[Federal Register: April 10, 2008 (Volume 73, Number 70)]
[Rules and Regulations]
[Page 19389-19431]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap08-1]
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Rules and Regulations
Federal Register
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[[Page 19389]]
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 158 and 260
[Docket No. RM07-9-000; Order No. 710]
Revisions to Forms, Statements, and Reporting Requirements for
Natural Gas Pipelines
Issued March 21, 2008.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Final rule.
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SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission
(Commission) is revising its financial forms, statements, and reports
for natural gas companies, contained in FERC Form Nos. 2, 2-A and 3-Q.
The revisions are designed to enhance the forms' usefulness by updating
them to reflect current market and cost information relevant to
interstate natural gas pipelines and their customers. The changes will
provide additional information that the Commission needs to carry out
its responsibilities under the Natural Gas Act (NGA).
DATES: This Final Rule is effective April 10, 2008. The revisions to
FERC Form Nos. 2, 2-A, and 3-Q are applicable on January 1, 2008, and
the termination of FERC Form No. 11 is applicable on February 28, 2009.
FOR FURTHER INFORMATION CONTACT:
Michelle Veloso (Technical Information), Division of Financial
Regulation, Office of Enforcement, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, Telephone:
(202) 502-8363, E-mail: michelle.veloso@ferc.gov.
Scott Molony (Technical Information), Chief Accountant, Division of
Financial Regulation, Office of Enforcement, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, Telephone:
(202) 502-8919, E-mail: scott.molony@ferc.gov.
Jane E. Stelck (Legal Information), Office of Enforcement, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426, Telephone: (202) 502-6648, E-mail: jane.stelck@ferc.gov.
SUPPLEMENTARY INFORMATION: Before Commissioners: Joseph T. Kelliher,
Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon
Wellinghoff.
I. Introduction
1. The Federal Energy Regulatory Commission (Commission) is
revising Parts 158 and 260 of its regulations to effect changes to its
FERC Form No. 2 (Form 2), Annual report for major natural gas
companies, FERC Form No. 2-A (Form 2-A), Annual report for nonmajor
natural gas companies, and FERC Form No. 3-Q (Form 3-Q), Quarterly
financial report of electric utilities, licensees and natural gas
companies to expand and update the forms to reflect current market and
cost information relevant to interstate natural gas pipelines and their
customers.\1\ The Commission is revising these financial forms to
provide, in greater detail, the information the Commission needs to
carry out its responsibilities under the NGA to ensure that rates are
just and reasonable, and to provide pipeline customers and the public
the information they need to assess the justness and reasonableness of
pipeline rates.
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\1\ Section 10 of the Natural Gas Act (NGA), 15 U.S.C. 717g,
authorizes the Commission to prescribe rules and regulations
concerning annual and other periodic or special reports, as
necessary or appropriate for purposes of administering the NGA. The
Commission may prescribe the manner and form in which such reports
are to be made, and require from natural gas companies specific
answers to all questions on which the Commission may need
information.
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II. Background
2. Before the restructuring of pipeline services promulgated by the
Commission's Order No. 636, interstate natural gas pipelines offered
both sales and transportation services.\2\ Gas costs were charged to a
purchased gas adjustment (PGA) account and were periodically adjusted
and passed through to customers. The quid pro quo for the ability to
recover the gas costs through a PGA tracker was the requirement that
the pipelines file to restate their rates every three years. Order No.
636 eliminated the PGA regulations and the triennial filing
requirement. Subsequently, the Commission issued a final rule that
changed pipeline filing and reporting requirements in the post-Order
No. 636 unbundled environment.\3\
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\2\ See Pipeline Service Obligations and Revisions to
Regulations Governing Self-Implementing Transportation; and
Regulation of Natural Gas Pipelines After Partial Wellhead
Decontrol, Order No. 636, FERC Stats. & Regs. ] 30,939, order on
reh'g, Order No. 636-A, FERC Stats. & Regs. ] 30,950, order on
reh'g, Order No. 636-B, 61 FERC ] 61,272 (1992), order on reh'g, 62
FERC ] 61,007 (1993), aff'd in part and remanded in part sub nom.
United Distribution Cos. v. FERC, 88 F.3d 1105 (D.C. Cir. 1996),
order on remand, Order No. 636-C, 78 FERC ] 61,186 (1997).
\3\ See Filing and Reporting Requirements for Interstate Natural
Gas Company Rate Schedules and Tariffs, FERC Stats. & Regs. ] 31,025
(1995).
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3. The financial reporting forms for natural gas companies were
again revised in 1995, in Order No. 581, to reflect the changed
regulatory environment of unbundled pipeline sales for resale at
market-based prices and open-access transportation of natural gas.\4\
Order No. 637, issued in 2000, among other things, revised the
Commission's regulatory approach to pipeline pricing by permitting
pipelines to propose peak/off peak and term differentiated rate
structures.\5\
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\4\ Revisions to Uniform System of Accounts, Forms, Statements,
and Reporting Requirements for Natural Gas Companies, Order No. 581,
FERC Stats. & Regs. ] 31,026 (1995), order on reh'g, Order No. 581-
A, FERC Stats. & Regs. ] 31,032 (1996).
\5\ Regulation of Short-Term Natural Gas Transportation
Services, and Regulation of Interstate Natural Gas Transportation
Services, Order No. 637, FERC Stats. & Regs. ] 31,091, clarified,
Order No. 637-A, FERC Stats. & Regs. ] 31,099, reh'g denied, Order
No. 637-B, 92 FERC ] 61,062 (2000), aff'd in part and remanded in
part sub nom. Interstate Natural Gas Ass'n of America v. FERC, 285
F.3d 18 (D.C. Cir. 2002), order on remand, 101 FERC ] 61,127 (2002),
order on reh'g, 106 FERC ] 61,088 (2004), aff'd sub nom. American
Gas Ass'n v. FERC, 428 F.3d 255 (D.C. Cir. 2005).
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4. Since the Commission eliminated the triennial restatement of
rates filing requirement in Order No. 636, there has been a decline in
filings under NGA section 4.\6\ As stated in the NOPR, the records
indicate that as many as 15 major and 20 nonmajor gas pipelines have
not filed a section 4 rate case in
[[Page 19390]]
more than a decade.\7\ While the Commission may, on its motion,
institute a section 5 investigation, it relies also on section 5
complaints filed by pipeline customers or state public utility
commissions, to review a pipeline company's rates outside of a section
4 proceeding.\8\ A section 5 complaint may rely on Forms 2, 2-A, and 3-
Q financial data to support a complaint.
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\6\ 15 U.S.C. 717c.
\7\ Revisions to Forms, Statements, and Reporting Requirements
for Natural Gas Pipelines, 72 FR 54860 (Sept. 27, 2007), FERC Stats.
& Regs. ] 32,623, at note 60 (2002). (NOPR).
\8\ 15 U.S.C. 717d.
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5. In 2006, two section 5 complaints were filed with the
Commission, both relying on data provided in Forms 2 and 2-A to support
allegations that the pipeline's rates were unjust and unreasonable.\9\
In National Fuel, the pipeline responded that the Form 2 data relied
upon by the complainants was not sufficient to support a complaint and
that only a detailed cost and revenue study could provide the necessary
justification for a section 5 investigation. In setting the complaint
for hearing, the Commission rejected National Fuel's contention, noting
that the Form 2 data relied upon by complainants was sufficient to
raise serious questions about the pipeline's rates.\10\ The National
Fuel complaint was followed by a section 5 action filed by a group of
Southwest Gas customers alleging unjust and unreasonable rates and
relying, in that instance, on Form 2-A data.\11\
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\9\ See Public Service Commission of New York, Pennsylvania
Public Utility Commission and Pennsylvania Office of Consumer
Advocate v. National Fuel Gas Supply Corp., 115 FERC ] 61,299
(2006), (National Fuel), order approving uncontested settlement, 118
FERC ] 61,091 (2007); Panhandle Complainants v. Southwest Gas
Storage Co., 117 FERC ] 61,318 (2006) (Southwest Gas).
\10\ National Fuel at P 37.
\11\ Southwest Gas, 117 FERC at P 1.
