[Federal Register Volume 75, Number 120 (Wednesday, June 23, 2010)]
[Proposed Rules]
[Pages 35700-35709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-15164]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 260
[Docket No. RM07-9-003]
Revisions to Forms, Statements, and Reporting Requirements for
Natural Gas Pipelines
June 17, 2010.
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Notice of Proposed Rulemaking.
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SUMMARY: In this Notice of Proposed Rulemaking, the Federal Energy
Regulatory Commission proposes to revise certain financial reporting
forms required to be filed by natural gas companies (FERC Form Nos. 2,
2-A,
[[Page 35701]]
and 3-Q) to include functionalized fuel data on pages 521a through 521d
of those forms, and to include on those forms the amount of fuel
waived, discounted or reduced as part of a negotiated rate agreement.
We also propose to revise page 520 accordingly.
DATES: Comments are due August 23, 2010.
ADDRESSES: You may submit comments, identified by Docket No. RM07-9-
003, by any of the following methods:
Agency Web Site: http://www.ferc.gov. Documents created
electronically using word processing software should be filed in native
applications or print-to-PDF format and not in a scanned format.
Mail/Hand Delivery: Commenters unable to file comments
electronically must mail or hand deliver an original and 14 copies of
their comments to: Federal Energy Regulatory Commission, Office of the
Secretary, 888 First Street, NE., Washington, DC 20426.
FOR FURTHER INFORMATION CONTACT: Brian Holmes (Technical Information),
Office of Enforcement, Federal Energy Regulatory Commission, 888 First
Street, NE., Washington, DC 20426, Telephone: (202) 502-6008, E-mail:
[email protected].
Robert Sheldon (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426, Telephone: (202) 502-8672, E-mail:
[email protected].
Gary D. Cohen (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426, Telephone: (202) 502-8321, E-mail:
[email protected].
SUPPLEMENTARY INFORMATION:
Notice of Proposed Rulemaking
1. In response to a court remand \1\ of Order Nos. 710 and 710-
A,\2\ the Commission is granting a motion by the American Gas
Association (AGA) requesting that the Commission issue a Notice of
Proposed Rulemaking (Notice) proposing that the Commission revise FERC
Form Nos. 2, 2-A, and 3-Q, to include functionalized fuel data on pages
521a through 521d of those forms, and to include on such forms the
amount of fuel waived, discounted or reduced as part of a negotiated
rate agreement. We also propose to revise page 520 accordingly.
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\1\ American Gas Association v. FERC, 593 F.3d 14 (D.C. Cir.
2010).
\2\ Revisions to Forms, Statements, and Reporting Requirements
for Natural Gas Pipelines, Order No. 710, FERC Stats. & Regs. ]
31,267 (2008), order on reh' g and clarification, Order No. 710-A,
123 FERC ] 61,278 (2008).
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I. Background
2. In Order No. 710, the Commission revised its financial forms,
statements, and reports for natural gas companies, contained in FERC
Form Nos. 2, 2-A, and 3-Q to make the information reported in these
forms more useful by updating them to reflect current market and cost
information relevant to interstate natural gas pipelines and their
customers.
3. Among the changes required by the Final Rule, the Commission
adopted new schedules for Forms 2, 2-A, and 3-Q \3\ and added page 520
(Gas Account-Natural Gas) to Form 3-Q \4\ to report, in greater detail,
the acquisition and disposition of shipper-supplied gas.\5\ Order No.
710 requires pipelines to report: (1) The difference between the volume
of gas received from shippers and the volume consumed in pipeline
operations each month; (2) the disposition of any excess gas 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 the gas used to meet any deficiency.\6\ AGA expressed
support for these additions to the forms, but argued that greater
clarity could 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.''
\7\
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\3\ This new schedule reports: (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.
\4\ Page 520 was added to provide more timely reporting of the
quantity of natural gas received and delivered by the pipeline.
\5\ Order No. 710, P 13.
\6\ Id.
\7\ Id. P 15.
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4. In response to AGA's arguments, the Commission found that the
information that AGA requested to be broken out by function (e.g.,
transportation, storage, gathering, etc.) is available in Form 2 at
page 520.\8\ The Commission explained that 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.\9\
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\8\ Order No. 710, P 16.
