Preservation of Records of Public Utilities and Licensees, Natural Gas Companies, and Oil Pipeline Companies

Federal RegisterJan 10, 2000

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DEPARTMENT OF ENERGY

FEDERAL ENERGY REGULATORY COMMISSION

18 CFR Parts 125, 225, and 356

[Docket No. RM99-8-000]

Preservation of Records of Public Utilities and Licensees,

Natural Gas Companies, and Oil Pipeline Companies

December 21, 1999.

AGENCY: Federal Energy Regulatory Commission.

ACTION: Notice of Proposed Rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes

to amend its records retention regulations for public utilities and

licensees, natural gas companies, and oil pipeline companies

(``regulated companies''). The Commission proposes to update its

regulations and to eliminate unnecessary burdens on regulated companies

as part of its ongoing program to reduce or eliminate burdensome and

unnecessary regulatory requirements. If adopted, the burden of

maintaining records on regulated companies would be significantly

reduced.

DATES: Comments on the proposed rulemaking are due on or before March

10, 2000. The Commission will also permit interested persons to submit

reply comments in response to the initial comments filed in this

proceeding. Reply comments should not exceed 50 double-spaced pages and

should include an executive summary. The original and 14 copies of the

reply comments must be received on or before April 10, 2000.

ADDRESSES: File comments on the notice of proposed rulemaking with the

Office of the Secretary, Federal Energy Regulatory Commission, 888

First Street, N.E., Washington, DC 20426. Comments should reference

Docket No. RM99-8-000.

FOR FURTHER INFORMATION CONTACT:

Marybeth Schumann (Technical Information), Office of Finance,

Accounting and Operations, 888 First Street, NE Washington, DC 20426

(202) 208-2332.

Julia A. Lake (Legal Information), Office of the General Counsel, 888

First Street, NE Washington, DC 20426 (202) 208-2019.

SUPPLEMENTARY INFORMATION: 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.fed.us) and in FERC's Public Reference Room during normal

business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First

Street, NE, Room 2A, Washington, DC 20426.

From FERC's Home Page on the Internet, this information is

available in both the Commission Issuance Posting System (CIPS) and the

Records and Information Management System (RIMS).

--CIPS provides access to the texts of formal documents issued by the

Commission since November 14, 1994.

--CIPS can be access using the CIPS link or the Energy Information

Online icon. The full text of this document will be available on CIPS

in ASCII and WordPerfect 8.0 format for viewing, printing, and/or

downloading.

--RIMS contains images of documents submitted to and issued by the

Commission after November 16, 1981. Documents from November 1995 to the

present can be viewed and printed from FERC's Home Page using the RIMS

link or the Energy Information Online icon. Descriptions of documents

back to November 16, 1981, are also available from RIMS-on-the-Web;

requests for copies of these and other older documents should be

submitted to the Public Reference Room.

User assistance is available for RIMS, CIPS, and the Website during

normal business hours from our Help line at (202) 208-2222 (E-Mail to

WebM[email protected]) or the Public Reference at (202) 208-1371 (E-

Mail to [email protected]).

During normal business hours, documents can also be viewed and/or

printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC

Website are available. User assistance is also available.

I. Introduction

The Federal Energy Regulatory Commission (Commission) proposes to

amend Parts 125, 225, and 356 1 of its regulations to

update, reduce, and clarify records retention requirements for

jurisdictional public utilities and licensees, natural gas companies

and oil pipeline companies. This proposed rule is part of the

Commission's ongoing program to update and eliminate burdensome and

unnecessary requirements and if adopted these changes would

significantly reduce the burden of maintaining records for regulated

companies. This process was also initiated to respond to requests made

by the Office of Management and Budget (OMB) and the industry.

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\1\ 18 CFR Parts 125, 225, and 356.

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II. Background

Both the Federal Power Act 2 and the Natural Gas Act

3 require jurisdictional companies to keep records that the

Commission may prescribe ``as necessary or appropriate for purposes of

administration'' of these acts.4 In 1977, the Commission

assumed jurisdiction over transportation of oil by oil pipeline

companies from the Interstate Commerce Commission by 705(a) of the

Department of Energy Organization Act.5 Section 20 of the

Interstate Commerce Act 6 requires oil pipeline companies to

keep records that the Commission determines are necessary to

effectively regulate those companies. In 1983, the Commission last

amended its records retention regulations applicable to the public

utilities and licensees, natural gas companies, and oil pipeline

companies.7

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\2\ Section 301, 16 U.S.C. 825(a)

\3\ Section 8, 15 U.S.C. 717g(a)

\4\ Section 402(a)(2) of the Department of Energy Organization

Act transfers these Federal Power Act and Natural Gas Act

responsibilities from the Federal Power Commission to the Federal

Energy Regulatory Commission. 42 U.S.C. 7172(a)(2).

\5\ 42 U.S.C. 7295.

\6\ 49 App. U.S.C. 1 et seq.

\7\ 48 FR 12722 (1983).

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In response to the Office of Management and Budget (OMB) request

during recertification of the information collection requirements of

FERC Form 555, Preservation of Records of Public Utilities and

Licensees, Natural Gas Companies, and Oil Pipeline Companies, the

Commission agreed to review the media and records retention

requirements for the public utilities and licensees, natural gas

companies, and oil pipeline companies. OMB also requested that the

Commission review the possibility of reducing the records retention

requirements for general ledgers from 50 years to 10 years and plant

ledgers from 50 years to 25 years. In January, the Commission updated

the media requirements 8 and this notice of proposed

rulemaking is the result of a review of the current records retention

regulations for public utilities and licensees, natural gas companies,

and oil pipeline companies.

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\8\ 86 FERC para. 61,005 (1999).