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6. The question of whether the Commission's financial forms provide
data sufficient to support a complaint resulted in a review of Forms 1,
1-F, 2, 2-A, and 3-Q data in the fall of 2006. Staff met with both form
filers and users to discuss the need for additional information or
other clarifications. Thereafter, on February 15, 2007, the Commission
issued a Notice of Inquiry (NOI).\12\
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\12\ Assessment of Information Requirements for FERC Financial
Forms, Notice of Inquiry, 72 FR 8316 (Feb. 26, 2007), FERC Stats. &
Regs. ] 35,554 (2007). The NOI also invited comments from filers and
users of Form 6 and 6-Q.
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7. The NOI sought comments on the need for changes to the financial
forms. The Commission received 35 comments and 15 reply comments in
response to the NOI. Eleven initial comments and two reply comments
specifically addressed Forms 2, 2-A, and 3-Q data, with most pipeline
customers seeking expanded information and pipelines opposing
additional filing requirements.
8. Following a careful review of the comments and reply comments,
the Commission issued a Notice of Proposed Rulemaking (NOPR) on
September 20, 2007, proposing revisions to Forms 2, 2-A, and 3-Q, and
the elimination of Form 11.\13\ The NOPR proposed to add several new
schedules, requiring pipelines to report: (1) The disposition of
shipper-supplied gas; (2) transactions between the pipeline and its
affiliates; (3) revenues and volumes applicable to discount and
negotiated rate services; and (4) identification of rate treatment
afforded new pipeline projects. In addition, the NOPR proposed
modifications to existing schedules to require more detail regarding:
(1) Sales data; (2) deferred income taxes; (3) state income tax
expense; (4) regulatory assets and liabilities; (5) distribution of
salaries and wages; and (6) employee pensions and benefits.
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\13\ See NOPR.
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9. The Commission received 17 comments in response to the proposed
reporting requirements which ranged from favorable to those seeking yet
more detailed information, and a few who argued that the proposed
modifications were unnecessary or burdensome.\14\ In general, most
commenters applauded the Commission's efforts to improve the quality of
the financial forms. After careful consideration of the comments
received, the Commission is adopting the changes and revisions as
proposed in the NOPR with certain modifications and clarifications as
discussed below. If no comments were received on a particular issue and
it is not discussed below, the proposal is adopted as set forth in the
NOPR.
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\14\ A list of commenters is attached as Appendix B.
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III. Discussion
A. General
10. The NOPR discussed a concern raised by the Interstate Natural
Gas Association of America (INGAA) that the proposed changes to
reporting requirements could blur the distinction between sections 4
and 5 of the NGA, and invited comments on this issue.\15\ A few
commenters addressed this issue. Dominion Resources, Inc. (Dominion)
commends the Commission for recognizing this concern and requests that
the Commission keep the concern in mind when finalizing the rule.\16\
The Michigan Public Service Commission (MPSC) urges the Commission to
reject any argument that the reporting requirements proposed in the
NOPR would improperly shift the burden of proof under section 5 of the
NGA by requiring pipelines to justify their existing rates outside the
context of a section 4 rate case.\17\ The MPSC states that the NGA
explicitly gives the Commission the authority to require periodic
reporting as necessary for purposes of administering the NGA.\18\ The
Process Gas Consumers Group (PGC) states that the NOPR is proposing
greater transparency and accuracy, which are essential to the
Commission's oversight obligations and neither of which could
reasonably impact the burden of proof in section 5 proceedings.\19\
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\15\ NOPR at P 28.
\16\ Dominion NOPR Comments at 4.
\17\ MPSC NOPR Comments at 4.
\18\ MPSC NOPR Comments at 4.
\19\ PGC NOPR Comments at 5.
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11. The Kansas Corporation Commission (KCC) and Apache Corporation
(Apache) express concern that the ability of a pipeline to file a
section 4 rate case even after parties have filed a section 5
complaint, as transpired in the recent Southwest Gas proceeding, may
serve as a disincentive for some parties to file section 5
complaints.\20\ Apache recommends that the Commission add to the Form 2
and 2-A a cost and revenue summary page that would provide the
Commission and interested parties a clear view of whether a pipeline's
filed rates are just and reasonable.\21\ The KCC agrees that the
possibility that a pipeline may file a section 4 rate case after a
complaint has been lodged will make potential complainants hesitant
about incurring the costs of a section 5 complaint.\22\ The KCC further
notes the fact that any relief under a section 5 proceeding is limited
since it is prospective only and urges the Commission to reinstate a
periodic rate-refiling requirement as a condition to approval of
pipeline blanket certificates.\23\
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\20\ KCC NOPR Comments at 15-16; Apache NOPR Comments at 2.
\21\ Apache NOPR Comments at 2.
\22\ KCC NOPR Comments at 17.
\23\ KCC NOPR Comments at 17-18.
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12. As an initial matter, the Commission has no intention of
obscuring the distinction between sections 4 and 5 of the NGA by any
changes implemented here to the financial forms filed by natural gas
companies. Therefore, the Commission will not reinstate a periodic rate
review absent a concomitant benefit as was the case when, in exchange
for recovering
[[Page 19391]]
purchased gas costs through a tracker, pipelines were required to
restate their rates every three years.\24\ In addition, the Commission
rejects the proposal to order companies to file cost and revenue
studies as part of these forms. Also, the changes being implemented
here do not affect existing rates nor change any rate on file. In like
vein, the Commission cannot alter the rights and obligations of
pipelines and their customers under sections 4 and 5 of the NGA. Under
section 4 of the NGA, a pipeline has the right to file a rate case at
any time. The Commission cannot compel a pipeline to file under section
4, nor can it preclude it from filing under section 4 for any reason,
including the presence of a section 5 complaint. The pipeline can agree
to bind itself, for example through an agreement to a rate moratorium
in a rate case settlement, but the Commission does not have the power
to prohibit a pipeline from filing a rate case. The requested data is
designed to provide the Commission and pipeline customers with
information that will aid their ability to make a reasonable assessment
of a pipeline's cost of service. Greater transparency is essential to
the Commission's oversight responsibilities and, as implemented here,
will not affect the burden of proof in section 5 proceedings. A party
filing a section 5 complaint would still have the burden to show why
the information in the Commission's financial forms support an
allegation that the pipeline's existing rates are unjust and
unreasonable. Stated briefly, the changes adopted in the final rule
will not be used to limit an entity's right under the NGA and our
regulations. Nor will the changes to the forms change the Commission's
obligation to rule on complaints, petitions, or other requests for
relief based on a full record and substantial evidence.
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\24\ See Public Service Commission of the State of New York v.
FERC, 866 F.2d 487, 492 (D.C. Cir. 1989).
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B. Acquisition and Disposition of Gas: Shipper-Supplied Gas
1. Financial Forms NOPR
13. In the NOPR, the Commission noted that despite current
accounting and reporting requirements for gas used in operations, gas
lost, and gas sold, Forms 2 and 2-A users cannot readily determine the
disposition and value of any shipper-supplied gas that exceeds the
pipeline's operational needs or the source and cost of any gas acquired
to meet deficiencies in shipper-supplied gas.\25\ Comments on the NOI
identified information regarding the pipeline's fuel retainage
percentage as particularly lacking in detail. The complainants in the
National Fuel case, referenced above, asserted that the principal
reason for the pipeline's alleged excess revenue was due to its
retention of more than twice as much fuel from shippers than is
necessary to operate the system and that it then sold and retained all
revenues from those sales.\26\ In light of these concerns, the
Commission proposed the addition of a new schedule to Forms 2, 2-A, and
3-Q, which would require the pipeline to report the following: (1) The
difference between the volume of gas received from shippers and the
volume of gas consumed in pipeline operations each month; (2) the
disposition of any excess and the accounting recognition given to such
disposition, including the basis of valuing the gas and the specific
accounts charged or credited; and (3) the source of gas used to meet
any deficiency, including the accounting basis of the gas and the
specific account(s) charged or credited.\27\ In addition, the NOPR
proposed to add page 520 (Gas Account-Natural Gas) to Form 3-Q in order
to provide more timely reporting of the quantity of natural gas
received and delivered by the pipeline.\28\ The NOPR also proposed to
require pipelines to provide in a footnote to page 520, the volumes of
gas purchased applicable to each of the gas pipeline expense
accounts.\29\
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\25\ NOPR at P 37.
