# Filing and Reporting Requirements for Interstate Natural Gas Company Rate Schedules and Tariffs

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URL: https://www.frixlaw.com/law-library/documents/fr%3A95-24723

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** October 11, 1995
- **Citation:** 60 FR 52960

## Text

SUMMARY: The Federal Energy Regulatory Commission is amending part 154
of the Commission's regulations under the Natural Gas Act. The
Commission is reorganizing, rewriting and updating its regulations
governing the form, composition and filing of rates and charges for the
transportation of natural gas in interstate commerce. This rule is part
of the Commission's ongoing program to review its filing and reporting
requirements and reduce unnecessary burdens by eliminating the
collection of data that are not necessary to the performance of the
Commission's regulatory responsibilities. The rule also requires that
certain data, necessary to the analysis of a proposed rate, be filed at
an earlier stage of the process.

EFFECTIVE DATE: This final rule is effective November 13, 1995.

FOR FURTHER INFORMATION CONTACT: Richard A. White, Office of the
General Counsel, Federal Energy Regulatory Commission, 825 North
Capitol Street, NE., Washington, DC 20426, (202) 208-0491.

SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours at 888 First Street NE.,
Washington, DC 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (800) 856-3920. To access CIPS, set your communications
software to 19200, 14400, 12000, 9600, 7200, 4800, 2400, 1200, or 300
bps, full duplex, no parity, 8 data bits, and 1 stop bit. The full text
of this document will be available on CIPS in ASCII and WordPerfect 5.1
format. The complete text on diskette in Wordperfect format may also be
purchased from the Commission's copy contractor, La Dorn Systems
Corporation, also located in Room 3104, 941 North Capitol Street NE.,
Washington, DC 20426.

Table of Contents

I. Introduction
II. Public Reporting Burden
III. Background
IV. Discussion
A. Overview and Objectives of the Final Rule
1. Organization and editorial changes.
2. Substantive changes.
B. The Revised Regulations
1. Subpart A--General Provisions and Conditions
a. Section 154.1 Application; obligation to file
b. Section 154.2 Definitions
c. Section 154.3 Effective Tariff
d. Section 154.4 Electronic and Paper Media
e. Section 154.5 Rejection of Filings
f. Section 154.6 Acceptance for filing not approval
g. Section 154.7 General Requirements for the Submission of a
Tariff Filing or Executed Service Agreement
h. Section 154.8 Informal Submission for Staff Suggestions
2. Subpart B--Form and Composition of Tariff
a. Section 154.101 Form
b. Section 154.102 Title Page and Arrangement
c. Section 154.103 Composition of Tariff
d. Section 154.104 Table of Contents
e. Section 154.105 Preliminary Statement
f. Section 154.106 Map
g. Section 154.107 Currently Effective Rates
h. Section 154.108 Composition of Rate Schedules
i. Section 154.109 General Terms and Conditions
j. Section 154.110 Form of Service Agreement
k. Section 154.111 Index of Customers
l. Section 154.112 Exception to Form and Composition of Tariff
m. Miscellaneous Subpart B Comments
3. Subpart C--Procedures for Changing Tariffs
a. Section 154.201 Filing Requirements
b. Section 154.202 Filings to Initiate a New Rate Schedule
c. Section 154.203 Compliance Filings
d. Section 154.204--Changes in Rate Schedules, Forms of Service
Agreements, or the General Terms and Conditions
e. Section 154.205 Changes Related to Suspended Tariffs,
Executed Service Agreements or Parts Thereof
f. Section 154.206 Motion to Place Suspended Rates Into Effect
g. Section 154.207 Notice Requirements
h. Section 154.208 Service on Customers and Other Parties
i. Section 154.209 Form of Notice for Federal Register
j. Section 154.210 Protests, Interventions, and Comments
4. Subpart D--Material to be Filed With Changes
a. Section 154.301 Changes in Rates
b. Section 154.302 Previously Submitted Material
c. Section 154.303 Test Periods
d. Section 154.304 Format of Statements, Schedules, Workpapers,
and Supporting Data
e. Section 154.305 Tax Normalization
f. Section 154.306 Cash Working Capital
g. Section 154.307 Joint Facilities
h. Section 154.308 Representation of Chief Accounting Officer
i. Section 154.309 Incremental Expansions
j. Section 154.310 Zones
k. Section 154.311 Updating of Statements
l. Section 154.312 Composition of Statements
1. Schedule B
2. Schedule C
3. Schedule C-1, End of Base Period Plant Functionalized
4. Schedule C-2 (Proposed Schedule C-3)
5. Schedule C-3 (Proposed Schedule C-4)
6. Schedule C-4 (Proposed Schedule C-5)
7. Schedule C-5 (Proposed Schedule C-6)
8. Schedule D
9. Schedules D-1 and D-2
10. Schedule D-2 (Proposed Schedule D-3)
11. Statement E Schedule E-3
14. Schedule E-4
15. Proposed Schedule E-5
16. Statement F-2
17. Statement G, Revenues, Credits, and Billing Determinants
18. Schedule G-1, Base Period Revenues Schedule G-2, Adjustment
Period Revenues
20. Schedule G-3
21. Schedule G-4, At-risk Revenue
22. Schedule G-5, Other Revenues
23. Statement H-1
24. Schedule H-1(1)
25. Schedules H-1(1)(c), H-1(3)(a), and H-1(3)(b)
26. Schedules H-1(2)(a) and H-1(2)(b)
27. Schedule H-1(2) [Proposed Schedule H-1(3)]
28. Schedule H-1(2)(j) [Proposed Schedule H-1(3)(k)]
29. Schedule H-1(2)(k) [Proposed Schedule H-1(3)(l)]
30. Schedule H-2(1)
31. Statement H-3
32. Schedules H-3(1)-(3)
33. Schedule H-3(4)
34. Schedule H-4
35. Schedule I-1, Functionalization of Cost-of-service
36. Schedules I-2 (i) and (ii)
37. Schedule I-3, Allocation of Cost-of-Service
38. Schedule I-4, Transmission and Compression of Gas by Others
(Account 858)
39. Schedule I-5
40. Schedule I-5, Gas Balance
41. Statement J, Comparison and Reconciliation of Estimated
Revenues With Cost-of-service
42. Schedule J-1, Summary of Billing Determinants
43. Schedule J-2, Derivation of Rates
44. Schedule J-2(iii)
45. Statement P
m. Section 154.313 Schedules for Minor Rate Changes

