[Federal Register: December 29, 2008 (Volume 73, Number 249)]
[Rules and Regulations]
[Page 79316-79318]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de08-8]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Chapter I
[Docket No. RM07-9-00]
Review of FERC Form Nos. 6 and 6-Q
December 18, 2008.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Notice Terminating Proceeding.
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SUMMARY: The Federal Energy Regulatory Commission is terminating its
notice of inquiry regarding the need for changes or revisions to the
Commission's reporting requirements. This notice specifically addresses
FERC Form Nos. 6 (Annual Report of Oil Pipeline Companies) and 6-Q
(Quarterly Report of Oil Pipeline Companies).
DATES: Effective Date: December 29, 2008.
FOR FURTHER INFORMATION CONTACT:
Jenifer Lucas (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, (202) 502-8362. E-mail: jenifer.lucas@ferc.gov.
Dave Lengenfelder (Technical Information), Office of Enforcement,
Federal Energy Regulatory Commission, 888 First St., NE., Washington,
DC 20426, (202) 502-8351. E-mail: david.lengenfelder@ferc.gov.
SUPPLEMENTARY INFORMATION:
1. On February 15, 2007, the Commission issued a Notice of Inquiry
(NOI) in this proceeding, seeking comments from filers and users of
various financial forms, including FERC Form Nos. 6 (Annual Report of
Oil Pipeline Companies) and 6-Q (Quarterly Report of Oil Pipeline
Companies), addressing whether the forms should be modified.\1\ The
FERC Form No. 6 contains data such as a balance sheet, cost-of-service
information, income statement, and
[[Page 79317]]
statement of cash flow for oil pipeline companies. Similarly, the FERC
Form No. 6-Q contains the same type of information but for each of the
first three quarters of each year. Interested parties filed comments
addressing possible modifications to the forms, and on July 18, 2007,
the Commission's Staff conducted a public workshop to discuss the
topic.
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\1\ Assessment of Information Requirements for FERC Financial
Forms, FERC Stats. & Regs. ] 35,554 (2007).
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2. As discussed below, the Commission will not modify FERC Form
Nos. 6 and 6-Q at this time. Accordingly, the Commission is terminating
Docket No. RM07-9-000.\2\
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\2\ Following the issuance of the NOI, the Commission issued a
Notice of Proposed Rulemaking addressing FERC Form Nos. 2, 2-A, and
3-Q. On March 21, 2008, the Commission issued Order No. 710 revising
these forms. Revisions to Forms, Statements, and Reporting
Requirements for Natural Gas Pipelines, Order No. 710, 73 FR 19389
(April 10, 2008), FERC Stats & Regs. ] 31,267 (2008) order on reh'g,
Order No. 710-A, 123 FERC ] 61,278 (2008). Additionally, on
September 19, 2008, the Commission issued Order No. 715 revising
FERC Form Nos. 1, 1-F, and 3-Q. Revisions to Forms, Statements and
Reporting Requirements for Electric Utilities and Licensees, Order
No. 715, 73 FR 58720 (October 7, 2008), FERC Stats. & Regs. ] 31,277
(2008). This order addresses the sole remaining aspect of the NOI:
The financial forms relating to oil pipeline companies.
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Summary of Significant Comments
3. The Association of Oil Pipelines (AOPL), Shell Pipeline Company
L.P., Enbridge, Inc., Plains Pipeline L.P., and Magellan Pipeline
Company LLC (collectively, Carriers) argued for few if any changes to
FERC Form No. 6. In contrast, the Air Transport Association of America,
Inc., the Society for the Preservation of Oil Pipeline Shippers,
Anadarko Petroleum Corporation, Crowley Energy Consulting and Tesoro
Refining & Marketing Company (collectively, Shippers) sought
significant changes to the information required by FERC Form No. 6.
4. The Carriers argue that the Commission has analyzed and either
revised or affirmed the form repeatedly since 1994, most recently in
2006,\3\ finding that it satisfies applicable ratemaking requirements
and provides the information necessary for shippers to challenge the
oil pipelines' rates. The Carriers emphasize that oil pipelines are
required to file extensive information, including total annual cost of
service, operating revenues, and throughput in barrels and barrel-
miles. In the Carriers' view, this information is adequate to permit
shippers to compare the level of an oil pipeline's cost of service with
their rates, and to compare the shippers' own changes in rates to
changes in average barrel-mile rates.
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\3\ Five-Year Review of Oil Pipeline Pricing Index, 114 FERC ]
61,293 (2006).
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5. The Shippers contend that FERC Form No. 6 does not provide an
adequate basis for supporting complaints regarding oil pipeline rates,
and thus it impedes the Commission's statutory duty to monitor cost-
based rates, analyze costs of different services and classes of assets,
and compare costs across lines of business. In particular, Shippers
argue that the current reporting system is not useful in an environment
where certain oil pipelines may own several pipeline systems. At a
minimum, assert Shippers, each oil pipeline reporting financial and
rate data on more than one pipeline system (or more than one segment of
a pipeline system) should be required to segregate cost and revenue
information for each system.\4\ Shippers maintain that this would
facilitate examinations of possible cross-subsidies. Shippers further
argue that oil pipelines should file workpapers that fully support the
data reported on FERC Form No. 6, including cost-of-service
calculations.
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\4\ FERC Form No. 6 reflects aggregated data. AOPL contends that
providing cost-of-service and revenue information for each segment
would be an undue burden because the oil pipeline companies do not
break down costs by segment, and they would be forced to estimate
amounts that they do not track separately.