\26\ See National Fuel, 115 FERC ] 61,299 at P 8.
\27\ NOPR at P 39.
\28\ Id.
\29\ Id. See 18 CFR Part 201, Account Nos. 800-05.
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2. Commenters
14. Most commenters support the addition of this information to
Forms 2, 2-A, and 3-Q. INGAA and Williston Basin Interstate Pipeline
Company (Williston), however, request that the Commission revise pages
521a and 521b to remove the monthly reporting requirement and replace
it with a quarterly reporting requirement.\30\ INGAA also requests that
the Commission revise its proposal to remove the requirement that
pipelines categorize the discrete offsetting gas transactions of any
excess or deficiency related to shipper supplied gas.\31\ Dominion
requests that the Commission modify the proposal to require the new
reporting on shipper-supplied gas on only an annual basis and not in
quarterly reports.\32\
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\30\ INGAA NOPR Comments at 5; Williston NOPR Comments at 5-6.
\31\ INGAA NOPR Comments at 5.
\32\ Dominion NOPR Comments at 7.
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15. The American Gas Association (AGA) supports the NOPR's proposal
to require this information but believes that greater clarity can be
achieved if the Commission requires the information to be broken out by
function (e.g., transportation, storage, gathering, etc.) and to
include, by function, the amount of fuel that has been waived,
discounted or reduced as part of a negotiated rate agreement.\33\ The
Natural Gas Supply Association (NGSA) requests that a column be added
to proposed page 521 to require pipelines to identify the specific
accounts being used to record the various sources and disposition of
fuel gas.\34\ In NGSA's view, this information would enable users to
reconcile the volumes broken out by account reported on proposed page
521 to data recorded elsewhere in Forms 2, 2-A and 3-Q.\35\ Calpine
Corporation (Calpine) requests that the Commission require the fuel gas
accounts to be broken down by month so that these costs can be
reconciled with those reported in other filings such as annual fuel
tracker reports.\36\
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\33\ AGA NOPR Comments at 5.
\34\ NGSA NOPR Comments at 5.
\35\ Id.
\36\ Calpine NOPR Comments at 5.
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3. Commission Determination
16. As stated in the NOPR, the Commission is concerned about the
increased impact on the pipeline's cost of service resulting from
rising gas prices.\37\ The escalation of gas prices coupled with the
decline of section 4 rate reviews has made this an important issue in
the pipeline's cost of transportation. Currently, Forms 2 and 2-A users
cannot determine the disposition and value of any shipper-supplied gas
that exceeds the pipeline's operational needs or the source and cost of
any gas acquired to meet deficiencies in shipper-supplied gas. While we
recognize INGAA's desire that the data be reported on a quarterly, and
not monthly basis, we agree with Calpine that monthly data is necessary
for the purpose of comparing and attempting to reconcile these costs
with other routine pipeline filings such as annual fuel tracker
reports. In addition, INGAA objects to the requirement that pipelines
categorize the discrete offsetting gas transactions relating to any
excess or deficiency in shipper-supplied gas. The Commission deems this
information critical to the clarity and transparency needed to support
a reasonable analysis of gas costs. The information broken out by
function (e.g., transportation, storage, gathering, etc.) sought by AGA
is
[[Page 19392]]
available in Form 2 at page 520. On page 520 (Gas Account), pipelines
are required to provide detailed information regarding gas received and
delivered by the pipeline, identified by function and account number.
Regarding NGSA's request that a column be added to page 521 to require
pipelines to identify the specific accounts being used to record the
various sources and disposition, we reject it as unnecessary. Pages
521a and 521b already require in columns (d) and (e) that the specific
account(s) be identified. The NOPR's proposals are designed to provide
needed transparency but also to reflect a fair balance between the need
for the information and the additional burden on the pipeline. We
believe that the new schedules (pages 521a and 521b) proposed in the
NOPR reflect this balance. Accordingly, the proposal is adopted as
outlined in the NOPR.
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\37\ See NOPR at P 38.
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C. Other Gas Dispositions
1. Financial Forms NOPR
17. The NOPR proposed to expand the detail provided on pages 300-01
of Forms 2 and 2-A (Gas Operating Revenues) to require filers to report
sales amounts reported in Account 480 (Residential Sales); Account 481
(Commercial and Industrial Sales); Account 482 (Other Sales to Public
Authorities); Account 483 (Sales for Resale); and Account 484
(Interdepartmental Sales). Currently this schedule, entitled ``Gas
Operating Revenues,'' aggregates on one line all sales data for these
separate accounts. Providing this data by account, rather than in an
aggregated number, will enable users to identify the dispositions of
gas acquired by or tendered to the pipeline and how those transactions
may affect the pipeline's cost of service. In addition, the NOPR
proposed to modify the schedule for Account 495, Other Gas Revenues, on
page 308 of Form 2 and add a new page to Form 2-A to specify that the
following types of revenues must be separately reported on the
schedule: (1) Commissions on sale or distribution of gas of others; (2)
compensation for minor or incidental services provided for others; (3)
profit or loss on sale of material and supplies not ordinarily
purchased for resale; (4) sales of steam, water, or electricity,
including sales or transfers to other departments; (5) miscellaneous
royalties; (6) revenues from dehydration and other processing of gas of
others except as provided for in the instructions to Account 495; (7)
revenues for rights and/or benefits received from others which are
realized through research, development, and demonstration ventures; (8)
gains on settlements of imbalances receivable and payables; (9)
revenues from penalties earned pursuant to tariff provisions, including
penalties associated with cash-out settlements; and (10) revenues from
shipper-supplied gas.
2. Commenters
18. NGSA states that the information on pages 300-01 of the forms
could be made more useful by requiring pipelines that use these
accounts to add footnotes detailing the type of transaction(s) being
reported.\38\ NGSA argues that the activities listed under these
accounts are outdated and the Commission should require additional
detail.\39\ NGSA also requests that to the extent a pipeline has
revenues associated with items not listed for Account 495 on page 308
of Form 2, the pipeline be required to specify each such type and
amount of revenue on a separate line under line 11 and provide
sufficient detail for customers to identify the accounts to which these
revenues are attributable.\40\ The Independent Petroleum Association of
America (IPAA) and the Texas Independent Producers and Royalty Owners
Association (TIPRO) also request that pipelines that continue to use
Account Nos. 480-484 be required to add footnotes on revised pages 300-
301 of Form 2 detailing the type of transaction(s) reported.\41\
Finally, Calpine suggests the addition of a revenue category to page
308 for purposes of capturing any environmental credits earned by the
pipeline.\42\
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\38\ NGSA NOPR Comments at 5.
\39\ Id. at 6.
\40\ NGSA NOPR Comments at 6.
\41\ IPAA and TIPRO NOPR Comments at 4.
\42\ Calpine NOPR Comments at 6.
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3. Commission Determination
19. The NOPR proposed the disaggregation of this revenue data to
enable the Commission and the forms' users to achieve a meaningful
understanding of the nature of the business activities from which the
revenues are derived. The Commission recognized that greater detail
concerning these revenue accounts could provide data that would enable
the Commission and pipeline customers to identify the dispositions of
gas acquired by or tendered to the pipeline and how these transactions
may affect the pipeline's cost of service. To that end, the NOPR
proposed a new schedule which requires a breakdown of revenue into ten
categories. The NOPR addressed many of the issues raised by NGSA, IPAA
and TIPRO and we believe that the additional detail sought by these
parties would add unnecessary burden to this new reporting requirement.
We agree with Calpine that identifying environmental credits received
by the pipeline is useful and important information. Rather than add a
new revenue category to page 308, we will require pipelines that
receive environmental credits to list those credits in a footnote to
the Financial Statements.