[[Page 52961]]

n. Section 154.314 Other Support for a Filing
5. Subpart E--Limited Rate Changes
a. Section 154.401 RD&D Expenditures
b. Section 154.402 ACA Expenditures
c. Section 154.403 Periodic Rate Adjustments
6. Subpart F--Refunds and Reports
a. Section 154.501 Refunds
b. Section 154.502 Reports
7. Subpart G--Other Tariff Changes
a. Section 154.601 Change in Executed Service Agreement
b. Section 154.602 Cancellation or Termination of a Tariff,
Executed Service Agreement or Part Thereof
c. Section 154.603 Adopting of a Tariff by a Successor
C. Comments requesting further changes
D. Electronic Filing
1. Industry-wide conference
2. Delayed implementation of electronic filing requirements
3. Software
4. Using Rich Text Format for Text
5. Appropriate Format for Numeric Data
6. Security and Reliability of Data
7. Submission of Data to the Commission
8. Dissemination of Data by the Commission
9. Fees for costs of electronic filing
V. Regulatory Flexibility Act Certification
VI. Environmental Statement
VII. Information Collection Statement
VIII. Effective Date
Regulatory Text
Appendix A
Appendix B
Appendix C

I. Introduction

The Federal Energy Regulatory Commission (Commission) hereby adopts
procedural rules governing the form and composition of interstate
natural gas pipeline tariffs and the filing of rates and charges for
the transportation of natural gas in interstate commerce under sections
4 and 5 of the Natural Gas Act (NGA) and section 311 of the Natural Gas
Policy Act. This rule is a companion to the final rule, issued
concurrently, titled ``Revisions to the Uniform System of Accounts and
to Forms and Statements and Reporting Requirements for Natural Gas
Companies'' which amends, among other things, the Uniform System of
Accounts and FERC Form No. 2.
The Commission intends to make the filing and reporting
requirements reflect recent regulatory changes, in particular the
implementation of Order No. 636, and the realities of the process of a
modern rate case.1 The restructuring of the pipeline industry has
rendered many of the current rate and tariff regulations superfluous or
outdated. The Commission is adopting filing requirements that reflect
the current part 284 service regulations that mandate unbundled
pipeline sales and open-access transportation of natural gas. The
current part 154 rate regulations are not designed for the type of rate
changes that will occur in the restructured service environment. These
filing requirements were originally designed to focus on pipeline sales
activities. The revised regulations focus on transportation services.

\1\Pipeline Service Obligations and Revisions to Regulations
Governing Self-Implementing Transportation; and Regulation of
Natural Gas Pipelines After Partial Wellhead Decontrol, Order No.
636, 57 FR 13267 (April 16, 1992), FERC Statutes and Regulations
para.30,939 (April 8, 1992); order on reh'g, Order No. 636-A, 57 FR
36128 (August 12, 1992), FERC Statutes and Regulations para.30,950
(August 3, 1992); order on reh'g, Order No. 636-B, 57 FR 57911
(December 8, 1992), 61 FERC para.61,272 (1992), reh'g denied, 62
FERC para.61,007 (1993), appeal pending sub nom. United Distribution
Co., et al. v. FERC, No. 92-1485, et al. (D.C. Cir. Feb. 8, 1995).
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Before the recent industry restructuring, natural gas pipelines
primarily provided a merchant service. A typical pipeline company would
purchase gas from producers or other suppliers, transport the gas from
the supply area to storage fields or sales delivery points, and sell
the gas on a bundled basis. Now, pipeline companies are primarily
transporters of natural gas. This change in the primary role of the
pipeline from merchant to transporter requires that the filing
requirements be adapted to the change. Accordingly, the Commission is
deleting all of the current regulations in part 154 and replacing them
with new regulations that reflect the restructured industry.
Kern River requests clarification that the companion rules are
pursuant to section 5 of the NGA. The clarification is denied. Section
5 specifically gives the Commission the power to change any rule,
regulation, practice or contract that the Commission finds to be
unjust, unreasonable, unduly discriminatory or preferential. The
Commission's power to prescribe rules, regulations and statements of
policy of general applicability with respect to any function under its
jurisdiction is derived from section 402 of the Department of Energy
Organization Act and section 16 of the NGA. The instant rule is more
appropriately considered to be promulgated pursuant to the latter
authorities.
The changes to the Commission's regulations are effective November
13, 1995.

II. Public Reporting Burden

The subject final rule will effect seven of the Commission's
existing data collections. However, only one of these data collections
will have a net change (reduction) in reporting burden. The final rule
reflects many of the changes suggested in industry comments filed in
response to Commission's Notice of Proposed Rulemaking. In particular,
the joint comments of The Interstate Natural Gas Association of America
(INGAA) and the American Gas Distributors (AGD) were helpful.
The final rule is expected to reduce the existing reporting burden
associated with FERC-545, Gas Pipeline Rates: Rate Change (Non-Formal)
(OMB Control No. 1902-0154) (FERC-545) by an estimated 136,785 hours
annually--an average of 172.9 hours per response. As a result of the
final rule, the annual reporting requirement under FERC-545 is
estimated to total 36,068 hours based on an expected 650 filings per
year. A copy of this rule is being provided to Office of Management and
Budget (OMB).
The Commission estimates the public reporting burden for data
collected under FERC-545 will average approximately 55.5 hours per
response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information.
Six other existing data collections are affected by the changes in
regulations.2 However, no net change in the reporting burden of
those affected data collections is expected because of off-setting
increases and decreases within each respective data collection. FERC-
545 is the only data collection under which a net change (reduction) in
reporting burden is expected as a result of the changes in filing
requirements adopted by the Commission in the subject final rule.

\2\Five existing data collections affected by the subject final
rule but with no net change in industry reporting burden, are:
FERC-542, Rate Change and Tracking (1902-0070);
FERC-543, Rate Tracking (Formal) (1902-0152);
FERC-544, Gas Pipeline Rates: Rate Change (Formal) (1902-0153);
FERC-546, Certificated Rate Filings: Gas Pipeline Rates (1902-
0155); and
FERC-547, Refund Report Requirements (1902-0084).
Under the above data collections plus FERC-545, net reductions
in reporting burden have totaled more than 355,000 hours to date as
a result of Order No. 636. Such reductions have been reflected in
separate clearance packages previously reported to the Office of
Management and Budget (OMB).
A sixth existing data collection, FERC-542(A), Tracking and
Recovery of Alaska Natural Gas Transportation System (ANGTS) Charge
(1902-0129), which has conditional OMB approval on a ``standby''
basis, is terminated under the final rule.
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Interested persons may send comments regarding these burden
estimates or any other aspect of these

[[Page 52962]]
collections of information, including suggestions for further
reductions of burden, to the Federal Energy Regulatory Commission, 888
First Street NE, Washington, DC 20426 (Attention: Michael Miller,
Information Services Division, (202) 208-1415, FAX: (202) 208-2425).
Comments on the requirements of this final rule may also be sent to the
Office of Information and Regulatory Affairs of OMB, Washington, DC
20503 (Attention: Desk Officer for Federal Energy Regulatory
Commission, (202) 395-6880, FAX: (202) 395-5167).