\9\ Id.
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5. On rehearing, AGA argued, among other matters, that the fuel
data would be more useful if such data were broken out by different
pipeline functions, including transportation, storage, gathering, and
exploration/production, and should include, by function, the amount of
fuel waived, discounted or reduced as part of a negotiated rate
agreement.
6. In Order No. 710-A, the Commission addressed the various
requests for rehearing and clarification of Order No. 710, including
AGA's, and denied AGA's request to add additional detail to the fuel
costs reported at pages 521a and 521b on the basis that some of the
information sought by AGA, i.e., certain data broken out by function,
are already available on page 520 of Form Nos. 2 and 2-A and because
Order No. 710 also added page 520 to Form No. 3-Q.\10\ The Commission
found that, while the detail sought by AGA might provide additional
clarity with respect to fuel costs, the Commission did not believe its
exclusion would preclude the Commission's or customers' ability to
assess the justness and reasonableness of pipeline rates.\11\ The
Commission also denied AGA's request that pipelines provide information
regarding the amount of fuel that a pipeline has waived, discounted or
reduced as part of a negotiated rate agreement, deeming such
information unnecessary and burdensome.\12\ Chairman (then
Commissioner) Wellinghoff issued a partial dissent arguing that AGA's
proposals should have been adopted.\13\
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\10\ Order No. 710-A, P 9-11.
\11\ Id. P 10.
\12\ Id. P 11.
\13\ Id. at 62,708-9.
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7. Subsequently, AGA filed a petition for review in the United
States Court of Appeals for the District of Columbia Circuit arguing
that the Commission erred by not addressing the concerns raised by
Chairman Wellinghoff in his partial dissent to Order No. 710-A. The
court agreed and remanded the matter back to the Commission for further
proceedings.\14\
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\14\ 593 F.3d at 21.
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8. Following the court's remand, AGA filed a motion requesting that
the Commission issue a Notice proposing revisions to FERC Form Nos. 2,
2-A, and 3-Q, to add additional details as initially proposed by AGA in
the rulemaking proceeding. Comments in support of AGA's motion were
filed by Kansas Corporation Commission and by
[[Page 35702]]
Independent Oil & Gas Association of West Virginia, Inc.
II. Discussion
9. In this Notice, the Commission addresses the concerns raised by
AGA in its motion. In Order No. 710-A, the Commission found that the
detail sought by AGA might provide additional clarity with respect to
fuel costs, but decided, nonetheless, not to require the reporting of
this information, based on concerns over the burden associated with
compliance with such a requirement.\15\ The Commission also declined to
accept AGA's proposal regarding reporting details about the amount of
fuel that a pipeline has waived, discounted or reduced as part of a
negotiated rate agreement, based on concerns that this information
might not be significant and might not be readily available, as many
pipelines do not periodically file to adjust fuel rates and may not
keep records of this type of information.\16\
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\15\ Order No. 710-A, P 10.
\16\ Id. P 11.
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10. The court ruled that the Commission's earlier findings did not
discuss AGA's argument that pages 520 and 521 of the forms work in
tandem and unless the information provided on pages 521a and 521b is
broken out by function, a shipper cannot match the revenues generated
by the sale of excess fuel with the functionalized costs reported on
page 520. Thus, our preliminary view is that the additional information
proposed to be reported on pages 521a and 521b will allow the user to
determine if there is a cross-subsidy, which is critical to assessing
the justness and reasonableness of the pipeline's fuel rates.\17\
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\17\ We note that our proposal renumbers page 521 as 521a,
renumbers page 521a as 521b, and adds two runover pages as 521c and
521d. The pages should line up with 521a on top of page 521b, with
page 521c a continuation of page 521a and page 521d a continuation
of page 521b. The references in this Notice to pages 521a and 521b
assume the inclusion of pages 521c and 521d.
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11. Moreover, as pointed out by AGA, while page 520 of the form
provides certain fuel information by function, the information is not
adequate to enable a form user to determine where on the pipeline
system fuel costs are being incurred and how they are being allocated.