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III. Discussion

The Commission proposes to make modifications to the current public

utilities and licensees, natural gas companies, and oil pipeline

companies

[[Page 1485]]

records retention regulations.9 These proposed changes to

Parts 125, 225, and 356 include revising the general instructions,

shortening various records retention periods, increasing retention

periods for a few categories of records, and removing all but two

retention reserve items.

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\9\ See the tables in Appendices A, B, and C depicting the

differences between the current and proposed records retention

requirements.

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A. Changes to Public Utilities and Licensees, and Natural Gas Companies

General Instructions.

The following proposed changes to the general instructions of Parts

125 and 225 incorporate the Commission's new regulation on record

storage media and clarify the Commission's regulations on keeping

records used to support costs in rate cases and depreciation (see

proposed schedules 125.2 and 225.2).

1. 125.2(d) and 225.2(d)--Incorporate the accounting issuance AI99-

2-000 10 on record storage media.

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10 86 FERC para. 61,005 (1999).

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2. 125.2(k) and 225.2(k)--Incorporate the need to keep records that

will be used for ``rate cases'' until the next rate case.

3. 125.2(l) and 225.2(l)--Incorporate a paragraph on life or

mortality study data needed to be retained for depreciation purposes.

The Commission believes that these changes are needed to bring

clarity to the Commission's records retention instructions and

regulations.

B. Shortening of Public Utilities and Licensees, and Natural Gas

Companies Records Retention Periods.

The Commission proposes to shorten certain retention periods in 18

CFR 125.3 and 225.3 to reduce the recordkeeping burden on the

industries. The records retention periods for the following item

numbers and description of records found in the regulations will be

reduced for both the public utilities and licensees, and natural gas

companies except where noted:

Item Number and Description

2. (a) of Organizational documents.

3. (a) of Contracts and agreements (public utilities and licensees

only).

3. (b) of Contracts and agreements.

4. (a) and (b) of Accountants' and auditors' reports.

6. (a)(1), (a)(2), (b)(1), and (b)(2) of General and subsidiary

ledgers.

7. Journals.

8. (a) of Journal vouchers and journal entries.

9. Cash books.

10. Voucher registers.

11. (a), (b), (c), (d) of Vouchers.

12.1. (b) of Production-Nuclear (public utilities and licensees only).

15. (a), (b), (c) of Maintenance work orders.

16. (a), (b) of Plant ledgers.

17. (a), (b), (c), (d), (e), (f) of Construction work in progress

ledgers.

18. (a), (b) of Retirement work in progress ledgers, work orders, and

supplemental records.

18. (c) of Retirement work in progress ledgers, work orders, and

supplemental records (public utilities and licensees only).

19. Summary sheets, distribution sheets, reports, and statements.

20. (a) Appraisals and valuations.

33. (a) and (b) of Revenue summaries.

34. (a)(1), (3), (5), (6) and (b), (c) of Tax records.

36. (b) of Records of deposits with banks.

38. (a) of Statistics.

41. Reports to Federal and State regulatory commissions.

42. Advertising.

In addition, the Commission proposes to make a change to the public

utilities and licensees and natural gas companies requirements that are

tied to ``FERC audit reports.'' The Commission no longer audits on a

three year cycle. Instead it conducts industry wide audits on specific

Commission accounting issues. The Commissions proposed changes to its

regulatory requirements regarding audits range between two and six

years.

Item Number and Description

1. Annual reports or statements to stockholders.

26. Material ledgers.

29. Customers service applications and contracts.

30. Rate Schedules.

C. Additions to Public Utilities and Licensees and Natural Gas

Companies Records Retention Periods.

To continue to meet its regulatory requirements the Commission

proposes to add records retention requirements for the following public

utilities and licensees, and natural gas companies record categories

(see proposed schedules 125.3 and 225.3):

Item Number and Description

20. (b) Appraisals and valuations.

21. (a) The original or reproduction of engineering records, drawings

and other supporting data.

35. Statement of funds and deposits.

Proposed retention item 20(b) is added to include property or

investments that are written up or down as a result of mergers or

acquisitions, asset impairments, and other basis. The records retention

item 20(b) will be 10 years after the event. These added records

retention requirements will allow the Commission adequate time to

review these events as necessary.

Proposed retention item 21(a) maps, diagrams, profiles,

photographs, field survey notes, plot plan, detail drawings, and

records of engineering studies and similar records showing the location

of proposed or as-constructed facilities is changed to include

retention until retired. These records are needed for our environmental

reviews, and therefore should be retained until the facilities are

retired.

Proposed retention item 35, Statement of funds and deposits, is

revised in response to FERC policy statement on Post-Employment

Benefits Other Than Pension 11 (PBOP), to require retention

of records until the fund is dissolved or terminated. This information

is necessary to allow the Commission to ensure the proper disposition

of rate payer contributions for PBOPs.

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\11\ 61 FERC para. 61,330 (1992).

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D. Removal of Public Utilities and Licensees, and Natural Gas Companies

Reserve Accounts.

The Commission proposes to remove all but one reserve item in both

public utilities and licensees, and natural gas companies (see proposed

schedule 125.3). The removal of these reserve items allows the records

retention schedule to reflect only the records the Commission needs to

fulfill its mission. However, we will keep reserve item 37 as place

holder in the public utilities and licensees records retention schedule

in order to align the public utilities and licensees and natural gas

companies item numbers.

E. Changes to Oil Pipeline Companies General Instructions.

The Commission proposes to reorganize the oil pipeline companies

general instructions to better align them to the public utilities and

licensees, and natural gas companies general instructions (see proposed

schedule 356.2). This reorganization will make the general instructions

for all three industries consistent.