III. Background

On December 16, 1994, the Commission issued a Notice of Proposed
Rulemaking proposing a major overhaul of its regulations governing
natural gas company filing and reporting requirements.3 The
Commission is determined to issue sensible regulations that impose the
least burden without sacrificing rational and necessary
protections.4 The Commission is not changing its substantive rate
policies in this rulemaking, but rather bringing its filing
requirements and procedures up to date to match its current substantive
policies. In the interest of an expeditious process, the regulations
have been revised with a view toward removing any industry-wide filing
burdens that are not generally needed to analyze a proposal. The
revised regulations are designed to provide the Commission and
interested parties with the information generally required to access
and process a rate filing. Where more information is needed, it may be
collected on an individual case basis. This achieves a realistic
balance between the public interest and the needs of the industry.

\3\Filing and Reporting Requirements for Interstate Natural Gas
Company Rate Schedules and Tariffs, 60 FR 3111 (January 13, 1995),
IV FERC Stats. & Regs. para.32,511 (1995).
\4\This effort is consistent with the President's directives in
his memo dated 3/4/95 concerning the National Performance Review to,
among other things, eliminate or revise outdated regulations, and to
move from a process that creates volumes of regulations to issuing
``sensible regulations that impose the least burden without
sacrificing rational and necessary protections.''
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The Commission received many comments on the NOPR.5
Additionally, on August 17, 1995, AGD and INGAA filed joint comments to
both this and the companion rule (Agreement).6 The Commission
found the Agreement both informative and helpful as it clearly sets out
the positions and interests of a fairly large representative group of
pipelines and customers.

\5\See Appendix B for a list of commenters.
\6\Agreement Between Associated Gas Distributors (AGD) and The
Interstate Natural Gas Association of America (INGAA) on Issues
Related to Filing Requirements, filed August 17, 1995. The agreement
was in addition to the individual comments provided by AGD, INGAA,
and their members. It was an attempt to resolve various differences
and reflected compromises in the positions of AGD and INGAA.
---------------------------------------------------------------------------

The Final Rule reflects many of the proposals in the Agreement. The
suggestions concerning the restructuring of Statement G, the concurrent
filing of Statement P, and the reduction in material required to
support a filing, are reflected in the Final Rule, as more fully
explained in the discussion of Statement G, supra. However, the Final
Rule does not, automatically, accord confidential treatment to
Statement G, as proposed in the Agreement, which is also discussed
supra.
The NOPR proposed to delete many filing requirements. After
analyzing the comments in light of its current goals, the Commission
has determined to delete even more of the current filing requirements,
not include many proposed filing requirements, and further modify many
other current and proposed regulations. Specific reductions in
reporting requirements follow:
All the filing requirements of current Secs. 154.201-213 have been
deleted. Those regulations apply to shippers seeking to recover charges
incurred for the conditioning and transportation of Alaska natural gas
through the Alaska Natural Gas Transportation System (ANGTS) for sale
in the contiguous 48 states of the United States.
Current Sec. 154.38(e), requiring that the minimum bill heading
appear on every schedule is deleted.
Current Sec. 154.67(b), requiring annual reports, is deleted.
Current Schedule E-5, showing the computations, cross-references
and sources from which the data used in computing claimed working
capital are derived, is deleted.
Current Schedule H(1)-2, cost of purchased gas, is deleted.
Current Schedule H(3)-1, reporting the reconciliation of book and
taxable net income for a pipeline, is deleted.
Current Schedule H(3)-2, reporting the differences between book and
tax depreciation on a straight-line basis and the excess of liberalized
depreciation for tax purposes, is deleted.
Current Schedule I-5, requiring information on metering points and
units, is deleted.
Current Schedule I-6, Three-day peak deliveries, is deleted.
Current Sec. 154.42, dealing with the price of gas, is deleted.
Proposed Sec. 154.309 has been modified by removing the requirement
to report ``every major expansion since the pipeline's last rate
case.''
Proposed Schedule C-2, Plant in Service as Adjusted, showing the
proposed test period Adjusted Plant by function, has not been included
in the final rule.
Proposed Schedule D-2, Projected End of Test Period Depreciation
Reserves Functionalized, showing the ending test period balance of
accumulated depreciation reserve, has not been included in the final
rule.
Proposed Schedule E-3, which was to be filed by companies with PGA
clauses, has not been included in the final rule.
Proposed Schedule H-1(1) has been modified by removing the
requirement to report the rate assigned for reflecting an expense for
gas used on the system. Only the volumes will be required.
Proposed Schedule H-1(2)(a), which was to be filed by companies
with PGA clauses, has not been included in the final rule.
Proposed Schedule H-1(2)(b), which was to be filed by companies
with PGA clauses, has not been included in the final rule.
Proposed Schedule H-1(3)(b), Account 813, Other Gas Supply
Expenses, has not been included in the final rule.
Proposed Schedule H(2)-1 requiring the reporting of the
reconciliation of depreciable plant to gas plant was incorporated into
Schedule H(2).
Proposed Sec. 154.314 provided that in addition to the workpapers
accompanying the filing, certain material, related to the test period,
must be provided to the Commission on request. This requirement has
been removed from the final rule. Parties to a hearing may seek this
information through the discovery process.

IV. Discussion

A. Overview and Objectives of the Final Rule

Section 4(a) of the Natural Gas Act (NGA) requires that any rate
charged by a natural gas company must be ``just and reasonable.''7
In order to aid the Commission in establishing whether a change in a
rate meets the statutory standard, section 4 of the NGA grants
authority to the Commission to establish procedures for the review of
proposed changes. Section 4(c) of the NGA requires that a natural gas
company file proposed changes in rates with the Commission thirty days
prior to the proposed effective date.8 The Commission may suspend
the effectiveness of the proposed changes to

[[Page 52963]]
that rate for up to five months, permit the changed rates to take
effect subject to refund, and may order a hearing to determine the
lawfulness of the proposed rates.9 At such hearing, the company
bears the burden of proof that the proposed changed rates are just and
reasonable. Part 154 imposes specific filing and reporting requirements
on jurisdictional natural gas companies in order for the Commission to
fulfill its statutory review functions.