As stated in the Final Rule, page 520 of Form Nos. 2 and 2-A provides
fuel losses by function (unaccounted for gas is broken out by function
at lines 30-34). AGA argues that additional detail regarding fuel costs
is required for pages 521a and 521b to ensure that the Commission and
pipeline customers have sufficient information required to assess the
justness and reasonableness of pipeline rates. We agree and therefore
propose to require that the fuel information be disaggregated by
function to provide greater clarity with regard to fuel costs. The
Commission believes that the availability of this information, reported
by function, is consistent with our goal in the Final Rule of having
sufficient information to allow the Commission and pipeline customers
to assess the impact on pipeline rates of rising fuel costs. Thus, our
proposal in this Notice includes the level of detail suggested by AGA
and as explained and shown below, we propose to require additional
information to be reported on pages 521a and 521b of the forms.
12. Specifically, we propose to revise pages 521a and 521b to
provide more detailed information about the information that previously
has been reported on page 520, Gas Account--Natural Gas. However, the
functional category for production/extraction/processing that we are
here proposing to add to page 521a and 521b is additional information
that has not previously been reported in page 520. Consequently, we
propose to add a line on page 520 for Gas of Others Received for
Production/Extraction/Processing (Accounts 490 and 491) and another
line for Gas of Others Delivered for Production/Extraction/Processing
(Accounts 490 and 491). This provides a bridge between the production/
extraction/processing function on pages 521a, 521b and 520. In
addition, we propose to revise page 520, line 29 (current line 27) to
read Other Deliveries and Gas Used for Other Operations. Again, this
allows the reporting of gas used in operations with the detail reported
in pages 521a and 521b.
13. Finally, we propose to revise the heading on page 520 for Gas
Unaccounted For to read Gas Losses and Gas Unaccounted For.
Additionally, as we are here proposing to have more detailed
information on fuel costs (broken down by function) reported on pages
521a and 521b, we are removing (as duplicative) the prior requirement
to report information on fuel costs in a more summary fashion on page
520.
14. AGA also requested the reporting of the amount of fuel by
function that has been waived, discounted or reduced as part of a
negotiated rate agreement. AGA argued that this information would
enable pipeline customers to better determine if any inappropriate
cross-subsidization is occurring. The Commission has a strict policy
that existing shippers must not subsidize the negotiated rate program,
and we agree that this additional information could be useful in
identifying potential violations of that policy.\18\ Therefore, we
propose that fuel costs and revenues associated with each type of rate
structure (i.e., negotiated, discounted, or recourse) be broken down by
function to provide better information with which to assess the
justness and reasonableness of a pipeline's fuel rates.
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\18\ See Alternative to Traditional Cost-of-Service Ratemaking
for Natural Gas Pipelines; Regulations of Negotiated Transportation
Services of Natural Gas Pipeline (Alternative Rate Policy
Statement), 74 FERC ] 61,076, at 61,242 (1996), and NorAm Gas
Transmission Company, 77 FERC ] 61,011 (1996).
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15. We also are revisiting the earlier finding that information
regarding the amount of fuel that a pipeline has waived, discounted or
reduced as part of a negotiated rate agreement, may not be readily
available. AGA argued that some pipeline maintain this information by
function in order to change a fuel rate either in a tracking mechanism
or in a future section 4 rate filing, and that such information is
readily accessible. After further consideration of these arguments we
have decided to propose the more detailed reporting of this
information, as suggested by AGA, and estimate that the burden
associated with this proposal is related solely to inputting the data
in the Form Nos. 2, 2-A, and 3-Q and with this additional information
we now propose to find that, in light of the usefulness of this
information, this small increase in filing burden is justified.
16. Thus, we propose in this Notice to revise the financial
reporting forms required to be filed by natural gas companies (FERC
Form Nos. 2, 2-A, and 3-Q) to include functionalized fuel data on pages
521a and 521b of those forms, and to include on such forms the amount
of fuel waived, discounted or reduced as part of a negotiated rate
agreement. Specifically, we propose to revise pages 521a and 521b to
include the following: (1) Expanding line 1 to separately reflect
shipper supplied fuel by function, i.e., production/extraction/process,
gathering, transmission, distribution, and storage; (2) expanding lines
2, 3, and 4 to separately list the volumes for each of these functions;
(3) expanding the listing of volumes to include discounted, negotiated
and recourse rates; (4) expanding line 5 to separately list the volumes
for each of these functions; (5) expanding the reporting of dollar
amounts to include amounts collected under discounted, negotiated and
recourse rates; (6) requiring the reporting of volumes of gas (in
dekatherms) not collected where the request for that gas has been
waived or reduced under discounted or negotiated rates; and (7)
directing filers (if the
[[Page 35703]]
pipeline does not use a particular function) to enter a zero for that
field.