D. Affiliate Transactions
1. Financial Forms NOPR
20. The NOPR proposed that pipelines be required to provide
detailed information regarding affiliate transactions. The Commission
agreed with the form users' assertions that currently, Forms 2 and 2-A
do not require any reporting of affiliate transactions and that
disclosures of affiliate transactions are needed to prevent cross-
subsidization between regulated and unregulated companies. The NOPR
proposed to add a new schedule, page 358, to both Forms 2 and 2-A
entitled ``Transactions with Associated (Affiliated) Companies'' that
would require filers to report affiliate transactions. The NOPR
proposed that filers be required to report the following: (1) A
description of the good or service transacted; (2) the name of the
associated (affiliated) company; (3) the FERC account charged or
credited; and (4) the amount charged or credited. The NOPR proposed
that where amounts billed to or from an affiliate are based on an
allocation process, filers be required to explain the basis of the
allocation in a footnote. The NOPR also proposed to amend the existing
instructions for page 357, Charges for Outside Professional and Other
Consultative Services, to exclude affiliate transactions, and remove
the existing $250,000 threshold for reporting services.
2. Commenters
21. INGAA, AGA, Williston, Kinder Morgan Interstate Pipelines
(Kinder Morgan) and other commenters ask the Commission to reconsider
the proposed removal of the $250,000 cost threshold for the reporting
of non-affiliated ``Charges for Outside Professional and Other
Consultative Services'' on page 357 of Form 2.\43\ INGAA and Williston
assert that eliminating the threshold will add a significant burden to
Form 2
[[Page 19393]]
filers without adding a significant benefit to the form's users.\44\
For similar reasons, AGA and Williston also recommend that the $250,000
cost threshold be applied to the new schedule for affiliate
transactions.\45\ AGA requests that the Commission clarify that the
required affiliate information be limited to transactions between a
jurisdictional entity and its affiliates and not include transactions
solely between affiliated entities that are not subject to the
Commission's reporting requirements.\46\ Dominion asks the Commission
to clarify that when an affiliate provides a service on an on-going
basis, only a single line entry describing that service is
required.\47\
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\43\ INGAA NOPR Comments at 3-4; AGA NOPR Comments at 6;
Williston NOPR Comments at 3; Kinder Morgan NOPR Comments at 3-4;
Enbridge Energy Partners (Enbridge) NOPR Comments at 7-9; Dominion
NOPR Comments at 11.
\44\ INGAA NOPR Comments at 4; Williston NOPR Comments at 3-4.
\45\ AGA NOPR Comments at 6; Williston NOPR Comments at 3-4.
\46\ AGA NOPR Comments at 5-6.
\47\ Dominion NOPR Comments at 10-11.
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3. Commission Determination
22. The Commission agrees that elimination of the $250,000 cost
threshold for page 357 of Forms 2 and 2-F and the absence of a similar
threshold for the new schedule for reporting affiliate transactions may
add a substantial burden to the forms' filers. Accordingly, we will
reinstate the $250,000 cost threshold on page 357 (Charges for Outside
Professional and Other Consultative Services) and add an instruction to
the new schedule on page 358 (Transactions with Associated (Affiliated)
Companies) to require reporting of amounts in excess of $250,000.
However, in order to ensure full reporting of these expenses, we will
add a requirement for pages 357 and 358 that the filer must provide the
total amount of all services amounting to $250,000 or less. As
requested by AGA, we clarify that affiliate transactions reported are
limited to transactions between a jurisdictional entity and its
affiliates. Finally, in response to Dominion's request, we clarify that
when an affiliate provides an on-going service, only a single line
entry describing that service is required.
E. Incremental Pricing Policy
1. Financial Forms NOPR
23. The NOPR proposed to add a new schedule to Forms 2 and 2-A
(page 217), entitled ``Non-Traditional Rate Treatment Afforded New
Projects,'' to collect information regarding a company's individual
rate treatments for services. The necessity for more information
regarding rate treatment for new pipeline construction arose as a
result of the evolution of the Commission's pricing policy for pipeline
capacity expansions, due in part to the changes in the industry brought
by Order No. 636. The ``rolled-in'' rate treatment approach for
pipeline capacity pricing, where added facilities were integrated into
the pipeline's mainline system to the benefit of all customers, has
changed as Commission policy now requires that a pipeline be prepared
to financially support expansion projects without relying on
subsidization from existing customers.\48\ Where incremental rates for
new capacity have been approved, the Commission has required pipelines
to maintain their accounting records so as to be able to identify the
facilities and related costs used to provide service to the incremental
rate customers.\49\ To date, however, the Commission has not required
the disaggregation of these costs in Forms 2 and 2-A. The NOPR proposed
that a proper rate assessment would be enhanced by providing a
breakdown of costs related to these separate facilities. The NOPR
proposed to add a new schedule to Forms 2 and 2-A, at page 217,
entitled ``Non-Traditional Rate Treatment Afforded New Projects,'' to
report the following: (1) The name of the facility; (2) the docket
number under which the facility was approved; (3) the type of rate
treatment (e.g., incremental or another rate treatment); (4) the amount
of plant in service; (5) the amount of accumulated depreciation; (6)
the amount of accumulated deferred income taxes; (7) amount of
operating expenses; (8) the amount of maintenance expenses; (9) the
amount of depreciation expense; (10) incremental revenues; and (11)
other expenses.
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\48\ See Certification of New Interstate Natural Gas Pipeline
Facilities, Statement of Policy, 88 FERC ] 61,227 (1999), order
clarifying policy, 90 FERC ] 61,128 (2000), order clarifying policy,
92 FERC ] 61,094 (2000) (Certificate Policy Statement).
\49\ See 18 CFR 154.309.
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2. Commenters
24. Most commenters supported the addition of this requirement.
Calpine requests that the list of required information be expanded to
include other items such as incremental fuel treatment and project
financing.\50\ Calpine asserts that this separate recording of
incremental costs and functions should be expanded throughout the
proposed modifications to Forms 2 and 2-A.\51\ Dominion states that the
Commission should exempt from these new reporting requirements LNG
import projects authorized on a ``proprietary'' basis with deregulated
rates under the Energy Policy Act of 2005 (EPAct 2005) and the
Commission's ``Hackberry'' policy.\52\
---------------------------------------------------------------------------
\50\ Calpine NOPR Comments at 8.
\51\ Id.
\52\ Dominion NOPR Comments at 8-9. See Hackberry LNG Terminal
LLC, 101 FERC ] 61,294 (2002) (Hackberry), order issuing
certificates and granting reh'g, 104 FERC ] 61,269 (2003).
---------------------------------------------------------------------------
3. Commission Determination
25. Calpine's request for additional information is granted in
part. We agree that if incremental projects charge a separate fuel rate
rather than using the systemwide fuel rate, the pipeline should
identify the volumes received and used for a particular incremental
project. We will require this information to be provided in a footnote
to the report with the information identified for each incremental
project to which the requirement applies. Further, we deny Calpine's
request for information related to project financing. The Commission
generally approves rates for incremental projects designed on the rate
of return approved in the pipeline's last rate case; thus, the
information is not necessary.\53\ With that addition, we adopt the new
requirements proposed in the NOPR. Further, we clarify that this rule
does not affect any waivers or exemptions from filing requirements
granted previously by the Commission.
---------------------------------------------------------------------------
\53\ See, e.g., Texas Eastern, LP, 99 FERC ] 61,383, at P 22
(2002); Kern River Gas Transmission Co., 98 FERC ] 61,205, at
61,721-22 (2002); Trailblazer Pipeline Co., 95 FERC ] 61,258, at
61,903 (2001).
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F. Discounted and Negotiated Rate Services
1. Financial Forms NOPR
26. The NOPR proposed to add a new schedule, page 313, entitled
``Discounted Rate Services and Negotiated Rate Services,'' to Forms 2
and 2-A to require pipelines to report the revenues and volumes
applicable to discounted and negotiated rate services provided during
the reporting period. Currently, Form 2 filers report the dollar
amounts and volumes associated with the type of transportation
provided. These are pages 300-01, Gas Operating Revenue; pages 302-03,
Revenues from Gas Transportation of Others Through Gathering
Facilities; pages 304-05, Revenues from Gas Transportation of Others
Through Transmission Facilities; pages 306-07, Revenues from Storing
Gas of Others; and page 308, Other Gas Revenues. However, the current
schedules do not require filers to identify the volumes and revenues
applicable to discounted, negotiated, or recourse rates. The Commission
believes that since individual pipelines may provide services from the
same facilities using different rates, it is important for
[[Page 19394]]
the Commission and the pipeline customer to know the level of services
provided under each rate schedule in order to protect against cross-
subsidization and to ensure that recourse rates remain just and
reasonable.