\7\15 U.S.C. 717c(a).
\8\15 U.S.C. 717c(d).
\9\15 U.S.C. 717c(e).
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This proceeding represents a major overhaul of the regulations
governing natural gas company filing and reporting requirements. The
new part 154 incorporates both basic ``housekeeping'' changes to
eliminate obsolete language and sections, and substantive changes to
update the regulations to reflect the many developments that have taken
place in the natural gas industry since the regulations were first
promulgated.
The revised part 154 represents the reorganization, rewriting,
updating, modification, consolidation, and pruning of the current
regulations. The changes provide for more useful and less burdensome
data filed in electronic format; a schedule by schedule revision of the
current Sec. 154.63 filing requirements for an NGA section 4(e) general
rate case; and, new filing requirements for initial rates and various
limited section 4 filings, miscellaneous tariff change filings, and
cost tracking filings.
1. Organization and Editorial Changes
Part 154--Rate Schedules and Tariffs has been reorganized into
subparts: Subpart A--General Provisions and Conditions; Subpart B--Form
and Composition of Tariff; Subpart C--Procedures for Changing Tariffs;
Subpart D--Material to be Filed With Changes; Subpart E--Limited Rate
Changes; Subpart F--Refunds and Reports; Subpart G--Other Tariff
Changes.
The revised part 154 is organized in such a way that the filing
requirements are cumulative. That is, all filings must meet the
requirements of subpart A even if no other subpart applies. All tariff
sheets or executed service agreements must conform to the requirements
of subpart B. Changes to tariff sheets or executed service agreements,
whether additions or modifications, must conform to the requirements of
subpart B and comply with the filing requirements of subpart C.
Additional filing or reporting requirements applicable to specific
types of filings fall under subparts D through G.
The entire part 154 has been edited for clarity and to remove
outdated references. For example, all references to filing fees have
been removed because fees are no longer required for interstate
pipelines. Also, the current regulations contain some sections which
have never been updated and refer to the Commission as the ``FPC'' or
direct the applicant to comply with sections that have been removed.
The Commission has made appropriate editorial revisions to these
sections.
Some current sections contain provisions on several different
matters and, for the sake of clarity, have been broken out into several
smaller sections. For example, the provisions of current Sec. 154.63
are redistributed throughout the revised part 154. Current
Sec. 154.38(d) (5) and (6) deal with the substantive rules for
obtaining rate treatment for research, development, and demonstration
costs (RD&D) and annual charge adjustment (ACA) expenditures,
respectively. These sections are moved to a separate subpart and
revised.
Many provisions are redrafted to reflect the prevalent practice in
the industry. For example, revised Sec. 154.208 formally adds to the
regulations the requirement that the company must serve notice upon its
customers. Revised Sec. 154.209 sets out a new form of notice to
reflect current practice. Revised Sec. 154.107 formalizes the general
practice of providing a detailed statement of rates and charges in a
particular location in the tariff. Revised Sec. 154.2(d) allows mailing
to customers and state commissions to be accomplished either through
electronic media or traditional methods.
2. Substantive Changes
The changes create filing requirements that reflect the current
policies and regulations that mandate unbundled pipeline sales and
open-access transportation of natural gas. The primary objectives of
the substantive changes are to update the filing and reporting
requirements to reflect restructured services and operations,
streamline rate case processing by receiving important information
earlier in the process, and remove outdated requirements.
The revised filing requirements permit parties to address the
important issues more quickly. For example, pipelines currently file
their Statement P testimony 15 days after filing the rate proposal. The
Commission's experience is that Statement P provides the most
comprehensive description of the proposed change. The rule requires
Statement P to be filed concurrently with the rate case so as to make a
more complete explanation of the rate proposal available at the outset.
To achieve its intended purpose of expediting the hearing, Statement P
must serve as the applicant's complete case-in-chief, not a mere
description of proposed rates.
INGAA, Panhandle, ANR/CIG, KNI, MRT, and Great Lakes state that the
proposed regulations would increase the burden to the pipeline
industry. Panhandle attached a study showing that the number of hours
needed to prepare a section 4 filing would increase by 77% and the
paperwork would triple. Panhandle states that the study reflects
estimates of time required to prepare a rate filing, responses to staff
data requests and, the proposed quarterly updates. Panhandle states
that the quarterly updates account for a substantial portion of the
increased burden and that 88 percent of the increased burden could be
eliminated if pipelines were permitted to submit supplemental testimony
as the need arises (i.e., Statement P does not represent the ``sole''
case-in-chief).
As discussed supra, the proposed quarterly update provision has not
been included in the final rule. Proposed Sec. 154.311 has been
modified to only require one update; and so, that portion of the
increased burden has been substantially reduced. Statement G and
associated schedule requirements have not been expanded as proposed.
Revised Statement G does not require the customer specific information
as proposed in the NOPR; and so, that portion of the increased burden
has also been eliminated.
It was unclear from the material provided by Panhandle whether the
study considered that filing Statement P with the initial filing is an
increase to the filing burden. The Commission remains firm in the
belief that the requirement for a fuller, complete Statement P
presented at the beginning of a rate case reduces the overall burden to
the parties to the hearing. The Commission does not expect that this
requirement will entirely remove the need for data requests and
discovery in all instances. However, it is the pipelines' statutory
burden to demonstrate that proposed rates are just and reasonable. When
the rates cannot be determined to be just and reasonable by the filed
material alone, a hearing must be established. This rule represents a
concerted effort to avoid lengthy hearings. One way to expedite the
process is to get the information needed to make the determination
(Statement P) to the Commission and other parties sooner than under the
current regulations. This does not

[[Page 52964]]
increase the burden to the pipeline but changes only the timing of the
submission.
Certain regulations are, as a practical matter, no longer of
general interest. The Commission has removed them from the general
regulations. The regulations concerning Research, Development, and
Demonstration expenses (RD&D) for example, are currently a lengthy and
cumbersome part of Sec. 154.38. These regulations were originally
developed to apply to all pipelines and to any number of RD&D
organizations. However, in practice, there is one predominant and
principal research organization, Gas Research Institute (GRI). Thus,
the Commission has streamlined the regulations, recognizing that GRI is
the principal research organization funded by the natural gas industry.
The Commission has removed the regulations governing Purchase Gas
Adjustments (PGAs) from the general regulations. As a result of the
restructuring of the industry under Order No. 636, most pipelines have
shed their traditional merchant function. At the time this rule is
being written, only two natural-gas companies, Eastern Shore Natural
Gas Company and West Texas Gas, Inc., continue to pass through gas
purchase costs under the PGA regulations.10 The Commission will
now require these natural-gas companies to incorporate all of the
existing PGA regulatory requirements applicable to it into their
tariffs if they are not open-access by the effective date of this
rule.11 The PGA regulations are removed from part 154. The
Commission also requires the provisions governing PGAs in current
Sec. 154.111 to be incorporated into these companies' tariffs and that
section is also removed.