17. In comments to the notice of proposed rulemaking in this
proceeding issued on September 20, 2007,\19\ the Interstate Natural Gas
Association of America commented that the Commission should revise the
reporting requirement for pages 521a and 521b to have these data
reported on a quarterly basis, rather than a monthly basis. While this
suggestion is not part of the Commission's proposal in this Notice, we
nonetheless invite comments on this suggestion and reserve decision,
until the final rule, as to which of these options will be adopted in
our final rule.
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\19\ Revisions to Forms, Statements, and Reporting Requirements
for Natural Gas Pipelines, Notice of Proposed Rulemaking, FERC
Stats. & Regs. ] 32,623 (2007).
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III. Information Collection Statement
18. The following collections of information contained in this
proposed rule have been submitted to the Office of Management and
Budget for review under section 3507(d) of the Paperwork Reduction Act
of 1995.\20\ The Commission solicits comments on the Commission's need
for this information, whether the information will have practical
utility, the accuracy of the burden estimates, ways to enhance the
quality, utility and clarity of the information to be collected or
retained, and any suggested methods for minimizing respondents' burden,
including the use of automated information techniques.
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\20\ 44 U.S.C. 3507(d).
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Estimated Annual Burden:
19. The Commission estimates that on average it will take
respondents five additional hours per collection to comply with the
proposed requirements. Most of the additional information required to
be reported is already compiled and maintained by the pipelines, and
will not substantially increase the existing reporting burden. This
proposal will increase the burden hours as follows:
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Change in the Change in the
Number of number of Filings per total annual
Data collection form respondents hours per year hours for this
respondent form
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FERC Form 2..................................... 84 5 1 420
FERC Form 2-A................................... 44 5 1 220
FERC Form 3-Q................................... 128 5 3 1,920
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Totals...................................... .............. .............. .............. 2,560
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Information Collection Costs: The Commission seeks comments on the
costs to comply with these requirements. As most of the proposed
additional data are already maintained by the pipelines, the Commission
estimates that the additional collection costs will not be overly
burdensome.
Title: FERC Form No. 2, ``Annual Report for Major Natural Gas
Companies''; FERC Form No. 2-A, ``Annual Report for Nonmajor Natural
Gas Companies''; FERC Form No. 3-Q, ``Quarterly Financial Report of
Electric Utilities, Licensees, and Natural Gas Companies.''
Action: Proposed information collection.
OMB Control Nos. 1902-0028 (Form No. 2); 1902-0030 (Form No. 2-A);
and 1902-0205 (Form No. 3-Q).
Respondents: Businesses or other for profit.
Frequency of responses: Annually (Form No. 2 and 2-A) and quarterly
(Form No. 3-Q).
20. Necessity of the information: The information maintained and
collected under the requirements of part 260 is essential to the
Commission's oversight duties. The data now reported in the forms does
not provide sufficient information to the Commission and the public to
permit an evaluation of the filers' jurisdictional rates. Since the
triennial restatement of rates requirement was abolished and pipelines
are no longer required to submit this information, the need for current
and relevant data is greater than in the past. The information
collection proposed in the Notice of Proposed Rulemaking will increase
the forms' usefulness to both the public and the Commission. Without
this information, it is difficult for the Commission and the public to
perform an assessment of pipeline costs, and thereby help to ensure
that rates are just and reasonable. We do not believe that the
additional burden created by the reporting of this information is
significant, because the pipelines should already have this information
readily available for their own use in developing separately stated
fuel rates in their tariffs. In any event, we believe this additional
information will allow the Commission and form users to better analyze
pipeline fuel costs, an important component in assessing the justness
and reasonableness of pipelines' rates.
21. Internal Review: The Commission has reviewed the proposed
changes and has determined that the changes are necessary. These
requirements conform to the Commission's need for efficient information
collection, communication, and management within the energy industry.