2. Commenters
27. One commenter, Calpine, requests that the Commission further
clarify that filers of this schedule be required to complete a separate
chart for each incremental vintage so that the revenues and volumes can
be appropriately attributed.\54\
---------------------------------------------------------------------------
\54\ Calpine NOPR Comments at 8-9.
---------------------------------------------------------------------------
3. Commission Determination
28. The Commission believes that the proposed schedule described in
the NOPR, requiring filers to report the revenues and volumes
associated with the types of transportation provided, is adequate for
purposes of assessing rates to prevent cross-subsidization and to
ensure the justness and reasonableness of recourse rates. The
Commission finds that the additional information requested by Calpine
would add unnecessary burden to the pipeline's reporting requirements.
Accordingly, the modification is accepted as outlined in the NOPR.
G. Rate Base and Other Cost of Service Components--Deferred Income
Taxes
1. Financial Forms NOPR
29. The NOPR proposed to add an instruction to each deferred income
tax schedule, as listed below, requiring the pipeline to provide a
summary of the type and amount of deferred income taxes reported in the
beginning-of-year and end-of-year balances for deferred income taxes
used to develop jurisdictional recourse rates. At present, Form 2
filers are required to report only a single line of data for the total
deferred income tax balance related to gas operations on the following
schedules: (1) Accumulated Deferred Income Taxes (Account 190), pages
234-35; (2) Accumulated Deferred Income Taxes--Other Property (Account
282), pages 274-75; and (3) Accumulated Deferred Income Taxes--Other
(Account 283), pages 276-77. Deferred income tax balances are an
important factor in determining rate base and evaluating a pipeline's
earned rate of return. The level of detail now required in Form 2 for
deferred income taxes related to gas operations does not provide
sufficient information to enable customers to evaluate the pipeline's
current rates. The NOPR also proposed to add these deferred tax
reporting schedules to Form 2-A to allow all pipeline customers access
to this information.
2. Commenters
30. Calpine asks the Commission to clarify that the reporting of
deferred income taxes should be done on a disaggregated basis when
possible.\55\ Williston, on the other hand, argues that due to the
subjectivity of deferred income taxes, speculation on which deferred
income taxes are included in rate base is a subject more appropriately
addressed in a rate case.\56\
---------------------------------------------------------------------------
\55\ Calpine NOPR Comments at 9.
\56\ Williston NOPR Comments at 4-5.
---------------------------------------------------------------------------
3. Commission Determination
31. Contrary to Williston's concern, the NOPR's proposal does not
require speculation on the part of the pipeline. The proposal would
simply require the pipeline to provide an estimate for the deferred
income tax accounts for the immediate reporting year, and to provide a
summary of the end-of-year and beginning of year balances for the
reported amounts. These estimates are not binding on the pipeline at
such time as it may file a section 4 rate case. Customers need this
information in order to assess the reasonableness of the rates
currently paid. With respect to Calpine's request that reporting of
deferred income taxes be done on a disaggregated basis when possible,
we believe that the required summary of the type and amount of deferred
income taxes reported in the beginning-of-year and end-of-year balances
will provide adequate detail. Accordingly, the proposal as outlined in
the NOPR is adopted.
H. State Income Tax Expense
1. Financial Forms NOPR
32. The NOPR proposed to add a new column Q to the Taxes Accrued,
Prepaid and Charged During Year, Distribution of Taxes Charged schedule
on pages 262-3 of Form 2 and to add the same schedule to Form 2-A to
require pipelines to report state and local income tax rates.
Currently, only the aggregate state deferred income tax for the entire
reporting entity is required to be reported on Form 2. This information
does not permit the Commission or the pipeline's customers to determine
the amount of state income tax expense that should be associated with
the before-tax net income generated from the sales of transportation
services under more than one rate structure.
2. Commenters
33. The American Public Gas Association (APGA) requests that the
Commission add the requirement that pipelines include the property
valuation used by taxing authorities.\57\
---------------------------------------------------------------------------
\57\ APGA NOPR Comments at 5.
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3. Commission Determination
34. The Commission believes that the proposal to require pipelines
to report the state and local income tax rates is sufficient to aid the
forms' users in interpreting the data. We reject APGA's request that
pipelines include the property valuation used by taxing authorities. We
believe that access to disaggregated data will provide the necessary
information. Accordingly, the proposed change outlined in the NOPR is
adopted.
I. Regulatory Assets and Liabilities
1. Financial Forms NOPR
35. The NOPR proposed to revise the schedule entitled ``Other
Regulatory Assets,'' page 232, by adding footnote citations for each
regulatory asset to record the item and adding a column to identify
amounts written off during the period as non-recoverable. In addition,
the NOPR proposed to revise the ``Other Regulatory Liabilities''
schedule, page 278, by adding footnote citations for each regulatory
liability to identify the regulatory approval to refund the item and
adding a column to identify amounts written off during the period as
non-refundable. At present, Forms 2 and 2-A filers are required to
report a breakout of regulatory assets and liabilities where future
recovery/refunding from ratepayers is probable. These amounts, however,
can be challenged in a section 4 rate case proceeding. The proposed
revisions will allow the Commission and customers to determine which
assets and liabilities have been written off or refunded during the
reporting period.
2. Commenters
36. Dominion argues that the regulatory assets and liability
information should not be included in the Form 3-Q, but only in the
annual report.\58\ The MPSC suggests that the Commission modify its
proposal to require pipelines to report the asserted basis for
recording a regulatory asset or liability, including, but not limited
to, any regulatory approval to record the item.\59\
---------------------------------------------------------------------------
\58\ Dominion NOPR Comments at 5-7.
\59\ MPSC NOPR Comments at 7.
---------------------------------------------------------------------------
3. Commission Determination
37. The Commission believes that the footnote citations proposed in
the NOPR will provide a level of detail sufficient to enable the forms'
users to assess the
[[Page 19395]]
pipeline's reporting for regulatory assets and liabilities. We believe
it is unnecessary and burdensome to require the pipeline to report the
basis for recording the asset or liability together with a citation to
any regulatory approval. As drafted, the NOPR would require the
pipeline to identify any regulatory approval to refund an item and to
record such refund. We believe this data provides the forms' users with
the information necessary to determine which pipeline assets have been
written off or refunded during the relevant reporting period.
Accordingly, the proposal as outlined in the NOPR is adopted.
J. Employee Pensions and Benefits
1. Financial Forms NOPR
38. The NOPR proposed to amend Instruction 3 to page 122.1 to
require filers that participate in multi-employer post-retirement
benefit plans to disclose the amount of cost recognized in the filer's
financial statements for each plan for the period presented and the
basis for determining the filer's share of the total plan costs. In
addition, the NOPR proposed to add a schedule entitled ``Employee
Pensions and Benefits,'' page 352, to both Forms 2 and 2-A, to provide
additional details about the types and costs of employee benefits. At
present, this information is not readily available in Forms 2 and 2-A,
due in part to the pipelines' participation in multi-employer benefit
plans in which they are assigned a portion of the total cost, and the
flexibility in the way in which information is described in a footnote
disclosure. The NOPR would permit forms users to assess the cost of
employee benefits and better compare this information between periods
and entities.
2. Commenters
39. The MPSC requests that the Commission require pipelines to
report the recommended/required contributions to pension and post-
retirement benefits other than pensions (PBOP) funds identified by the
pipelines' actuaries and reconcile any differences between these
recommended contribution amounts and the cost recognized on the
pipelines' financial statements.\60\ Further, MPSC requests that
pipelines also be required to reconcile any difference between the
actuary's recommended contribution and the amounts reported in Account
926.\61\
---------------------------------------------------------------------------
\60\ MPSC NOPR Comments at 8.
\61\ Id.