\10\These pipelines do not provide open access transportation
under part 284 of this chapter; and so, were not subject to
restructuring under Order No. 636.
\11\Eastern Shore is required by a settlement to apply to become
an open-access pipeline no later than January 1, 1996. 72 FERC
para.61,176 (1995).
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The Commission has deleted current Secs. 154.201-213. Those
regulations apply primarily to shippers seeking to recover charges
incurred for the conditioning and transportation of Alaska natural gas
through the Alaska Natural Gas System (ANGTS) for sale in the
contiguous 48 states of the United States. Those provisions establish
the terms and conditions for a permanent tariff provision that a
shipper may propose to adjust its rates semiannually to flow through to
its jurisdictional customers the jurisdictional portion of changes its
ANGTS charges. Alternatively, a shipper may recover the jurisdictional
portion of these charges through a cost-of-service tariff approved by
the Commission.
The Commission has deleted these regulations because the ANGTS
project has not been built as originally contemplated, and the
regulations are obsolete in light of the post-Order No. 636 unbundled
environment. Nonetheless, the Commission remains ready to facilitate
the construction of ANGTS, which Congress has found to be in the public
interest.12 Hence, if action is warranted in the future to
facilitate financing and progress on the ANGTS and the recovery of
ANGTS costs, the Commission will act expeditiously. What was stated in
Order No. 636-A applies here as well: ``nothing in the rule (Order No.
636) is intended to disturb the United States government's commitment
to the ANGTS prebuild.''13 Further, the Commission continues to
view the Northern Border Pipeline Company prebuild segment as remaining
subject to the various agreements between the United States and
Canadian governments and subsequent findings in Commission orders
certificating Northern Border's system.14 Removing these
regulations is not intended to have any effect on the ANGTS prebuild
revenue stream.

\12\Alaska Natural Gas Transportation System Act, 15 U.S.C.
Sec. 719-719.
\13\Order No. 636-A, III FERC Stats. & Regs. Preambles
para.30,950 at p. 30,674 (1992).
\14\Northern Border Pipeline Co., 63 FERC para.61,289 (1993).
---------------------------------------------------------------------------

B. The Revised Regulations

The revised part 154 has a completely new organization from the
current regulations, and virtually every section has been changed in
some way. The text has been edited to remove outdated and incorrect
references, and rewritten in a more concise style. Although many filing
and reporting requirements have not been changed, they have been
relocated. The revised regulations may be best understood by a
comparison to the current regulations they replace.15 Details of
the revised regulations are provided below along with a discussion of
the comments.

\15\Appendix A is a finding guide between current and revised
regulations.
---------------------------------------------------------------------------

1. Subpart A--General Provisions and Conditions
a. Section 154.1 Application; obligation to file. The Commission
has included as Sec. 154.1(b) the description of the purpose of part
154, which is currently set forth in Sec. 154.1(a). That purpose
reflects the requirement of Section 4(c) of the NGA that every natural
gas company must file with the Commission, and maintain open for public
inspection, its schedules and contracts.16

\16\15 U.S.C. 717c(c).
---------------------------------------------------------------------------

The Commission has deleted outdated language (i.e., ``On or after
December 1, 1948''). The Commission is removing the electronic medium
requirements from current Secs. 154.1 (b) and(c) and placing them in
new Sec. 154.4.
Section 154.1(c) replaces without change current Sec. 154.22, which
states that no natural gas company may file a new or changed rate
schedule or contract for service for which a certificate of public
convenience and necessity or certificate amendment must be obtained
pursuant to section 7(c) of the Natural Gas Act, until such certificate
has been issued.
Williston states that Sec. 154.1(c) only prolongs the approval
process and delays implementation of services. Williston suggests
allowing a new or changed rate to be filed concurrently with the
certificate filing.
This section imposes no additional requirements from current
Sec. 154.22. However, the Commission clarifies that, although a
pipeline may not file to incorporate a rate schedule in its tariff for
which section 7(c) authorization is required but for which section 7(c)
authorization has not yet been granted, it does not prohibit a pipeline
from proposing an initial rate in its certificate application under
section 7(c). Since the Commission has adopted the practice of granting
blanket certificates for services, this provision will be applied most
often to new companies which have not previously been subject to the
Commission's jurisdiction and do not have a tariff on file.
New Sec. 154.1(d) requires that any executed service agreement
which deviates in a material aspect from the form of service agreement
in a pipeline's tariff must be filed with the Commission. This
requirement codifies current Commission policy.17

\17\See, Tennessee Gas Pipeline Company, et al., 65 FERC
para.61,356 (1993); reh'g denied, 67 FERC para.61,196 (1994). INGAA,
CNG, Midcon, NGSA, and Columbia believe that Sec. 154.1(d) requires
public disclosure of contract provisions and may negatively affect
private contracts.
---------------------------------------------------------------------------

INGAA proposes various alternatives that limit the extent to which
information on contractual terms and conditions will be available to
the public.
Midcon urges the Commission to delete the requirements to file
commercially sensitive information. Midcon also suggests that the
proposal be deleted or clarified to state that

[[Page 52965]]
discount agreements do not ``deviate in any material aspect.'' Further,
Midcon suggests, any such contracts must be exempt from the
FOIA.18

\18\See the discussion on confidentiality, infra.
---------------------------------------------------------------------------

Pacific Northwest Commenters urge the Commission to be more
specific as to what deviations or substantive additional provisions
will trigger this filing requirement. Columbia objects to Sec. 154.1(d)
as too broad and requests that the Commission clarify that specifically
drafted provisions addressing flow rates, pressure obligations, maximum
delivery obligations, term, and other ``tariff-contemplated'' items are
not ``material'' deviations.
IPAA and NI-Gas support the requirement. IPAA states that the legal
concept of materiality may depend upon ``where one resides in the food
chain'' and suggests that all deviating agreements be filed.
The use of forms of service agreements as the basis of contracts
between a pipeline and its customers ensures that there are no
unreasonable differences among the rates, charges, services,
facilities, or otherwise of the pipeline's customers. Having made the
determination that the form of service agreement in the tariff is just
and reasonable, the Commission does not necessarily have to review
every contract to determine if it complies with the requirements of the
NGA. Thus, a contract that conforms to a pro forma service agreement
need not be filed with the Commission because the Commission has
already considered and determined that the pro forma service agreement
is just and reasonable. Likewise, any contract that deviates in a
material way from a pro forma service agreement must be evaluated anew
to determine that it is not unjust, unreasonable, preferential, or
otherwise unacceptable. The Commission does allow parties to negotiate
additional mutually agreeable terms and conditions in their service
agreements, but where the terms differ materially from those in the
form of service agreement, the pipeline must seek authorization for
these modifications from the Commission under section 4 of the
NGA.19