The Commission has assured itself, by means of internal review, that
there is specific, objective support associated with the information
requirements.
22. Interested persons may obtain information on the reporting
requirements by contacting: Federal Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426 [Attention: Ellen Brown, Office
of the Executive Director, phone (202) 502-8663, fax: (202) 273-0873,
e-mail: [email protected].] For submitting comments concerning the
collections of information and the associated burden estimates, please
send your comments to the contact listed above and to the Office of
Information and Regulatory Affairs, Office of Management and Budget,
725 17th Street, NW., Washington, DC 20503 [Attention: Desk Officer for
the Federal Energy Regulatory Commission, phone: (202) 395-4638, fax:
(202) 395-7285]. Due to security concerns, comments should be sent
electronically to the following e-mail address: [email protected]. Please refer to OMB Control Nos. 1902-0028
(FERC Form No. 2), 1902-0030 (FERC Form No. 2-A), and 1902-0205 (FERC
Form No. 3-Q), and the docket number of this proposed rulemaking in
your submission.
IV. Environmental Analysis
23. The Commission is required to prepare an Environmental
Assessment or an Environmental Impact Statement for any action that may
have a significant adverse effect on the human
[[Page 35704]]
environment.\21\ No environmental consideration is necessary for the
promulgation of a rule that addresses information gathering, analysis,
and dissemination,\22\ and, also, addresses accounting.\23\ No
environmental consideration is raised by the promulgation of a rule
that is procedural or does not substantially change the effect if
adopted, and thus, this rulemaking falls within these exclusions.\24\
This proposed rule, if finalized, involves information gathering,
analysis, and dissemination. Consequently, neither an Environmental
Impact Statement nor an Environmental Assessment is required.
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\21\ Regulations Implementing the National Environmental Policy
Act, 52 FR 47897 (Dec. 17, 1987), Order No. 486, FERC Stats. &
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
\22\ See 18 CFR 380.4(a)(5).
\23\ See 18 CFR 380.4(a)(16).
\24\ See 18 CFR 380.4(a)(2)(ii).
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V. Regulatory Flexibility Act
24. The Regulatory Flexibility Act of 1980 (RFA) \25\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small
entities.\26\ Under the industry standards used for purposes of the
RFA, a natural gas company qualifies as a ``small entity'' if it has
annual revenues of less than $7 million. Most companies regulated by
the Commission do not fall within the RFA's definition of a small
entity.\27\ Thus, most interstate natural gas companies to which the
rules proposed herein, if finalized, would apply, do not fall within
the RFA's definition of small entities. In fact, our most recent
information shows that only six natural gas companies not affiliated
with a large natural gas company fall within the definition of a small
entity. (These six entities constitute 4.7% of the 128 total
companies.) Consequently, the rules proposed herein, if finalized, will
not have a significant economic effect on a substantial number of small
entities.
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\25\ 5 U.S.C. 601-612.
\26\ Id.
\27\ 5 U.S.C. 601(3).
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VI. Comment Procedures
25. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due August 23, 2010. Comments must refer to
Docket No. RM07-9-003, and must include the commenter's name, the
organization they represent, if applicable, and their address in their
comments.
26. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
27. Commenters that are not able to file comments electronically
must send an original and 14 copies of their comments to: Federal
Energy Regulatory Commission, Office of the Secretary, 888 First
Street, NE., Washington, DC 20426.
28. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.
VII. Document Availability
29. 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 FERC's Home Page (http://www.ferc.gov) and in FERC's
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m.
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
30. From FERC's Home Page on the Internet, this information is
available on eLibrary. The full text of this document is available on
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or
downloading. To access this document in eLibrary, type the docket
number excluding the last three digits of this document in the docket
number field.
31. User assistance is available for eLibrary and the FERC's Web
site during normal business hours from FERC Online Support at 202-502-
6652 (toll free at 1-866-208-3676) or e-mail at
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at
[email protected].
List of Subjects in 18 CFR Part 260
Natural gas, Reporting and recordkeeping requirements.
By direction of the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
Note: The following revised schedules will not be published in
the Code of Federal Regulations.
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[FR Doc. 2010-15164 Filed 6-22-10; 8:45 am]
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