Feds approve settlement for infra fund-backed company

The Federal Energy Regulatory Commission has a approved an uncontested settlement with Natural Gas Pipeline Company of America to lower its charges for gas supply for the next six years.

The settlement will impact a host of fund managers and institutional investors who have an interst in the US natural gas pipeline operator, including SteelRiver Infrastructure Partners and Brookfield Infrastructure Partners.

Natural Gas Pipeline Company of America (NGPL) agreed to a rate moratorium and decreases in the maximum rates it can charge for its natural gas transportation and storage services, among other measures outlined in the commission’s settlement letter.

The settlement puts to rest all issues the commission brought in its complaint against NGPL in November 2009. The commission said at the time Natural’s service rates were “unjust and unreasonable” and initiated an investigation into the company’s business.

The impact of the settlement was already reflected in the quarterly filing of one of NGPL’s owners, Kinder Morgan Energy Partners. The natural gas pipeline operator, which owns 20 percent of NGPL, said in a May filing that it would mark down the carrying value of its equity stake by $430 million due to the settlement.

The mark-down could impact Kinder Morgan Energy Partners’ backers, which include funds managed by Goldman Sachs, Highstar, The Carlyle Group and Riverstone Holdings, according to a Kinder Morgan regulatory filing.

The settlement will also impact a host of fund managers and institutional investors who own the remaining 80 percent of NGPL through Myria Holdings, a holding company which purchased 80 percent of NGPL from Kinder Morgan in February 2008.

Brookfield Infrastructure Partners owns approximately an 11 percent interest in NGPL through its 40 percent ownership of Prime Infrastructure, the Sydney Stock Exchange-listed infrastructure fund formerly managed by Babcock & Brown. Prime, in turn, is a 26.4 percent investor in NGPL via Myria Holdings, according to a press release.

Another former Babcock & Brown-managed fund, SteelRiver Infrastructure Partners, is also likely to be impacted by the regulatory proceeding. SteelRiver is an investor in Myria Holdings.

Other Myria investors include Dutch pension fund Stichting Pensioenfonds Zorg en Welzijn and Canadian pension fund manager Public Sector Pension Investment Board, according to an NGPL press release.