\19\Id. See also, Mojave Pipeline Company, 57 FERC para.61,300
(1991).
---------------------------------------------------------------------------

The Commission agrees that ``materiality'' is likely to vary with
the circumstances of the case. Therefore, it is better to allow the
term to remain less strictly defined in order that the particular facts
of a given contract will determine whether the deviation is material
and needs to be filed. The Commission also agrees that provisions such
as those addressing flow rates, pressure obligations, maximum delivery
obligations, receipt and delivery points, and term would not normally
be expected to be ``material'' deviations. Such provisions could easily
be drafted into the fixed language of the pro forma service agreements
or a blank space could be provided for insertion according to the
agreement of the parties. Likewise, rates that fall between the maximum
and minimum rates permitted for the rate schedule would not be
considered to be material. In either case, there would be no deviation
from the Commission approved pro forma service agreements contract.
b. Section 154.2 Definitions. The Commission defines terms of
general applicability in Sec. 154.2. The Commission is proposing
stylistic changes only to definitions for: ``Rate Schedule,'' currently
in Sec. 154.11, ``Contract,'' currently in Sec. 154.12, ``Service
Agreement,'' currently in Sec. 154.13, and ``Tariff or FERC Gas
Tariff,'' currently in Sec. 154.14. ``Posting,'' currently in
Sec. 154.16, has been defined to allow the parties to agree to
alternative methods of ``mailing'' such as electronic mail.
Williston states that the definition of ``rate schedule'' in
Sec. 154.2(e) is unclear as to whether a ``sale of natural gas''
pertains to the price charged for gas sold by a pipeline's sales
division. Williston states that such information is proprietary and
should not be included in the rate schedule.
The definition of ``rate schedule'' is substantially the same as in
the current regulation and tracks the language of the NGA.20
Williston has not persuaded us to change the definition.

\20\18 U.S.C. 717c(c).
---------------------------------------------------------------------------

c. Section 154.3 Effective Tariff. The Commission describes the
term ``Effective tariff'' in Sec. 154.3, currently Sec. 154.21. The
description clarifies that a pipeline may not avoid filing for a rate
change by making the rate subject to an exception or condition, such as
a periodic rate change under a price index. At present this concept is
found in Sec. 154.38(d)(3).
AGD requests clarification that Sec. 154.3(b) is not intended to
cause incentive rates to be rejected. SoCal urges the Commission not to
prohibit index adjustments submitted as part of a settlement or where
supported by the facts.
The regulation does not prohibit index adjustments or incentive
rates when authorized by the Commission. The regulation only prevents a
change from occurring automatically, without Commission authorization.
The regulation is consistent with the statutory obligation of the
Commission to review all proposed rate changes for adherence to the
just and reasonable standard.
d. Section 154.4 Electronic and Paper Media. Current Sec. 154.26
generally calls for 6 paper copies and requires rate filings to be
submitted electronically. New Sec. 154.4 continues to require
electronic media filings in addition to paper copies. Generally, it
calls for an original and 5 paper copies but requires an original and
12 paper copies of filings made pursuant to subpart D.
The new section consolidates in one place the Commission's
requirements with respect to electronic submittal of filings required
by part 154. Currently, these requirements are strewn throughout part
154, often redundantly.
The appendix to the NOPR included updated electronic tariff filing
formats as well as tariff pagination guidelines.21 The revised
formats take into consideration improvements in the FASTR software
which reads the tariff ASCII files submitted by the companies to the
Commission.22 The NOPR proposed that all companies that had not
restated their tariffs, do so, electronically on or before June 1,
1995. That date has passed. Therefore, all companies that have not
restated their tariffs must do so, electronically on or before January
26, 1996.

\21\The formats for the electronic filing and paper copy can be
obtained at the Federal Energy Regulatory Commission, Public
Reference and Files Maintenance Branch, Washington, D.C. 20426.
\22\On February 28, 1990, the Commission issued the ``Notice of
Tariff Retrieval System Software Availability,'' otherwise referred
to as the FASTR software package.
---------------------------------------------------------------------------

Columbia seeks clarification as to whether the requirement under
Sec. 154.4(a) that 6 (the NOPR had proposed 6 paper copies) paper
copies be filed, applies to the quarterly updates under proposed
Sec. 154.311. The quarterly update requirement has not been included in
the final rule as originally proposed; however, the paper copy
requirement applies to any updates which are required.
El Paso does not support the increase in the number of paper copies
to be filed. As discussed infra, the Commission is suspending
electronic filing of proposed changes in rates. Until electronic filing
is reinstated, the Commission will continue to require 12 paper copies
of rate case data. At the time electronic filing is reinstated, the
Commission will make any appropriate adjustment to the paper copy
requirements.
INGAA states that electronic filing should be the rule; in order to
receive

