Duke Energy Natural Gas Corporation - Page 9

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          nonproducers is a mere distinction without a difference and does            
          not merit a different result herein.  Nor do we find dispositive            
          petitioner's reliance on the practice of the Federal Energy                 
          Regulatory Commission (FERC), with respect to gas transmission              
          systems, on the one hand, and gas production and/or gathering               
          facilities on the other.  We find no evidence that FERC's                   
          practice on this subject has been adopted by either the Congress            
          or the Commissioner of Internal Revenue (the Commissioner) in               
          their promulgation of the laws, rules, and regulations which make           
          up our Federal income tax regime.                                           
               Petitioner argues that its gathering systems are included in           
          asset class 13.2 because the systems are used by petroleum and              
          natural gas producers to produce natural gas in that the systems            
          are essential to the production and sale of gas in the market.              
          We disagree with petitioner's conclusion.  The mere fact that the           
          gathering systems may have helped producers produce and sell                
          their gas in the market does not mean that the systems are                  
          exploration or production assets within the realm of asset class            
          13.2.  Nor is it dispositive here that some producers own their             
          own gathering systems, which, in those cases, place the systems             
          within asset class 13.2.  The critical fact is that petitioner's            
          gathering systems are not used by producers to produce gas.  They           
          are used primarily by a pipeline company to carry gas to a                  

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Last modified: May 25, 2011