---------------------------------------------------------------------------
3. Commission Determination
40. The Commission believes that the proposed changes are
reasonable and respond adequately to the request for additional
information on pensions and benefits. The NOPR's proposal would require
filers to disclose the amount of costs for benefit plans and the basis
for determining the filer's share of the total cost. We believe this
level of detail is sufficient and reject as burdensome MPSC's request
that pipelines provide a reconciliation between costs recommended by an
actuarial and costs adopted. The MPSC's request for reconciliation is
the basis of review in a rate case for employer pension and PBOPs.
Accordingly, the proposed change in the NOPR is adopted.
K. Other Issues
Source of Capital Structure
1.Financial Forms NOPR
41. The NOPR rejected requests that pipelines be required to
provide additional detail on capital structure.\62\ The Industry
Coalition's request for additional capital structure information
included the requirement that if the pipeline believes an alternative
capital structure should be used for rate purposes, the appropriate
capital structure should be included in a footnote along with an
explanation of why another capital structure is appropriate.\63\ The
NOPR rejected this request on the grounds that it would require the
pipeline to speculate on a preferred capital structure.\64\
---------------------------------------------------------------------------
\62\ See NOPR at P 27.
\63\ See Industry Coalition NOI Comments at 4.
\64\ NOPR at P 27.
---------------------------------------------------------------------------
2. Commenters
42. Several commenters, including NGSA, APGA, Calpine, Enbridge,
and Process Gas Consumers Group (PGC), urge the Commission to
reconsider its ruling and to require pipelines to identify the specific
entity used as the source for the capital structure figures reported on
page 218a.\65\ PGC, APGA, NGSA and others observe that INGAA's reply
comments in response to the NOI stated that it has no objection to
identifying the entity whose capital structure is reported on page 218a
of Form 2.\66\
---------------------------------------------------------------------------
\65\ See APGA NOPR Comments at 3-4; NGSA NOPR Comments at 3;
Enbridge NOPR Comments at 3-4; Calpine NOPR Comments at 12; PGC NOPR
Comments at 3-4.
\66\ NGSA NOPR Comments at 3; PGC NOPR Comments at 3; APGA NOPR
Comments at 3-4. See INGAA NOI Reply Comments at 11.
---------------------------------------------------------------------------
3. Commission Determination
43. In light of the comments on this issue, including the
recognition that INGAA stated that it had no objection to identifying
the entity whose capital structure is reported on page 218a of the
form, the Commission will revise the instructions for page 218a of Form
2. The reporting pipeline will be required to provide, in a footnote,
the name of the entity whose capital structure is reported. We
reiterate, however, that the pipeline will not be required to identify
whether it plans to use a different capital structure and an
explanation of its appropriateness.
Reporting the Source of Return on Equity Figures
1. Financial Forms NOPR
44. The NOPR rejected proposals to add additional requirements to
the current return on equity disclosure. At present, page 218a of Form
2 requires that the pipeline provide the rate of return granted in the
last rate proceeding. If this rate of return is not available, the form
requires the pipeline to use the average rate of return earned during
the preceding three years. The NOPR expressed concern that adding
additional disclosures, including the pipeline's calculation of the
three year average rate of return, would be burdensome to the pipelines
and could have the unintended effect of turning the Form 2 into a
``mini'' rate case.\67\
---------------------------------------------------------------------------
\67\ NOPR P 27.
---------------------------------------------------------------------------
2. Commenters
45. APGA, NGSA, and PGC request that the Commission reconsider this
decision.\68\ At a minimum, PGC requests that the Commission require
pipelines to document whether they have elected to use the FERC-
approved rate of return on equity or a three-year average.\69\ APGA
requests that page 218a of Form 2 be amended to include a mandatory
disclosure of whether the listed return on equity is from the
pipeline's most recent rate proceeding (and if so, to identify such
proceeding by docket number and reference to any applicable documents
and/or Commission order), or if not, a description of the calculation
used to derive the listed rate of return.\70\ APGA asserts that this
approach would provide the public with vital information while not
encumbering pipelines with any additional burden.\71\ NGSA states that
INGAA's reply comments to the NOI indicated that it
[[Page 19396]]
did not object to providing which option was used for purposes of the
rate of return, with the caveat that a ``black box'' settlement figure
be viewed as an acceptable proxy for the pipeline's approved rate of
return.\72\ NGSA urges the Commission to adopt INGAA's suggested
compromise to document which option is reported.\73\
---------------------------------------------------------------------------
\68\ APGA NOPR Comments at 4; NGSA NOPR Comments 4; PGC NOPR
Comments at 3.
\69\ PGC NOPR Comments at 3.
\70\ APGA NOPR Comments at 4-5.
\71\ Id.
\72\ NGSA NOPR Comments at 4. See INGAA's Reply Comments to NOI
at 12.
\73\ NGSA NOPR Comments at 4.
---------------------------------------------------------------------------
3. Commission Determination
46. The Commission agrees that it would be a fair compromise to
require that pipelines disclose the following information when
reporting common equity at line (5), column (d), on page 218a: (1)
Indicate if the rate of return was formally approved in a rate case;
(2) indicate if the rate of return was a calculated black-box
settlement approved rate; or (3) if the rate of return was an actual
three-year average rate of return. This information should provide
sufficient clarification for the form's users and will not, we believe,
unduly burden the pipeline's reporting requirements.
Costs and Revenues Associated With Trackers or Special Surcharges
1. Commenters
47. The New York Public Service Commission (NYPSC) states that it
supports the Commission's proposed amendments to Forms 2, 2-A, and 3-Q.
NYPSC requests, however, that the Commission address its suggestions
for additional reporting requirements on Form 2, including billing
determinants for each rate schedule at the beginning and end of the
year, as well as any revenues and costs associated with trackers or
special surcharges.\74\
---------------------------------------------------------------------------
\74\ NYPSC NOPR Comments at 3.
---------------------------------------------------------------------------
2. Commission Determination
48. NYPSC's comments did not identify the items subject to tracking
or special surcharges. The Commission does not believe that a specific
cost and revenue analysis of these revenues is required since, with the
exception of some timing differences, the transactions generally should
be a wash, i.e., the reported revenues would include the surcharge
recoveries and the pipeline's operation and maintenance expenses would
reflect the costs incurred. We do agree that it would be beneficial to
have a summary of the revenues and expenses for each tracked cost and
special surcharge. Therefore, the Commission is adding this requirement
to the final rule. We will require that the pipeline provide this
summary in the footnotes to the financial statements. We decline to
grant NYPSC's request to require the pipeline to include billing
determinants for each rate schedule at the beginning and end of the
year. This information is available on the Index of Customers, filed by
pipelines on a quarterly basis.
L. Elimination of Form 11
1. Financial Forms NOPR
49. The NOPR sought comments on whether the information in FERC No.
11, Natural Gas Pipeline Company Quarterly Statement of Monthly Data
(Form 11) is relied upon by pipeline customers. The NOPR also asked
whether the information reported in Form 11 could, alternatively, be
incorporated into Form 3-Q. Form 11 is a quarterly filing made by
natural gas companies whose gas transported or stored for a fee
exceeded 50 million Dth in each of the three previous years.\75\ In
comments on the NOI, Williston had suggested that Form 11 be eliminated
and that the information required in Form 11 be incorporated into Form
3-Q.\76\
---------------------------------------------------------------------------
\75\ See 18 CFR 260.3.
\76\ See Williston Basin NOI Comments at 6-7.
---------------------------------------------------------------------------
2. Commenters
50. Most commenters expressed a need for the information reported
in Form 11. NGSA, Calpine, the IPPA and TIPRO oppose the elimination of
the form unless the information reported is added to Forms 2 and 3-Q,
with the assurance that this alternative would maintain the monthly
volume detail currently provided in Form 11.\77\ NGSA stated that the
information reported in Form 11 is the only source of contract demand
and volume information that enables customers to properly attribute
costs to incremental services and design rates.\78\ One commenter,
Dominion, asserted that the information reported in Form 11 is
unnecessary but stated that if the Commission deems that such
information needs to be reported, Form 11 should be incorporated into
Forms 2 and 3-Q.\79\
---------------------------------------------------------------------------
\77\ NGSA NOPR Comments at 7-8; Calpine NOPR Comments at 11;
ITPI NOPR Comments at 3-4.