F. Shortening of Oil Pipeline Companies Records Retention Periods.

The Commission proposes to shorten certain oil pipeline companies

retention periods for seven of the twenty four item to three years for

Part 356 (see proposed schedule 356.3). These proposed reductions

represent a significant reduction in reporting

[[Page 1486]]

burden on the oil industry. They are based on the statutory mandate

that limits oil pipeline company's reparations recovery to three years

from the time the cause of action accrues.12 We are

proposing that the following oil pipeline companies records retention

requirements be reduced to three years:

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\12\ 49 App. U.S.C. 1 et seq..

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Item Number and Description

2. Minutes of Directors and other corporate meetings.

4. (a) Contracts and related papers.

7. (a) and (b) Ledgers.

8. (a) and (b) Journals.

9. (a) and (b) Vouchers.

11. Records of accounting.

24. (a) Annual financial operating reports.

G. Additions to Oil Pipeline Companies Records Retention Periods.

The Commission proposes to revise records retentions requirements

for the following oil pipeline companies record items (see proposed

schedule 356.3):

Item Number and Description

12. (d)(1) Group method and depreciation rate.

12. (g) Files of detailed authorizations for expenditures.

Proposed records item 12(d)(1) is revised from 10 years to 3 years

after disposition of property because the Commission needs to review

these records at any time during the life of the asset. Proposed

retention item 12 (g) is also revised to extend the period from 3 years

from acquisition to 3 years after disposition of property because the

Commission must be able to review any records related to property or

equipment at any time during the life of the asset.

H. Miscellaneous

The Commission notes that OMB specifically requested the Commission

review the possibility of reducing the records retention requirements

for general ledgers to 10 years and plant ledgers to 25 years. In this

proposed rulemaking, the Commission is reducing the records retention

requirements for public utilities and licensees, and natural gas

companies general and plant ledgers from 50 years to 25 years. The

Commission is not currently proposing to further shorten the records

retention requirements for public utilities and licensees, and natural

gas companies. However, the Commission will consider whether to further

shorten the records retention periods consistent with its regulatory

obligations and public comments on this issue. The Commission is also

proposing to reduce the records retention requirements for oil pipeline

companies' general ledgers and plant ledgers from 50 years to 3 years

respectively.

IV. Environmental Statement

Commission regulations require that an environmental assessment or

an environmental impact statement be prepared for any Commission action

that may have a significant adverse effect on the human

environment.13 No environmental consideration is necessary

for the promulgation of a rule that is clarifying, corrective, or

procedural or that does not substantially changes the effect of

legislation or regulations being amended,14 and also for

information gathering, analysis, and dissemination.15 The

proposed rule changes do not substantially change the effect of the

underlying legislation or change the forms. Accordingly, no

environmental assessments are necessary.

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\13\ Regulations Implementing National Environmental Policy Act,

52 FR 47897 (Dec. 17, 1987); FERC Stats. and Regs. para. 30,783

(Dec. 10, 1987).

\14\ 18 CFR 380.4(a)(2)(ii).

\15\ 18 CFR 380.4(a)(5).

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V. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) 16 requires

rulemakings to contain either a description and analysis of the effect

that the proposed rule will have on small entities or a certification

that the rule will not have a significant economic impact on a

substantial number of small entities.

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\16\ 5 U.S.C. 601-612.

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In Mid-Tex Elect. Coop. v. FERC, 773 F. 2d 327 (D.C. Cir. 1985),

the court found that Congress, in passing the RFA, intended agencies to

limit their consideration ``to small entities that would be directly

regulated'' by proposed rules. Id. at 342. The court further concluded

that ``the relevant `economic impact' was the impact of compliance with

the proposed rule on regulated small entities.'' Id. at 342.

The Commission does not believe that this proposed rule will have

an adverse impact on small entities, nor will it impose upon them any

significant costs of compliance. Rather, we anticipate that this rule

will significantly reduce the record keeping burden on all

jurisdictional entities, including small entities. Most entities

regulated by the Commission do not fall within the RFA's definition of

a small entity.17 Therefore, the Commission certifies that

this rule will not have a significant economic impact on a substantial

number of small entities.

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\17\ 5 U.S.C. 601(3), citing to 3 of the Small Business Act, 15

U.S.C. 632. Section 3 of the Small Business Act defines a ``small-

business concern'' as a business which is independently owned and

operated and which is not dominant in its field of operation.

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VI. Information Collection Statement

The following collection of information contained in this proposed

rule is being submitted to the Office of Management and Budget (OMB)

for review under 3507(d) of the Paperwork Reduction Act of

1995.18 FERC identifies the information retained under Parts

125, 225, and 356 as FERC Form 555. The reporting burden to implement

this proposed rule is as follows:

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\18\ 44 U.S.C. 3507(d).

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No. of No. of Hrs. per Total annual

Data collection respondents responses response hours

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FERC-555.................................... 515 1 1080 556,200

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Total Annual Hours for Collection (Reporting + Recordkeeping (if

appropriate) = 556,200). Based on the Commission's experience with

current recordkeeping requirement practices, it is estimated that about

1,080 hours 19 are needed to retain records per year, for a

total annual burden of 556,200 hours. The Commission estimates that if

the proposed rule is adopted, it will significantly decrease the burden

of the current regulations by shortening the retention periods for

certain records.

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\19\ Previous to this proposed rule, the reporting burden was

estimated at approximately 2400 hours per response.

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Information Collection Costs: The Commission seeks comments on the

costs to comply with these requirements. It has projected the average

annualized cost for all respondents to be:

Annualized Capital/Startup Costs: $0.00.

Annualized Costs (Operations & maintenance): $29,274,430.

[[Page 1487]]

Total Annualized Costs: $29,274,430.

The OMB regulations require OMB to approve certain information

collection requirements imposed by agency rule.20

Accordingly, pursuant to OMB regulations the Commission is providing

notice of its proposed information collection to OMB.

