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A potential settlement could be close in the state Public Service Commission’s rate case with National Fuel Gas Co. and its probe into whether it should recover “excess” profits that the Amherst-based utility earned over the last few years and refund them to customers.

Six of the seven parties involved in the case have reached an agreement in principle and are seeking more time to prepare a joint proposal regarding the rate case, according to a filing Tuesday by a pair of administrative law judges handling the case.

Only the Public Utility Law Project, an Albany-based group that represents low-income and elderly consumers, has not signed on to the agreement in principle, the judges, David Prestermon and Kevin Casutto, said in the filing.

PULP has indicated that it will oppose the agreement, but that opposition will not stop the other groups involved in the case from continuing to work on the joint proposal, which then would be submitted to the PSC. The commission then could accept, reject or modify any of the provisions in the joint proposal.

PULP has argued that National Fuel increased its profits at a time when it was allowing millions of dollars in future pension and employee benefits to be deferred to future years, effectively allowing the company to earn more today by putting off expenses that eventually would be borne by consumers later on.

“Instead of using excess revenues to fund and defray the soaring pension liabilities, National Fuel paid increased dividends to its holding company parent,” PULP said in an October filing. PULP urged any excess earnings, which it pegged at $24 million since 2010, be used to cut rates and reduce the company’s deferred pension and benefit obligations.

The judges agreed to an indefinite extension of the time that the parties have to work out a joint proposal, although they ordered the PSC staff to provide them with a progress report on Nov. 22, along with an estimate of when they expect the joint proposal to be filed with the commission.

Karen L. Merkel, a National Fuel spokeswoman, said she could not comment on the discussions.

The PSC, in June, imposed a series of temporary rates on National Fuel that froze its delivery charges while the current rate case played out, while also warning that it could seek refunds from the company because National Fuel’s earnings from its New York utility business have been significantly higher than the targets set by the commission in its rate plan that took effect at the beginning of 2008.

National Fuel has argued that the company is being penalized for doing a good job running its New York utility business, cutting costs and improving the efficiency of its operations even while operating under a rate freeze for more than five years. The company has reduced its operating and maintenance costs by about 6 percent, or $10 million, since 2008.

The PSC, however, has argued that National Fuel overcharged its 516,000 customers in Western New York by upward of $10 million a year because the utility has been much more profitable than the level of earnings that was targeted under the 2008 rate plan.

email: drobinson@buffnews.com