\78\ NGSA NOPR Comments at 7-8.
\79\ Dominion NOPR Comments at 11-12.
---------------------------------------------------------------------------
3. Commission Determination
51. The comments indicate that Form 11 information is unique and
useful for performing a reasonable rate assessment. We agree with NGSA
and others that eliminating Form 11 without incorporating the detail in
other forms would remove from consideration data that is not available
elsewhere. We believe that the most efficient way to collect the
information now reported in Form 11 is to add a new schedule to Forms 2
and 3-Q, entitled ``Monthly Quantity & Revenue Data by Rate Schedule,''
to require the reporting of information now contained in Form 11. An
additional benefit of this change in reporting is that the data
collected in Form 11 can now be filed using Commission issued software
as part of the Form 2 filing rather than as a separate submission.
Accordingly, FERC Form 11 will be terminated on February 29, 2009, the
date that pipelines will be required to file a revised Form 3-Q.
M. Miscellaneous Issues
52. The Commission proposed to extend the filing date for the
Certified Public Accountant Certification Statement until May 18 of the
following calendar year for natural gas companies.\80\ The Commission
noted that this proposal would reduce the filing and administrative
burden by allowing more time for the company and the certified public
accountant to identify and resolve issues that may arise during the
course of the examination.\81\ No comments were filed on this issue
and, accordingly, the proposal is adopted as outlined in the NOPR.
---------------------------------------------------------------------------
\80\ See 18 CFR 158.11.
\81\ NOPR at P 63.
---------------------------------------------------------------------------
53. The NOPR discussed two questions posed in the NOI: (1) Whether
interstate pipelines should be required to notify the Commission when
their total sales or transactions fall below the minimum thresholds
established in the Commission's regulations such that the pipeline
believes that it is no longer subject to the filing requirements; and
(2) whether the Commission should require a showing of good cause
before granting an extension of time in which to file the reports.\82\
Calpine supports the concept that a pipeline should advise the
Commission if it believes it does not meet the threshold requirements
for reporting.\83\ The Commission agrees that notification of non-
filing status would be helpful to the Commission and users of Forms 2
and 2-A. Accordingly, at such time as a pipeline now subject to the
reporting requirements for either Form 2 or 2-A has, in three
consecutive years, experienced volumes and transactions below the
threshold levels specified in the Commission's regulations and believes
that it is no longer required to file a Form 2 or 2-A, it must notify
the Commission of this change. The
[[Page 19397]]
pipeline must file the notification on the date that the form would
otherwise be due. With respect to the requirement that a pipeline must
provide good cause when requesting an extension of time in which to
comply with the Commission's reporting regulations, the Commission
believes that any request for an extension of time must show good
cause. Without such a showing, the request may not be granted.
---------------------------------------------------------------------------
\82\ See 18 CFR 260.1 and 260.2.
\83\ Calpine NOPR Comments at 11.
---------------------------------------------------------------------------
IV. Implementation
54. The NOPR proposed an effective date of January 1, 2008.
Accordingly, companies subject to the new requirements would file their
revised Form 3-Q beginning with the first quarter of 2009 and their
revised Forms 2 and 2-A in 2009 for calendar year 2008. Form 11 data
will continue to be collected through 2008 and pipelines will be
required to file the form until February 28, 2009, when the revised 3-Q
filings will commence. While INGAA did not object to the Commission's
proposed effective date, it requests that the Commission recognize that
meeting this deadline may be difficult for some pipeline companies.\84\
INGAA states that although pipelines will not be required to file their
new annual Forms 2 and 2-A reflecting revised data for 2008 until 2009,
the changes will require modifications to accounting and computer
systems that will need to be in place on January 1, 2008, to capture
data for the full year 2008.\85\ Enbridge requests that the effective
date of the final rule be revised to the first day of the first full
calendar quarter that falls at least 90 days after the Commission's
issuance of a final rule.\86\
---------------------------------------------------------------------------
\84\ INGAA NOPR Comments at 2.
\85\ Id.
\86\ Enbridge NOPR Comments at 10.
---------------------------------------------------------------------------
55. The Commission proposed the January 1, 2008 effective date so
that pipelines' revised Form 2 and 2-A filings, reflecting an entire
year of data, could be filed in 2009. Enbridge's suggestion that the
effective date be changed to a mid-year calendar quarter would mean
that the new Form 2 data for filing year 2009 would be incomplete. The
proposals contained in the September 20, 2007 NOPR have not changed
substantially in the final rule. The reporting of some information,
deemed burdensome by pipeline filers, has been modified. Most of this
data will have been collected by the pipeline during the first quarter
of 2008 and the Commission does not believe that the necessary changes
warrant any delay in the filings required for 2009.
V. Regulatory Flexibility Act Certification
56. The Regulatory Flexibility Act of 1080 (RFA) \87\ generally
requires a description and analysis of final rules that will have a
significant economic impact on a substantial number of small
entities.\88\ However, the RFA does not define ``significant'' or
``substantial.'' Instead, the RFA leaves it up to an agency to
determine the effect of its regulations on small entities. Most filing
companies regulated by the Commission do not fall within the RFA's
definition of small entity.
---------------------------------------------------------------------------
\87\ 5 U.S.C. 601-12.
\88\ The RFA definition of ``small entity'' refers to the
definition provided in the Small Business Act, which defines a
``small business concern'' as a business that is independently owned
and operated and that is not dominant in its field of operation. 15
U.S.C. 632. The Small Business Size Standards component of the North
American Industry Classification System defines a small natural gas
pipeline company as one whose total annual revenues, including its
affiliates, are $6.5 million or less. 13 CFR 121,201.
---------------------------------------------------------------------------
57. The Commission estimates that there are 74 Major natural gas
pipeline companies and 44 Non-major companies that will be affected by
the final rule.\89\ As we stated in the NOPR, the rule will apply to
all interstate natural gas companies subject to the Commission's
jurisdiction. While we do not foresee that the Rule will have a
significant impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, we will consider granting
waivers in appropriate circumstances. In addition, the elimination of
Form 11 will further reduce the economic impact on most entities.
---------------------------------------------------------------------------
\89\ These numbers are based on the most recent filings.
---------------------------------------------------------------------------
58. Accordingly, the Commission certifies that the Rule will not
have a significant impact on a substantial number of small entities. As
a result, no regulatory flexibility analysis is required.
VI. Environmental Statement
59. Commission regulations require that an environmental assessment
or an environmental impact statement be prepared for a Commission
action that may have a significant effect on the human environment.\90\
However, in 18 CFR 380.4(a)(5), we categorically excluded the type of
information gathering required in this Rule from the requirement to
prepare an environmental impact statement. Thus, we affirm the finding
we made in the NOPR that this final rule does not impose any
requirements that might have a significant effect on the human
environment and find that no environmental impact statement concerning
this rule is required.
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\90\ Regulations Implementing National Environmental Policy Act,
Order No. 486, 52 FR 47897 (Dec. 17, 1987); FERC Stats. & Regs. ]
30,783 (Dec. 10, 1987) (codified at 18 CFR Part 380).
---------------------------------------------------------------------------
VII. Public Reporting Burden and Information Collection Statement
60. The following collections of information contained in this
Final Rule have been submitted to the Office of Management and Budget
(OMB) for review under Section 3507(d) of the Paperwork Reduction Act
of 1995.\91\ The Commission identifies the information provided under
Parts 158 and 260 of the Commission's regulations. The Commission is
revising the reporting requirements for interstate natural gas
companies as contained in the above financial and operational
information collections.
---------------------------------------------------------------------------
\91\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------
Information Collection Statement
Title: FERC Form No. 2, ``Annual Report for Major natural gas
companies;'' FERC Form No. 2-A, ``Annual Report for Nonmajor public
utilities and licensees; FERC Form No. 3-Q, ``Quarterly financial
report of electric utilities, licensees, and natural gas companies.''
FERC Form No. 11, ``Natural gas pipeline quarterly statement of
monthly data.:
Action: Final Rule.