[[Page 52966]]
documents in another medium, the customer should have to demonstrate
its lack of ability to retrieve information electronically. ANR/CIG
suggests that the option should be the pipeline's where the customer is
able to receive information electronically. El Paso suggests the filing
of documents by electronic means such as telecommunications or upload
to the OPR Bulletin Board.
El Paso and Columbia support electronic service of filings upon
parties rather than service on paper. According to Columbia, parties
should be required to demonstrate their inability to receive electronic
service. Service could be accomplished through a central electronic
library of filings, from which copies could be made, or through
electronic transmission through the EBB or other communication links.
El Paso suggests the Federal Register notice be the only paper document
served on customers. The remaining portions of a filing should be
placed on the pipeline's EBB with the ability to view and download.
This enhancement to the EBB would promote timely access to relevant
information.
The Commission will not require customers to accept only electronic
versions of a pipeline's filings at this time. The new electronic
filing requirements are not yet finalized. No testing has been done. It
will take some time before anyone can be comfortable with solely
electronic filing. Therefore, until all of the issues related to
electronic only filing can be resolved, parties must continue to
receive paper copies of the filing. As the industry gains more
experience with electronic filings, parties may elect to receive only
an electronic version of the filing. The decision to send or receive an
electronic filing should be arrived at by mutual consent of the
pipeline and the interested party as noted in Sec. 154.2(d).
e. Section 154.5 Rejection of Filings. Section 154.5 states that
filings, that would prejudice the Commission in the discharge of its
duty to decide whether or not to investigate and suspend the increased
rates contained in the filing, will be rejected by the Director of the
Office of Pipeline Regulation. This section merely recognizes, in these
rate and tariff filing requirements, the existing power of the Director
of the Office of Pipeline Regulation to reject tariff or rate schedule
filings pursuant to the authority delegated to the Director by the
Commission in Sec. 375.307(b)(2) of the Commission's regulations.
Proposed Sec. 154.5 replaced current Sec. 154.15 with a definition
of filing date based on Sec. 35.2(c) of the Commission's regulations
for public utilities under the Federal Power Act. The rule, as
proposed, would allow the Director of the Office of Pipeline Regulation
to notify a natural gas company that its filing is rejected within 15
days of receipt of the document. Under this proposal, the date of
receipt stamped by the Secretary would not necessarily be the
officially recognized filing date.
This proposed regulation was met with approval by some commenters
such as APGA, Brooklyn Union, and AGD. However, others such as Columbia
and El Paso object to the proposal that the stamped date is not
necessarily the filing date. INGAA seeks clarification that the date
the pipeline submits its filing to the Secretary is the filing date for
determining compliance. INGAA and ANR/CIG state that the Commission
already has the authority to reject rate filings if deemed incomplete;
so, the proposal should be rejected because it may only create
confusion as to the official filing date.
Columbia argues that 15 days is more time than necessary and
creates uncertainty in trying to project and place rates into effect as
of a date certain. Panhandle states that the status of interventions
and protests would be unclear during the 15 days. Northwest/Williams
states that 7 days is sufficient for the Director's notice. Northwest/
Williams suggests that ``procedural'' revisions should be allowed
within 2 days without effecting the filing date.
Pacific Northwest Commenters recommends that the Commission issue a
notice that a filing is deemed incomplete, suspend any applicable dates
triggered by the original filing, and allow an additional 8 business
days for further protests or comments.
Columbia proposes that a modification permit pipelines to
supplement deficient filings rather than being rejected where the
deficiency is not substantive.
Arizona Directs sees conflict between this regulation and
Sec. 154.209. Arizona Directs states that there is no proposed
requirement that a filing be deemed complete before the NGA section
4(d) 30-day notice period begins. Arizona Directs states that it would
be burdensome for customers to review, intervene, and comment upon a
filing deemed incomplete. Arizona Directs suggests that a new comment
period be established with respect to the entire complete application,
not just the corrected portion. Further, public notice should be given
whenever a filing is deemed incomplete, and a second notice issued
designating the date the filing is deemed complete and filed and
establishing a new intervention, protest, and comment deadline. Arizona
Directs suggest that the rule provide that a section 4 rate filing is
not accepted for filing within the meaning of section 4(d) until after
the end of a 15-day public review period and a staff finding that the
filing is complete. Then, a notice could issue establishing the 10-day
comment period.
NGSA suggests retaining the current provision or modifying the
proposal to start a 15-day comment clock after the Director's review
period.
Panhandle states that the determination by the Director that a
filing is incomplete is tantamount to a rejection or a summary
judgment. Panhandle states that filings should not be rejected if they
are in substantial compliance with the regulations. Panhandle states
that the proposal allows the Director to decide rate cases on isolated
components without further proceedings.
Consumers Power does not object to the Director making the
determination of incompleteness but believes the Commission should
provide specific guidance as to conditions for rejection.
INGAA states that the Director's discretion should be limited so
that rejection does not take place where: in a section 4 case, a good
faith effort was made to include all of the required statements and
schedules; information has not been provided for which a legitimate or
routine waiver has been sought; information is provided under seal with
a request for confidential treatment.
Panhandle suggests modifying the regulation to read that the
``Secretary'' shall reject any material ``which patently fails to
substantially comply with the applicable requirements.''
INGAA states that the proposed regulation would create practical
problems. If the Commission rejects a filing and establishes another
filing date, the pipeline could be in violation of the requirement that
the data be based upon a period ending not more than 4 months prior to
the filing date. A delay in the start of the 30-day notice period could
leave the pipeline without authorization to provide services set to
coincide with the expiration of old contracts.
Although several commenters supported proposed Sec. 154.5, most
commenters either opposed the regulation or requested substantial
modifications to the proposed section. Because of the confusion and
uncertainty that may be created by the proposed regulation and the
numerous procedural problems raised by the commenters, the Commission
is not adopting Sec. 154.5 as proposed. New Sec. 154.5 is an indication
of the

[[Page 52967]]
Commission's intent to have the Director reject filings that do not
comply with the filing requirements promulgated by this order.
Finally, because the Commission is not adopting proposed
Sec. 154.5, the definition of filing date contained in current
Sec. 154.15 is retained in new Sec. 154.2(f).
f. Section 154.6 Acceptance for filing not approval. New Sec. 154.6
replaces current Secs. 154.23 and 24. The rejection language of
Sec. 154.24 is amended and the reference to fees is deleted.
g. Section 154.7 General Requirements for the Submission of a
Tariff Filing or Executed Service Agreement. Section 154.7 is a new
section setting forth the content of a tariff filing or executed
service agreement. In part, new Sec. 154.7 reflects the requirements of
current Sec. 154.63(b)(1). New Sec. 154.7 concerns all filings of
tariff sheets and executed service agreements. In light of the short
time period in which the Commission and interested parties have to
review the filing, several items have been added to speed processing of
the filing and minimize additional requests for information. These
include an expanded definition of the reference to the authority under
which the filing is made, addition of the name and telephone number of
an official able to respond to questions regarding the filing, and
clarification of the contents of the statement of the nature, reasons,
and basis for the filing.
Section 154.7(a)(9) requires that the transmittal letter contain
either a motion, in case of minimal suspension, to place the proposed
rates into effect at the end of the suspension period; or, a specific
statement that the pipeline reserves its right to file a later motion
to place the proposed rates into effect at the end of the suspension
period.
APGA supports the requirement to provide a detailed statement of
the nature, reasons, and basis for any rate filing.
Columbia suggested that the proposed Sec. 154.7(b) be modified to
refer to the posting requirements of Sec. 154.2(d) as sufficient
service. Columbia also states that filings should be provided only to
firm customers, not ``affected'' customers. Although these suggestions
have not been adopted, the service requirements have been further
refined and reduced as discussed supra.
NI-Gas suggests that Sec. 154.7(a)(2) be modified to require that
the transmittal letter include an address suitable for overnight
delivery as opposed to a PO Box and a facsimile (FAX) number. The
Commission has required a telephone number in the transmittal letter to
provide for those situations where an intervenor needs clarification or
detects a problem with a filing that could best be resolved by a phone
call. The address is required by Sec. 154.102 to be on the title page
of the tariff. There is no need for it to also be in the transmittal
letter.
Northwest/Williams requests clarification whether the letter of
transmittal and certificate of service are to be submitted on
electronic media. These items are not required to be submitted on
electronic media. Section 154.4(a) lists those filings that must be
filed electronically. As discussed in the section on electronic filing,
the Commission does not intend to require that all filings be made
electronically.
h. Section 154.8 Informal Submission for Staff Suggestions. Section
154.8 replaces current Sec. 154.25.
2. Subpart B--Form and Composition of Tariff
a. Section 154.101 Form. Section 154.101 replaces current
Sec. 154.32. The Commission is proposing to eliminate the requirement
that electronic media record format duplicate the page size, borders,
and margins of the paper copy. The electronic filing requirements are
in new Sec. 154.4. In addition, the Commission has eliminated the
requirement of a binder.
b. Section 154.102 Title Page and Arrangement. Section 154.102
replaces current Sec. 154.33. The Commission has eliminated the
reference to Sec. 154.52, as special exceptions are covered by new
Sec. 154.112. The Commission has also eliminated the requirement of a
binder. The Commission now requires that the numbering of sheets be as
provided in the Tariff Sheet Pagination Guidelines.23

