[Code of Federal Regulations]
[Title 18, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 18CFR284.10]

[Page 737-738]
 
           TITLE 18--CONSERVATION OF POWER AND WATER RESOURCES
 
  CHAPTER I--FEDERAL ENERGY REGULATORY COMMISSION, DEPARTMENT OF ENERGY
 
PART 284_CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE 
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES--Table of Contents
 
               Subpart A_General Provisions and Conditions
 
Sec. 284.10  Rates.

    (a) Applicability. Any rate charged for transportation service under 
subparts B and G of this part must be established under a rate schedule 
that is filed with the Commission prior to

[[Page 738]]

commencement of such service and that conforms to the requirements of 
this section.
    (b) Rate objectives. Maximum rates for both peak and offpeak periods 
must be designed to achieve the following three objectives:
    (1) Rates for service during peak periods should ration capacity;
    (2) Rates for firm service during off-peak periods and for 
interruptible service during all periods should maximize throughput; and
    (3) The pipeline's revenue requirement allocated to firm and 
interruptible services should be attained by providing the projected 
units of service in peak and off-peak periods at the maximum rate for 
each service.
    (c) Rate design--(1) Volumetric rates. Except as provided in Sec. 
284.7(e), any rate filed for service subject to this section must be a 
one-part rate that recovers the costs allocated to the service to the 
extent that the projected units of that service are actually purchased 
and may not include a demand charge, a minimum bill or minimum take 
provision or any other provision that has the effect of guaranteeing 
revenue. Such rate must separately identify cost components attributable 
to transportation, storage, and gathering costs.
    (2) Based on projected units of service. Any rate filed for service 
subject to this section must be designed to recover costs on the basis 
of projected units of service. The fixed costs allocated to capacity 
reservations, as determined in accordance with Sec. 284.7(e), should be 
used along with the projected nominations accepted by the pipeline to 
compute the unit reservation fee. The remaining fixed costs and all 
variable costs should be used to determine the volumetric rate computed 
on the basis of projected volumes to be transported. The units projected 
for the service in rates filed under this section may be changed only in 
a subsequent rate filing under section 4 of the Natural Gas Act.
    (3) Differentiation due to time and distance. Any rate filed for 
service subject to this section must reasonably reflect any material 
variation in the cost of providing the service due to:
    (i) Whether the service is provided during a peak or an off-peak 
period; and
    (ii) The distance over which the transportation is provided.
    (4) Cost basis for rates. (i) Any maximum rate filed under this 
section must be designed to recover on a unit basis, solely those costs 
which are properly allocated to the service to which the rate applies.
    (ii) Any minimum rate filed under this section must be based on the 
average variable costs which are properly allocated to the service to 
which the rate applies.
    (5) Rate flexibility. (i) Any rate schedule filed under this section 
must state a maximum rate and a minimum rate.
    (ii)(A) Except as provided in paragraph (d)(5)(ii)(B) of this 
section the pipeline may charge an individual customer any rate that is 
neither greater than the maximum rate nor less than the minimum rate on 
file for that service.
    (B) If a pipeline does not hold a blanket certificate under Subpart 
G of this part, it may not charge, in a transaction involving its 
marketing affiliate, a rate that is lower than the highest rate it 
charges in any transaction not involving its marketing affiliate.
    (iii) The pipeline may not file a revised or new rate designed to 
recover costs not recovered under rates previously in effect.

[Order 436, 50 FR 42493, Oct. 18, 1985, as amended at 50 FR 52274, Dec. 
23, 1985; 53 FR 22163, June 14, 1988; Order 522, 55 FR 12169, Apr. 2, 
1990; Order 581, 60 FR 53072, Oct. 11, 1995. Redesignated and amended by 
Order 637, 65 FR 10220, Feb. 25, 2000]