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\20\ 5 CFR 1320.11.

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Title: FERC Form 555, Preservation of Records of Public Utilities,

Natural Gas Companies, and Oil Pipeline Companies.

Action: Proposed Data Collection.

OMB Control No.: 1902-0098, the respondent shall not be penalized

for failure to respond to this collection of information unless the

collection of information displays a valid OMB control number.

Respondents: Business or other for profit, including small

businesses.

Frequency of Responses: On Occasion.

Necessity of Information: The proposed rule revises the

requirements contained in 18 CFR parts 125, 225, and 356.

Internal Review: The Commission has assured itself, by means of

internal review, that there is specific, objective support for the

burden estimates associated with the recordkeeping. The official

records maintained by the regulated companies in accordance with the

Schedules provided in Parts 125, 225, and 356 are used by the companies

as the basis of their required rate filings and reports to the

Commission. The Federal Power Act, the Natural Gas Act, and Interstate

Commerce Act, require regulated companies to keep such records as the

Commission may prescribe ``as necessary or appropriate for purposes of

administration'' of these acts. One of the Commission's most important

functions under these acts is insuring that rates charged by regulated

companies for certain transactions are ``just and reasonable.'' Almost

all the records the Commission requires to be retained are for the

purpose of providing an adequate base of information to make decisions

on the ``reasonableness'' of rates. Similarly, the length of retention

periods have been based on the time that information will be needed to

make decisions on the impact of rates. The records are necessary as

they are used by the Commission's staff during compliance reviews and

special analyses performed as deemed necessary by the Commission. These

requirements conform to the Commission's plan for efficient information

collection within the public utilities and licensees, natural gas

companies, and oil pipeline companies.

Interested persons may obtain information on the reporting

requirements by contacting the following: Federal Energy Regulatory

Commission, 888 First Street, NE, Washington, DC 20426 [Attention:

Michael Miller, Office of the Chief Information Officer, Phone: (202)

208-1415, fax: (202) 208-2425, email: [email protected]].

For submitting comments concerning the collection of information

and the associated burden estimate, please send your comments 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)

395-3087, fax: (202) 395-7285].

VII. Public Comment Procedures

The Commission invites interested persons to submit written

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.

The original and 14 copies of such comments must be received by the

Commission before 5:00 p.m. on or before March 10, 2000. The Commission

will also permit interested persons to submit reply comments in

response to the initial comments filed in this proceeding. Reply

comments should not exceed 50 double-spaced pages and should include an

executive summary. The original and 14 copies of the reply comments

must be received on or before April 10, 2000. Comments should be

submitted to the Office of the Secretary, Federal Energy Regulatory

Commission, 888 First Street, NE, Washington, DC 20426, and should

refer to Docket No. RM99-8-000.

In addition to filing paper copies, the Commission encourages the

filing of comments either on computer diskette or via Internet E-mail.

Comments may be filed in the following formats: WordPerfect 8.0 or

lower version, MS Word Office 97 or lower version, or ASCII format.

For diskette filing, include the following information on the

diskette label: Docket No. RM99-8-000; the name of the filing entity;

the software and version used to create the file; and the name and

telephone number of a contact person.

For Internet E-mail submittal, comments should be submitted to

``[email protected]'' in the following format. On the subject

line, specify Docket No. RM99-8-000. In the body of the E-mail message,

include the name of the filing entity; the software and version used to

create the file, and the name and telephone number of the contact

person. Attach the comments to the E-mail in one of the formats

specified above. The Commission will send an automatic acknowledgment

to the sender's E-mail address upon receipt. Questions on electronic

filing should be directed to Brooks Carter at (202) 501-8145, E-mail

address [email protected]. Commenters should take note that,

until the Commission amends its rules and regulations, the paper copy

of the filing remains the official copy of the document submitted.

Thereafter, any discrepancies between the paper and the electronic

filing or the diskette will be resolved by reference to the paper

filing.

All written comments will be placed in the Commission's public

files and will be available for inspection in the Commission's Public

Reference room at 888 First Street, NE, Washington, DC 20426, during

regular business hours. Additionally, comments may be viewed, printed

or downloaded remotely via the Internet through FERC's Homepage using

the RIMS or CIPS link. RIMS contain all comments but only those

comments submitted in electronic format are available on CIPS. User

assistance is available on CIPS. User assistance is available at (202)

208-2222, or by E-mail to [email protected].

List of Subjects

18 CFR Part 125

Electric power, Electric utilities, Reporting and recordkeeping

requirements.

18 CFR Part 225

Natural gas, Reporting and recordkeeping requirements.

18 CFR Part 356

Pipelines, Reporting and recordkeeping requirements.

By direction of the Commission.

David P. Boergers,

Secretary.

In consideration of the foregoing, the Commission proposes to amend

Parts 125, 225, and 356 Chapter I, Title 18 of the Code of Federal

Regulations, as follows:

PART 125--PRESERVATION OF RECORDS OF PUBLIC UTILITIES AND

LICENSEES.

1. The authority for Part 125 is revised to read as follows:

Authority: 16 U.S.C. 825, 825c, and 825h; 44 U.S.C. 3501 et seq.

[[Page 1488]]

2. Section 125.1 is revised to read as follows:

Sec. 125.1 Promulgation.

This part is prescribed and promulgated as the regulations

governing the preservation of records by public utilities subject to

the jurisdiction of the Commission and by licensees holding licenses

issued by the Commission, to the extent and in the manner set forth

therein.

3. In Sec. 125.2, paragraphs (a)(1) through (a)(3), and paragraphs

(d) through (m) are revised to read as follows:

Sec. 125.2 General instructions.