OMB Control Nos.: 1902-0028 (Form 2); 1902-0030 (Form 2-A); 1902-
0205 (Form 3-Q), and 1902-0032 (Form 11).
Respondents: Business or other for profit.
Frequency of responses: Quarterly and Annually.
Necessity of the information: This Final Rule prescribes certain
modifications to the Commission's financial reports for interstate
natural gas companies, Form Nos. 2, 2-A, and 3-Q. The revisions adopted
in this Final Rule will increase the forms' usefulness to both the
public and the Commission. The Final Rule will improve the usefulness,
accuracy and transparency of financial information submitted to the
Commission. Expanding the detail of the financial data assists the
Commission in carrying out its responsibilities under the NGA to ensure
that rates are just and reasonable.
Burden Statement: There are an estimated 44 Nonmajor and 74 Major
natural gas companies that will be affected by the Final Rule, for a
total of 118 affected respondents.\92\ The change in annual public
reporting burden per
[[Page 19398]]
respondent for Form 2, Form 2-A, and Form 3-Q for Major and Form 3-Q
for Nonmajor natural gas companies is estimated to be 53, 135, 30, and
21 additional hours respectively. These estimates translate into 83
additional hours for Major natural gas companies annually and 156
additional hours for Nonmajor natural gas companies annually. The
corresponding annual aggregate increase per form is: 3,922 additional
hours annually for Form 2; 5,940 additional hours annually for Form 2-
A; 2,200 additional hours annually for Form 3-Q for Major natural gas
companies; and 924 additional hours annually for Form 3-Q for Nonmajor
natural gas companies. While the Final Rule increases the estimated
total annual burden by 13,006 hours, the Rule eliminates Form 11 which
reduces the total annual reporting burden by an estimated 888 hours. If
this change is taken into consideration, the annual burden increase
would be 12,118 hours. One commenter, Dominion, stated that while it
applauds the Commission for striving to achieve a balance between the
benefits these revisions will achieve, in assessing pipeline rates, and
the imposition of any additional burden on the pipeline, it believes
the estimated hours may be too low.\93\ No other commenters offered
burden estimates. Dominion estimates that the annual report will
require an additional 60 hours (the Commission estimates 53 hours) and
that preparation of information for Form 3-Q would be about 23 hours
per quarter (the Commission estimates seven hours).\94\ Dominion also
estimates that additional time will be required in the first year to
implement, including the required computer programming, the changes in
reporting requirements.\95\ The Commission agrees that some time will
be required to implement the changes, however, the Commission has
provided the companies with the software to prepare the financial
reports and we believe Dominion's estimates are excessive. Most of the
data required by the Final Rule is information that is already
collected by the pipeline company. Certain of the schedules added to
Form 3-Q are schedules that are currently in the annual forms and
require only that this data be reported on a quarterly basis in
addition to the annual reports. Further, the Final Rule has modified
some requirements that will ease considerably the reporting burden,
that is, reinstating the $250,000 cost threshold for page 357 of Form
2, and instating the same $250,000 threshold for new reporting on
affiliate transactions on page 358. In addition, the Final Rule
eliminates Form 11 which was previously filed in hard copy and
incorporates that information into the annual and quarterly forms,
thereby allowing the data to be submitted using Commission software.
This, too, produces a substantial decrease in burden. We believe that
the new, or revised, requirements strike a fair balance between the
benefits these changes will facilitate and the imposition of any
additional burden on the pipeline.
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\92\ These numbers are based on the most recent filings.
\93\ Dominion NOPR Comments at 4.
\94\ Id.
\95\ Id.
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Internal Review: The Commission has conducted an internal review of
the public reporting burden associated with this collection of
information and has assured itself, by means of its internal review,
that there is specific, objective support for this information burden
estimate. Moreover, the Commission has reviewed the collection of
information required by this rule and has determined that the
collection of information is necessary and conforms to the Commission's
plan, as described in this order, for the collection, efficient
management, and use of the required information.\96\
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\96\ See 44 U.S.C. 804(2).
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61. Interested persons may obtain information on the reporting
requirements by contacting: Federal Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426 [Attention: Michael Miller,
Office of the Chief Information Officer, phone: (202) 502-8415, fax:
(202) 273-0873; e-mail: Michael.Miller@ferc.gov]. Comments concerning
the collection of information and the associated burden estimates
should be sent to the contact listed above and to the Office of
Management and Budget, Office of Information and Regulatory Affairs,
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy
Regulatory Commission, phone (202) 395-7318, fax: (202) 395-7285].
VIII. Document Availability
62. In addition to publishing the full text of this document in the
Federal Register, the Commission provides all interested persons an
opportunity to view and/or print the contents of this document via the
Internet through the Commission's Home Page (http://www.ferc.gov) and
in the Commission's Public Reference Room during normal business hours
(8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE.,
Washington, DC 20426.
63. From the Commission's Home Page on the Internet, this document
is available at the Commission's document management system, e-Library.
The full text of this document is available on e-Library in PDF and
Microsoft Word format for viewing, printing, and/or downloading. To
access this document in e-Library, type the docket number excluding the
last three digits of this document in the docket number field.
63. User assistance is available for e-Library and the Commission's
Web site during normal business hours. For assistance, please contact
FERC Online Support at 1-866-208-3676 (toll free) or 202-502-6652 (e-
mail at FERCOn-LineSupport@ferc.gov) or the Public Reference Room at
202-502-8371, TTY 202-502-8659 (e-mail at public.reference@ferc.gov).
IX. Effective Date and Congressional Notification
64. This final rule will take effect April 10, 2008, and the
revisions to the forms are applicable on January 1, 2008, as proposed
in the NOPR, with one exception. While the rule eliminates Form 11, it
is important that the data collected in Form 11 continue to be filed
with the Commission. Accordingly, pipelines will be required to
continue to collect the data and file Form 11 for the remainder of
2008. Form 11 will be eliminated applicable as of February 28, 2009
when information for the fourth quarter of 2008 is filed. The January
1, 2008 applicability date will require Form 2 and 2-A filers to
collect the revised data during 2008 and file a revised annual form in
2009 for the 2008 reporting year. Form 3-Q filers will submit a revised
3-Q beginning with the first quarter of 2009. The information now
reported in Form 11 will be incorporated into Forms 2 and 3-Q beginning
in 2009.
65. The Commission has determined with the concurrence of the
Administrator of the Office of Information and Regulatory Affairs of
OMB that this final rule is not a major rule within the meaning of
section 251 of the Small Business Regulatory Enforcement Fairness Act
of 1996.\97\ The Commission will submit the final rule to both houses
of Congress and the General Accounting Office.
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\97\ 5 U.S.C. 801.
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List of Subjects
18 CFR Part 158
Administrative practice and procedure, Natural gas, Reporting and
recordkeeping requirements, Uniform System of Accounts.
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18 CFR Part 260
Natural gas, Reporting and recordkeeping requirements.
By the Commission.
Kimberly D. Bose,
Secretary.
In consideration of the foregoing, the Commission amends parts 158
and 260 of Title 18 of the Code of Federal Regulations, as set forth
below:
PART 158--ACCOUNTS, RECORDS, MEMORANDA AND DISPOSITION OF CONTESTED
AUDIT FINDINGS AND PROPOSED REMEDIES
0
1. The authority citation for part 158 continues to read as follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7102-7352.
0
2. Section 158.11 is revised to read as follows:
Sec. 158.11 Report of certification.
Each natural gas company not classified as Class C or Class D prior
to January 1, 1984 must file with the Commission by May 18 of the
following calendar year, a letter or report of the independent
accountant certifying approval, covering the subjects and in the format
prescribed in the General Instructions of the applicable Form No. 2 or
Form No. 2-A. The letter or report must also identify which, if any, of
the examined schedules do not conform to the Commission's requirements
and must describe the discrepancies that exist. The Commission will not
be bound by the certification of compliance made by an independent
accountant under this paragraph.
PART 260--STATEMENTS AND REPORTS (SCHEDULES)
0
3. The authority citation for part 260 continues to read as follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
0
4. Section 260.3 is removed.
Note: The following appendices will not be published in the Code
of Federal Regulations.
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[FR Doc. E8-6495 Filed 4-9-08; 8:45 am]
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