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Commission Analysis
6. In Order No. 561, the Commission responded to Congress'
direction that the Commission ``promulgate new regulations to provide a
simplified and generally applicable ratemaking methodology for oil
pipelines, and to streamline procedures in oil pipeline proceedings.''
\5\ The Commission's regulations evidence this light-handed regulation
in part by encouraging the settlement of disputes in oil pipeline rate
matters.\6\ Order No. 561 also established price caps for oil pipeline
rates and instituted an annual indexing process for rates tied to the
Producer Price Index for Finished Goods minus one percent.
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\5\ Revisions to Oil Pipeline Regulations Pursuant to the Energy
Policy Act of 1992, Order No. 561, FERC Stats. & Regs. ] 30,985, at
30,940 (1993), order on reh'g, Order No. 561-A, FERC Stats. & Regs.
] 31,000 (1994), aff'd, Association of Oil Pipe Lines v. FERC, 83
F.23d 1424 (D.C. Cir. 1996).
\6\ 18 CFR 343.5.
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7. The Commission has reviewed the comments addressing possible
changes to FERC Form Nos. 6 and 6-Q. These forms provide cost and
revenue data that are intended to be a screening tool used to assess on
an ongoing basis the justness and reasonableness of an oil pipeline's
rates. The information provided is not intended to be at the level of
detail necessary to litigate a case. Rather, the information need only
be of sufficient detail for a complainant to make a prima facia case
that existing rates are not just and reasonable.\7\ Indeed, the
information provided in FERC Form No. 6 has been adequate to allow
shippers over the last 10 years to file numerous complaints challenging
rates.\8\ Further, in a recent five-year review of the oil pipeline
pricing index, the Commission's Staff was able to track industry cost
changes by using data from the Annual Cost of Service Based Analysis
Schedule.\9\
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\7\ Cost-of-Service Reporting and Filing Requirements for Oil
Pipelines, Order No. 571, FERC Stats. & Regs. ] 31,006, at 31,168-69
(1994), aff'd, Association of Oil Pipe Lines v. FERC, 83 F.23d 1424
(D.C. Cir. 1996).
\8\ See SFPP, L.P., 63 FERC ] 61,014 (1993); Texaco Refining and
Marketing, Inc. v. SFPP, LP, 86 FERC ] 61,035 (1999); ARCO Products
Co. v. SFPP, L.P., 91 FERC ] 61,142 (2000); ARCO a subsidiary of BP
America, Inc. v. Calnev Pipe Line, L.L.C., 97 FERC ] 61,057 (2001);
Chevron Products Co. v. SFPP, L.P., 114 FERC ] 61,133 (2006);
Williams Energy Services, LLC v. Mid-America Pipeline Company, LLC,
116 FERC ] 61,175 (2006). In setting these cases for hearing, the
Commission based its finding on an analysis of the entire carrier
system.
\9\ Five-Year Review of Oil Pricing Index, 114 FERC ] 61,293
(2006).
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8. Additionally, the Commission has through various orders already
revised FERC Form No. 6 to make carrier costs more transparent. For
example, the Commission added the page 700, Annual Cost of Service
Based Analysis Schedule, which includes the filer's operating and
maintenance expenses, depreciation expense, AFUDC depreciation,
amortization of deferred earnings, rate base, rate of return, income
tax allowances, total cost of service, total operating revenues, and
throughput in barrels and barrel-miles for the end of the current and
previous calendar years.\10\ In Order No. 571, moreover, the Commission
rejected requests that the data reported on the Annual Cost of Service
Based Analysis Schedule include separate cost of service information
for each individual system, and explained that the schedule was not
intended to require a pipeline to demonstrate with precision its cost-
of-service attributed to each individual system it operates.\11\ In
this regard,
[[Page 79318]]
Shippers did not provide sufficient justification for the Commission to
further modify the requirements of FERC Form Nos. 6 and 6-Q.
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\10\ See Order No. 571, FERC Stats. & Regs. ] 31,006; Revisions
to and Electronic Filing of the FERC Form No. 6 and Related Uniform
Systems of Account, Order No. 620, FERC Stats. & Regs. ] 31,115
(2000), order on reh'g, Order No. 620-A, 94 FERC ] 61,130 (2001).
\11\ Order No. 571, FERC Stats. & Regs. ] 31,006, at 31,168-69.
Accord Five-Year Review of Oil Pricing Index, 114 FERC
61,293, at P 51-52 (2006). See also Order No. 620, FERC Stats. &
Regs. ] 31,115, at 31,958-59 (``Consistent with our decision in
Order No. 571, the Commission denies suggestions by shippers that
pipelines be required to file separate cost of service information
for each individual system and additional information specifying
debt and equity components.'')
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9. The Commission recognizes that FERC Form No. 6 contains only
enough information for a threshold determination of whether the
existing rates are just and reasonable. However, the Commission
concludes that FERC Form Nos. 6 and 6-Q continue to provide sufficient
information to allow shippers to file a complaint requesting a
determination of the justness and reasonableness of a pipeline's rates.
Accordingly, the Commission concludes that no changes to FERC Form Nos.
6 and 6-Q are warranted at this time, and the Commission terminates
Docket No. RM07-9-000.
The Commission Orders
Docket No. RM07-9-000 is hereby terminated, as discussed in the
body of this order.
By the Commission.
Kimberly D. Bose,
Secretary.
[FR Doc. E8-30621 Filed 12-24-08; 8:45 am]
BILLING CODE 6717-01-P