(a) Scope of this part. (1) The regulations in this part apply to

all books of account and other records prepared by or on behalf of the

public utility or licensee. See item 40 of the schedule (Sec. 125.3)

for those records that come into possession of the public utility or

licensee in connection with the acquisition of property, such as

purchase, consolidation, merger, etc.

(2) The regulations in this part should not be construed as

excusing compliance with other lawful requirements of any other

governmental body, Federal or State, prescribing other record keeping

requirements or for preservation of records longer than those

prescribed in this part.

(3) To the extent that any Commission regulations may provide for a

different retention period, the records should be retained for the

longer of the retention periods.

* * * * *

(d) Record storage media. Each public utility and licensee has the

flexibility to select its own storage media subject to the following

conditions.

(1) The storage media must have a life expectancy at least equal to

the applicable record retention period provided in Sec. 125.3 unless

there is a quality transfer from one media to another with no loss of

data.

(2) Each public utility and licensee is required to implement

internal control procedures that assure the reliability of, and ready

access to, data stored on machine readable media. Internal control

procedures must be documented by a responsible supervisory official.

(3) Each transfer of data from one media to another must be

verified for accuracy and documented. Software and hardware required to

produce readable records must be retained for the same period the media

format is used.

(e) Destruction of records. At the expiration of the retention

period, public utilities and licensees may use any appropriate method

to destroy records.

(f) Premature destruction or loss of records. When records are

destroyed or lost before the expiration of the prescribed period of

retention, a certified statement listing, as far as may be determined,

the records destroyed and describing the circumstances of accidental or

other premature destruction or loss must be filed with the Commission

within ninety (90) days from the date of discovery of the destruction.

(g) Schedule of records and periods of retention. (1) Records

related to plant in service must be retained until the facilities are

permanently removed from utility service, all removal and restoration

activities are completed, and all costs are retired from the accounting

records unless accounting adjustments resulting from reclassification

and original costs studies have been approved by the regulatory

commission having jurisdiction. If the plant is sold, the associated

records or copies thereof, must be transferred to the new owners.

(2) Records related to hydroelectric facilities and additions,

retirements, and betterments thereto must be retained until:

(i) The Commission has determined the actual legitimate original

cost of the facilities, or the licenses are surrendered. If the plant

is sold, the associated records or copies thereof, must be transferred

to the new owners.

(ii) Records related to the determination of amortization reserves

pursuant to Section 10(d) of the Federal Power Act must be retained

until a final determination and adjudication of the amortization

reserves are made.

(h) Retention periods designated ``Destroy at option''. ``Destroy

at option'' constitutes authorization for destruction of records at

managements' discretion if it does not conflict with other legal

retention requirements or usefulness of such records in satisfying

pending regulatory actions or directives.

(i) Records of services performed by associated companies. Public

utilities and licensees must assure the availability of records of

services performed by and for associated or affiliated companies with

supporting cost information for the periods indicated in Sec. 125.3 as

necessary to be able to readily furnish detailed information as to the

nature of the transaction, the amounts involved, and the accounts used

to record the transactions.

(j) Index of records. Public utilities and licensees must arrange,

file, and index records so records may be readily identified and made

available to Commission representatives.

(k) Rate case. Notwithstanding the minimum retention periods

provided in these regulations, if public utilities or licensee wants to

reflect costs in a current, future, or pending rate case, or if a

public utilities or licensees has abandoned or retired a plant

subsequent to the test period of the utility's rate case, the utility

must retain the appropriate records to support the costs and

adjustments proposed in the current or next rate case.

(l) Pending complaint litigation or governmental proceedings.

Notwithstanding the minimum requirements, if a public utility or

licensee is involved in pending litigation, complaint procedures,

proceedings remanded by the court, or governmental proceedings, it must

retain all relevant records.

(m) Life or mortality study data. Life or mortality study data for

depreciation purposes must be retained for 25 years or for 10 years

after plant is retired, whichever is longer.

* * * * *

4. Section 125.3 is revised to read as follows:

Section 125.3 Schedule of records and periods of retention.

Table of Contents

Corporate and General

1. Reports to stockholders.

2. Organizational documents.

3. Contracts and agreements.

4. Accountants' and auditors' reports.

Information Technology Management

5. Automatic data processing records.

General Accounting Records

6. General and subsidiary ledgers.

7. Journals: General and subsidiary.

8. Journal vouchers and entries.

9. Cash books.

10. Voucher registers.

11. Vouchers.

Insurance

12. Insurance records.

Operations and Maintenance

13.1 Production--Public utilities and licensees (less nuclear).

13.2 Production--Nuclear.

14. Transmission and distribution--Public utilities and licensees.

15. Maintenance work and job orders.

Plant and Depreciation

16. Plant ledgers.

17. Construction work in progress ledgers.

18. Retirement work in progress ledgers.

19. Summary sheets.

20. Appraisals and valuations.

21. Engineering records.

22. Contracts.

[[Page 1489]]

23. Reclassification of utility plant account records.

24. Accumulated depreciation and depletion of utility plant account

records.

Purchase and Stores

25. Procurement.

26. Material ledgers.

27. Materials and supplies received and issued.

28. Records of sales of scrap and materials and supplies.

Revenue Accounting and Collection

29. Customers' service applications and contracts.

30. Rate schedules.

31. Maximum demand and demand meter record cards.

32. Miscellaneous billing data.

33. Revenue summaries.

Tax

34. Tax records.

Treasury

35. Statements of funds and deposits.

36. Records of deposits with banks and others.

Miscellaneous

37. Reserve.

38. Statistics.

39. Budgets and other forecasts.

40. Records of predecessors and former associates.

41. Reports to Federal and State regulatory commissions.

42. Advertising.

Schedule of Records and Periods of Retention

----------------------------------------------------------------------------------------------------------------

Item No. Description Retention period

----------------------------------------------------------------------------------------------------------------

CORPORATE AND GENERAL

----------------------------------------------------------------------------------------------------------------

1............... Reports to stockholders: Annual reports or 5 years.

statements to stockholders.

