attractive market for gas.

Also, FGT states that the revenue deficiency attributable to the Cash-Out Mechanism, there is a revenue deficiency of $367,959 associated with the Fuel Resolution Mechanism as shown on Schedule A, page 1, lines 7-12. FGT believes this deficiency is primarily attributable to a $1.47 negative differential in the weighted average prices used in the deferred fuel account balances ($3.903/MMBtu paid for over retained fuel versus $2.437/MMBtu received for under retained fuel, as detailed on Schedule A, page 2 of 3, lines 15 through 28). FGT does not believe this deficiency can be ascribed to any “gaming” behavior on the part of shippers, but is instead reflective of the relationship between gas price levels and throughput (and the resulting fuel use) on FGT's system. FGT's fuel reimbursement percentage is based on average fuel usage during prior seasonal periods. Therefore, during periods of relatively high gas prices, the reduced throughput and fuel usage may result in an over recovery of fuel by FGT, which is then valued at the high gas price which led to the reduced throughput and over recovery of fuel. Conversely, low gas prices encourage high throughput and fuel consumption, resulting in under recovered fuel, which is valued at the low gas prices at least partially responsible for increased throughput and under recovery of fuel. FGT believes the significant under recovery of fuel during the production months of December 1999 and January 2000 is attributable to higher than projected throughput as a result of low gas prices relative to alternate fuels. The negative impact of this phenomenon in the annual true-up system balancing costs is directly offset, however, in the calculation of the unit fuel surcharges through which shippers pay lower prices for undercollections by FGT and receive higher prices for overcollections. FGT has discussed this phenomenon with shippers at previous Operating Committee meetings and believe further discussions are warranted in light of the current data.

After further analysis by FGT and further discussions with its shippers of the issues reflected in the results of this Settlement Period, FGT may propose prospective tariff changes at a future time.

Copied of this filing are on file with the Commission and are available for public inspections.

Any person desiring to protest said filing should file a protest with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with section 385.211 of the Commission's Rules and Regulations. All such protests must be filed in accordance with section 154.210 of the Commission's Regulations. Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceedings. Copies of this filing are on file with the Commission and are available for public inspection in the Public Reference Room. This filing may be viewed on the web at http://www.ferc.fed.us/online/rims.htm (call 202-208-2222) for assistance). Comments and protests may be filed electronically via the internet in lieu of paper. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's web site at http://www.ferc.fed.us/efi/doorbell.htm.