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:
March
24,
2006
(Date
of Earliest
Event Reported: March 20, 2006)
EL
PASO
NATURAL GAS COMPANY
(Exact
name of
Registrant as specified in its charter)
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Delaware
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1-2700
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74-0608280
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(State
or
other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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El
Paso
Building
1001
Louisiana
Street
Houston,
Texas
77002
(Address
of
principal executive offices) (Zip Code)
Registrant’s
telephone number, including area code (713) 420-2600
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
8.01 Other Information
In
June 2005, we
filed a rate case with the Federal Energy Regulatory Commission (FERC)
proposing
an increase in transportation revenues of 10.6% over our previously effective
rates and also proposing new transportation services to our customers.
The FERC
issued two orders this week that address the applicability of a rate limitation
from our prior 1996 rate case settlement, as well as the new proposed services.
In
its first order
issued on March 20, the FERC found, based upon the evidence currently before
it,
that while the rate limitation in the 1996 settlement applies to the
continuation of firm services for certain contracts that were in effect
as of
December 31, 1995, the limitation ends when those contracts expire or are
terminated. The FERC also held that one part of the rate limitation does
not
apply to (a) our new services; (b) transportation services provided through
the
use of capacity created by system expansions after 1995, including capacity
created by our Line 2000 or the subsequent Power-up of Line 2000; or (c)
interruptible services, backhaul services, or services such as storage
or park
and loan. The other part of the rate limitation would only be applicable
if we
had less than 4000 MMcf/day of capacity contracted at maximum rates.
The
FERC also held
we will be permitted (a) to provide further evidence or support at the
hearing
in our rate case to show that retaining the rate limitation is contrary
to the
public interest and (b) to propose rates that would re-allocate the costs
of the
rate-restricted capacity to other shippers during the upcoming hearing
for our
current rate proceeding. The FERC also held that we can seek a discount
adjustment to rates by demonstrating we meet the FERC’s requirements for such an
adjustment.
In
its second order
issued on March 23, the FERC generally found that our proposed new services
are
just and reasonable. While the FERC required us to modify certain of our
proposals, it approved penalty provisions designed to encourage customers
to
contract appropriately for the services they need.
While
the impact of
these two decisions cannot be measured at this time, if we are permitted
by the
FERC to reallocate the costs of service associated with the rate-restricted
capacity to other shippers we anticipate the revenue impact of the rate
limitation order will be minimal. We will know more about the specific
effects
of both of these orders after the upcoming hearing in our current rate
proceeding and following the selection of new services by our customers
at rates
which are yet to be determined.
In
the meantime, we
remain in discussions with our customers in hopes of settling our pending
rate
case.
SIGNATURES
Pursuant
to the
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto
duly
authorized.
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EL
PASO NATURAL GAS COMPANY
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By:
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/s/
John
R. Sult
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John
R. Sult
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Senior
Vice President, Chief Financial Officer and
Controller
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(Principal
Financial and Accounting
Officer)
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Dated:
March 24, 2006