2............... Organizational documents:

(a) Minute books of stockholders', 5 years or termination of the corporation's

directors', and directors' committee existence, whichever occurs first.

meetings.

(b) Titles, franchises, and licenses: 6 years after final non-appealable order.

Copies of formal orders of regulatory

commissions served upon the utility.

3............... Contracts, including amendments and agreements

(except contracts provided for elsewhere):

(a) Service contracts, such as for All contracts, related memoranda, and

management, accounting, and financial revisions should be retained for 3 years

services. after expiration or until the conclusion of

any contract disputes pertaining to such

contracts, whichever is later.

(b) Contracts with others for transmission All contracts, related memoranda, and

or the purchase, sale or interchange of revisions should be retained for 4 years

product. after expiration or until the conclusion of

any contract disputes or governmental

proceedings pertaining to such contracts,

whichever is later.

explaining provisions of contracts listed they relate.

above, including requests for discounts.

(d) Card or book records of contracts, For the same periods as contracts to which

leases, and agreements made, showing dates they relate.

of expirations and of renewals, memoranda

of receipts, and payments under such

contracts.

4............... Accountants' and auditors' reports:

(a) Reports of examinations and audits by 5 years after the date of the report.

accountants and auditors not in the regular

employ of the utility (such as reports of

public accounting firms and commission

accountants).

(b) Internal audit reports and working 5 years after the date of the report.

papers.

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INFORMATION TECHNOLOGY MANAGEMENT

----------------------------------------------------------------------------------------------------------------

5............... Automatic data processing records (retain Retain as long as it represents an active

original source data used as input for data viable program or for periods prescribed for

processing and data processing report related output data, whichever is shorter.

printouts for the applicable periods

prescribed elsewhere in the schedule):

Program documentation and revisions thereto.

----------------------------------------------------------------------------------------------------------------

GENERAL ACCOUNTING RECORDS

----------------------------------------------------------------------------------------------------------------

6............... General and subsidiary ledgers:

(a) Ledgers:

(1) General ledgers........................ 25 years.

(2) Ledgers subsidiary or auxiliary to 25 years.

general ledgers except ledgers provided

for elsewhere.

(b) Indexes:

(1) Indexes to general ledgers............. 25 years.

(2) Indexes to subsidiary ledgers except 25 years.

ledgers provided for elsewhere.

subsidiary ledgers.

7............... Journals: General and subsidiary.............. 25 years.

8............... Journal vouchers and journal entries including ..............................................

supporting detail

(a) Journal vouchers and journal entries.... 25 years.

(b) Analyses, summarization, distributions,

and other computations which support

journal vouchers and journal entries:

(1) Charging plant accounts................ 25 years.

(2) Charging all other accounts............ 6 years.

9............... Cash books: General and subsidiary or 5 years after close of fiscal year.

auxiliary books.

[[Page 1490]]

10.............. Voucher registers: Voucher registers or 5 years.

similar records when used as a source

document.

11.............. Vouchers:

(a) Paid and cancelled vouchers (one copy- 5 years.

analysis sheets showing detailed

distribution of charges on individual

vouchers and other supporting papers).

(b) Original bills and invoices for 5 years.

materials, services, etc., paid by vouchers.

specific vouchers.

(d) Authorization for the payment of 5 years.

specific vouchers.

(e) Lists of unaudited bills (accounts Destroy at option.

payable), list of vouchers transmitted, and

memoranda regarding changes in audited

bills.

(f) Voucher indexes......................... Destroy at option.

----------------------------------------------------------------------------------------------------------------

INSURANCE

----------------------------------------------------------------------------------------------------------------

12.............. Insurance records:

(a) Records of insurance policies in force, Destroy at option after expiration of such

showing coverage, premiums paid, and policies.

expiration dates.

(b) Records of amounts recovered from 6 years.

insurance companies in connection with

losses and of claims against insurance

companies, including reports of losses, and

supporting papers.

----------------------------------------------------------------------------------------------------------------

OPERATIONS AND MAINTENANCE

----------------------------------------------------------------------------------------------------------------

13.1............ Production--Electric (less Nuclear):

(a) Boiler-tube failure report.............. 3 years.

(b) Generation and output logs with 3 years.

supporting data:.

(1) Hydro-electric......................... 25 years.

(2) Steam and others....................... 6 years.

load records.

(d) Load curves, temperature logs, coal, and 3 years.

water logs.

(e) Gauge-reading reports................... 2 years, except river flow data collected in

connection with hydro operation must be

retained for life of corporation.

(f) Recording instrumentation charts........ 1 year, except where the basic chart

information is transferred to another record,

the charts need only be retained 6 months

provided the record containing the basic data

is retained 1 year.

13.2............ Production--Nuclear:

For informational purposes, refer to the

document retention requirements of the

Nuclear Regulatory Commission.

14.............. Transmission and distribution--Electric:......

(a) Substation and transmission line logs... 3 years.

(b) System operator's daily logs and reports 3 years.

of operation.

(d) Records of transformer inspections, oil Destroy at option.

tests, etc.

15.............. Maintenance work orders and job orders:

(a) Authorizations for expenditures for 5 years.

maintenance work to be covered by work

orders, including memoranda showing the

estimates of costs to be incurred.

(b) Work order sheets to which are posted in 5 years.

detail the entries for labor, material, and

other charges in connection with

maintenance, and other work pertaining to

utility operations.

and job orders and clearances to operating

other accounts (exclusive of plant

accounts).

