Texas Gas Transmission
Keeping the Heat on Beale Street
Tom Hodge, left, Texas Gas district manager at Lake Cormorant, Mississippi, joins Bill Crawford, president of Memphis Light, Gas and Water, on Beale Street. A national historic landmark, Beale Street is the acclaimed home of the blues and birthplace of rock 'n' roll. The headquarters for Memphis Light, Gas and Water, a major Texas Gas customer, is just steps from Beale.
Texas Gas Transmission's 6,100-mile system transports natural gas from the Gulf Coast, east Texas and north Louisiana to markets including Memphis, Cincinnati, Louisville and Indianapolis. System design capacity is 2.6 Bcfd; seasonal storage capacity is 176.7 Bcf. Texas Gas was not part of Williams prior to 1995.
Providing top-quality service to local distribution company customers in Memphis, Cincinnati, Louisville, Indianapolis and numerous other markets is paramount at Texas Gas. And it shows. A national independent survey ranked us No. 1 in customer service and satisfaction. That was nice, but receiving appreciative responses from our customers is even better. As one wrote, "When it comes to customer service, there is no other pipeline like Texas Gas. If I could pattern my company after another, it would be Texas Gas." Now, that's hard to top.
| Selected Financial Data (dollars in millions) | 1995** | ||
| Revenues | $276.30 | ||
| Operating profit | 64 | ||
| Identifiable assets* | 1,151.80 | ||
| Operating profit as % of average assets | 4.60% | ||
| Capital expenditures | 32.1 | ||
| Depreciation | 38.9 | ||
| Operating Statistics | |||
| Throughput (TBtu) | 653 | ||
| Employees (December 31) | 990 | ||
| *Defined in Note 16 of the Notes to Consolidated Financial Statements, page 53. | |||
| **These amounts include Texas Gas Transmission's operations and statistics since January 18, 1995. | |||
Key Points
- We entered into a rate case settlement involving virtually all of our customers, with the new rates going into effect in April 1995. FERC approval of the settlement is expected in early 1996. The rate case settlement, coupled with savings resulting from restructuring following our merger with Williams, favorably impacted 1995 earnings.
- Maintained all firm transportation service contracts in 1995 without major renegotiation. More than half of our firm-transportation contracts are due to expire by November 1998. However, we expect most, if not all, of these to be renewed. Proliferation of unbundled services on the Texas Gas system and strong competition in our service area suggest shorter-term contracts in the future. In response to this, we are developing strategies such as new storage services and other value-added products.
- Settled all recovery issues concerning gas-supply realignment costs involved in restructuring under FERC Order 636. At year-end 1995, we had recovered $44 million of the settlement; we expect to recover an additional $23 million in 1996 and 1997.
- We do not anticipate filing a rate increase in 1996. Our regulatory schedule appears to be the clearest in recent history. Our competitive rates, coupled with rate stability, should help us maintain throughput and pursue additional business.
- 1996 results should improve significantly because of higher rates resulting from the 1995 rate case settlement and lower operating expenses. We are concentrating on reducing expenses, remarketing unused pipeline capacity and introducing new services, while maintaining unsurpassed customer service. A recent nationwide, independent survey of pipeline customers ranks Texas Gas No. 1 in customer service and satisfaction. In 1996, we will provide customers with quicker and easier access to scheduling and nominations via an online nominations system.