----------------------------------------------------------------------------------------------------------------

PLANT AND DEPRECIATION

----------------------------------------------------------------------------------------------------------------

16.............. Plant ledgers:

(a) Ledgers of utility plant accounts 25 years.

including land and other detailed ledgers

showing the cost of utility plant by

classes.

(b) Continuing plant inventory ledger, book 25 years.

or card records showing description,

location, quantities, cost, etc., of

physical units (or items) of utility plant

owned.

17.............. Construction work in progress ledgers, work

orders, and supplemental records:

(a) Construction work in progress ledgers... 5 years after clearance to plant account,

provided continuing plant inventory records

are maintained; otherwise 5 years after plant

is retired.

[[Page 1491]]

(b) Work orders sheets to which are posted 5 years after clearance to plant account,

in summary form or in detail the entries provided continuing plant inventory records

for labor, materials, and other charges for are maintained; otherwise 5 years after plant

utility plant additions and the entries is retired.

closing the work orders to utility plant in

service at completion.

additions to utility plant, including except where there are ongoing Commission

memoranda showing the detailed estimates of proceedings.

cost, and the bases therefor (including

original and revised or subsequent

authorizations).

(d) Requisitions and registers of 5 years after clearance to plant account

authorizations for utility plant except where there are ongoing Commission

expenditures. proceedings.

(e) Completion or performance reports 5 years after clearance to plant account

showing comparison between authorized except where there are ongoing Commission

estimates and actual expenditures for proceedings.

utility plant additions.

(f) Analysis or cost reports showing 5 years after clearance to plant account

quantities of materials used, unit costs, except where there are ongoing Commission

number of man-hours etc., in connection proceedings.

with completed construction project.

(g) Records and reports pertaining to Destroy at option.

progress of construction work, the order in

which jobs are to be completed, and similar

records which do not form a basis of

entries to the accounts.

18.............. Retirement work in progress ledgers, work

orders, and supplemental records:

(a) Work order sheets to which are posted 5 years after plant is retired.

the entries for removal costs, materials

recovered, and credits to utility plant

accounts for cost of plant retirement.

(b) Authorizations for retirement of 5 years after plant is retired.

utility plant, including memoranda showing

the basis for determination to be retired

and estimates of salvage and removal costs..

19.............. Summary sheets, distribution sheets, reports, 5 years.

statements, and papers directly supporting

debits and credits to utility plant accounts

not covered by construction or retirement

work orders and their supporting records.

20.............. Appraisals and valuations:

(a) Appraisals and valuations made by the 3 years after appraisal.

company of its properties or investments or

of the properties or investments of any

associated companies. (Includes all records

essential thereto.).

(b) Determinations of amounts by which

properties or investments of the company or

any of its associated companies will be

either written up or written down as a

result of:

(1) Mergers or acquisitions................ 10 years after completion of transaction or as

ordered by the Commission.

(2) Asset impairments...................... 10 years after recognition of asset

impairment.

(3) Other bases............................ 10 years after the asset was written up or

down.

21.............. The original or reproduction of engineering Retain until retired.

records, drawings, and other supporting data

for proposed or as-constructed utility

facilities: Maps, diagrams, profiles,

photographs, field survey notes, plot plan,

detail drawings, records of engineering

studies, and similar records showing the

location of proposed or as-constructed

facilities:

22.............. Contracts relating to utility plant:..........

(a) Contracts relating to acquisition or 6 years after plant is retired or sold.

sale of plant.

(b) Contracts and other agreements relating 6 years after plant is retired or sold.

to services performed in connection with

construction of utility plant (including

contracts for the construction of plant by

others for the utility and for supervision

and engineering relating to construction

work).

23.............. Records pertaining to reclassification of 6 years.

utility plant accounts to conform to

prescribed systems of accounts including

supporting papers showing the basis for such

reclassifications.

24.............. Records of accumulated provisions for

depreciation and depletion of utility plant

and supporting computation of expense:

(a) Detailed records or analysis sheets 25 years.

segregating the accumulated depreciation

according to functional classification of

plant.

(b) Records reflecting the service life of 25 years.

property and the percentage of salvage and

cost of removal for property retired from

each account for depreciable utility plant.

----------------------------------------------------------------------------------------------------------------

[[Page 1492]]

PURCHASES AND STORES

----------------------------------------------------------------------------------------------------------------

25.............. Procurement:

(a) Agreements entered into for the

acquisition of goods or the performance of

services. Includes all forms of agreements

not specifically set forth in Subsection 7

such as but not limited to: Letters of

intent, exchange of correspondence, master

agreements, term contracts, rental

agreements, and the various types of

purchase orders:

(1) For goods or services relating to plant 6 years.

construction.

(2) For other goods or services............ 6 years.

(b) Supporting documents including accepted 6 years.

and unaccepted bids or proposals (summaries

of unaccepted bids or proposals may be kept

in lieu of originals) evidencing all

relevant elements of the procurement.

26.............. Material ledgers: Ledger sheets of materials 6 years after the date the records/ledgers

and supplies received, issued, and on hand. were created.

27.............. Materials and supplies received and issued: 6 years.

Records showing the detailed distribution of

materials and supplies issued during

accounting periods.

28.............. Records of sales of scrap and materials and

supplies:.

(a) Authorization for sale of scrap and 3 years.

materials and supplies.

(b) Contracts for sale of scrap materials 3 years.

and supplies.

----------------------------------------------------------------------------------------------------------------

REVENUE ACCOUNTING AND COLLECTION

----------------------------------------------------------------------------------------------------------------

29.............. Customers' service applications and contracts: 4 years after expiration.

Contracts, including amendments for

extensions of service, for which

contributions are made by customers and

others.

30.............. Rate schedules: General files of published 6 years after published rate sheets and

rate sheets and schedules of utility service. schedules are superseded or no longer used to

Including schedules suspended or superseded. charge for utility service.

31.............. Maximum demand, and demand meter record cards. 1 year, except where the basic chart

information is transferred to another record

the charts need only be retained 6 months,

provided the basic data is retained 1 year.

32.............. Miscellaneous billing data: Billing Destroy at option.

department's copies of contracts with

customers (other than contracts in general

files).

33.............. Revenue summaries: Summaries of monthly 5 years.

operating revenues according to classes of

service. Including summaries of forfeited

discounts and penalties.

----------------------------------------------------------------------------------------------------------------

TAX

----------------------------------------------------------------------------------------------------------------

34.............. Tax records:..............................

(a) Copies of tax returns and supporting

schedules filed with taxing authorities,

supporting working papers, records of

appeals of tax bills, and receipts for

payment. See Subsection 11(b) for vouchers

evidencing disbursements:

(1) Income tax returns..................... 2 years after final tax liability is

determined.

(2) Property tax returns................... 2 years after final tax liability is

determined.

(3) Sales and other use taxes.............. 2 years.

(4) Other taxes............................ 2 years after final tax liability is

determined.

(5) Agreements between associate companies 2 years after final tax liability is

as to allocation of consolidated income determined.

taxes.

(6) Schedule of allocation of consolidated 2 years after final tax liability is

Federal income taxes among associate determined.

companies.

(b) Filings with taxing authorities to 5 years after discontinuance of plan.

qualify employee benefit plans.

taxing authorities. determined.

----------------------------------------------------------------------------------------------------------------

TREASURY

----------------------------------------------------------------------------------------------------------------

35.............. Statements of funds and deposits: For nuclear decommissioning funds, retain

records for all items listed for a period of

3 years after completion of final

decommissioning is completed.

If amortization reserve funds related to

licensed projects are maintained, retain

until the Commission makes a final

determination of the disposition of

amortization reserves.

(a) Statements of periodic deposits with Retain records for the most recent 3 years.

fund administrators or trustees.

(b) Statements of periodic withdrawals from Retain records for the most recent 3 years.

fund.

administrator or trustees of fund activity terminated.

including:

[[Page 1493]]

(1) Beginning of the year balance of fund;

(2) Deposits with the fund;

(3) Acquisition of investments held by the

fund;

(4) Disposition of investments held by the

fund;

(5) Disbursements from the fund, including

party to whom disbursement was made;

(6) End of year balance of fund.

36.............. Records of deposits with banks and others:

(a) Statements from depositories showing the Destroy at option after completion of audit by

details of funds received, disbursed, independent accountants.

transferred, and balances on deposit.

(b) Check stubs, registers, or other records 3 years.

of checks issued.

----------------------------------------------------------------------------------------------------------------

MISCELLANEOUS

----------------------------------------------------------------------------------------------------------------

37.............. Reserve

38.............. Statistics: Financial, operating and 5 years.

statistical reports used for internal

administrative or operating purposes.

39.............. Budgets and other forecasts (prepared for 3 years.

internal administrative or operating

purposes) of estimated future income,

receipts and expenditures in connection with

financing, construction and operations,

including acquisitions and disposals of

properties or investments.

40.............. Records of predecessor companies.............. Retain consistent with the requirements for

the same types of records of the utility.

41.............. Reports to Federal and State regulatory 5 years.

commissions including annual financial,

operating and statistical reports.

42.............. Advertising: Copies of advertisements by or 2 years.

for the company on behalf of itself or any

associate company in newspapers, magazines,

and other publications, including costs and

other records relevant thereto (excluding

advertising of appliances, employment

opportunities, routine notices, and

invitations for bids all of which may be

destroyed at option).

----------------------------------------------------------------------------------------------------------------

PART 225--PRESERVATION OF RECORDS OF NATURAL GAS COMPANIES

5. The authority for Part 225 is revised to read as follows:

Authority: 15 U.S.C. 717-717w, 3301-3432; 16 U.S.C. 792-828c; 42

U.S.C. 7101-7352; E. O. 12009, 3 CFR 1978 Comp. p. 142.

6. Section 225.1 is revised to read as follows:

Sec. 225.1 Promulgation.

This part is prescribed and promulgated as the regulations

governing the preservation of records by natural gas companies subject

to the jurisdiction of the Commission, to the extent and in the manner

set forth therein.

7. In Sec. 225.2, paragraphs (a)(1) through (a)(3) and paragraphs

(d) through (m) are revised to read as follows:

Sec. 225.2 General instructions.

(a) Scope of this part. (1) The regulations in this part must apply

to all books of account and other records prepared by or on behalf of

the natural gas company. See item 40 of the schedule for those records

that come into possession of the natural gas company in connection with

the acquisition of property, such as purchases, consolidation, merger,

etc.

(2) The regulations in this part should not be construed as

excusing compliance with other lawful requirements of any other

governmental body, Federal or State, prescribing other record keeping

requirements, or for preservation of records for periods longer than

those prescribed in this part.

(3) To the extent that any Commission regulations may provide for a

different retention period, the records should be retained for the

longer of the retention periods.

* * * * *

(d) Record storage media. Each natural gas company has the

flexibility to select its own storage media subject to the following

conditions.

(1) The storage media must have a life expectancy at least equal to

the applicable record retention period provided in Sec. 225.3 unless

there is a quality transfer from one media to another with no loss of

data.

(2) Each natural gas company is required to implement internal

control procedures that assure the reliability of and ready access to

data stored on machine readable media. Internal control procedures must

be documented by a responsible supervisory official.

(3) Each transfer of data from one media to another must be

verified for accuracy and documented. Software and hardware required to

produce readable records must be retained for the same period the media

format is used.

(e) Destruction of records. At the expiration of the records

retention period, natural gas companies may use any appropriate method