\23\The guidelines and electronic filing instructions for tariff
sheets may be obtained at the Federal Energy Regulatory Commission,
Public Reference and Files Maintenance Branch, Washington, DC 20426.
---------------------------------------------------------------------------

Currently, compliance with these guidelines is optional although
the Commission has required use of the pagination guidelines in
individual cases. Many companies have already voluntarily adopted the
Commission's guidelines. The Commission now makes these guidelines
mandatory. The guidelines provide the only means to ensure that tariff
sheets are in the proper order in the Commission's electronic database.
The guidelines also provide the basic knowledge necessary to create a
sorting methodology for any party that wishes to create a database.
Most importantly, the guidelines help to create a clear guide to the
succession of tariff sheets.
MoPSC suggests the title page of each volume of a pipeline's tariff
contain a phone number which customers and interested persons may call
to make inquiries about those tariffs.
NI-Gas suggested that communications information be expanded to
include an address suitable for overnight deliveries. Many pipelines
use post office boxes for their general mail deliveries, but expedited
delivery services cannot make deliveries to such locations. NI-Gas also
recommends that the information should include a fax number, so that
requests for additional information can be promptly delivered and
forwarded.
NGSA recommends tariff sheets be clearly distinguished from each
other as being one of the following: (1) Proposed, (2) accepted but
subject to refund, and (3) approved. It often becomes very confusing as
to whether the tariff being identified is currently effective (i.e.,
the rate currently being charged) or is to become effective on the date
proposed in the filing.
The Commission finds that the proposal to add a telephone number
and a fax number to the title page has merit. The regulations currently
require, on the title page, the name and address of a person to whom
communications concerning the tariff should be sent. A few pipelines
provide a telephone number and/or a fax number on the title page now.
Inclusion of a telephone number and a fax number on the title page will
be made mandatory. This modest addition should foster communication
about the tariff.
Pipelines are fairly evenly divided between those who put a post
office box number on the title page and those who put a street address.
The Commission does not believe it is burdensome to provide a street
address instead of, or in addition to, the post office box
number.24 This suggestion will be adopted.

\24\Those pipelines who prefer communications to be addressed to
a post office box number may wish to present the address information
in the way Northern Border Pipeline Company does. The street address
is noted specifically as the courier address.
---------------------------------------------------------------------------

The Commission will not adopt the suggestion that the tariff sheets
carry designations as suggested by NGSA. Adoption of this suggestion
will require the pipelines to make filings of tariff sheets simply to
change the status designation. This would consume additional pipeline
and Commission staff resources. The tariff sheets available to the
public at the Commission's Washington, DC headquarters are marked in
the way suggested by NGSA. The electronic tariff sheets, in a format
readable by the Commission's software, can be downloaded from the
Commission's

[[Page 52968]]
bulletin board system. In this format, the tariff sheets each carry a
status indicator: proposed, effective, superseded, withdrawn, rejected,
or suspended. The tariff sheets also indicate if the order acting on
the sheets accepted the sheets subject to refund.
c. Section 154.103 Composition of Tariff. Section 154.103 is the
replacement for current Sec. 154.34. In recognition of prevailing
practice, the new section specifically requires that the tariff set
forth all currently effective rates. The Commission has deleted the
reference to special exceptions and changed the examples of classes of
service to reflect the current prevalent designations.
d. Section 154.104 Table of Contents. Section 154.104 replaces
current Sec. 154.35 with the clarification that the table of contents
must contain a list of the sections of the general terms and
conditions.
NI-Gas states that the inclusion of a detailed listing of the
General Terms and Conditions of the tariff in the table of contents
will be a major improvement in the current practice of some pipelines.
Columbia's tariffs have an initial table of contents in the front
of the tariff which contains a line item reference to ``General Terms
and Conditions'' and lists a page number for the ``General Terms and
Conditions Table of Contents'' located in approximately the middle of
the tariff, at the beginning of the General Terms and Conditions.
Columbia seeks clarification that this is permissible within the
context of the proposed regulation; and, if not, requests that the
regulation be modified to accept this format.
The intent of requiring the sections of the general terms and
conditions to be listed in the table of contents is to ensure such a
listing appears in the tariff. Columbia's approach to the table of
contents is acceptable.
e. Section 154.105 Preliminary Statement. Section 154.105 replaces
current Sec. 154.36 with stylistic changes only.
f. Section 154.106 Map. Section 154.106 is the replacement for
current Sec. 154.37. Maps must be submitted on paper and updated to
reflect major changes. The new section states a preference for zones to
be displayed on separate sheets.
Williston states that there should not be a map requirement in the
tariff because there is a map in the FERC Form No. 2. The Commission
has found that the presence of a map in the tariff is helpful in the
process of evaluating other provisions.
NGSA states that the map should identify storage, gathering, and
all off-system (non-contiguous) facilities as well as ``pipeline''
facilities.
Industrials recommend that pipelines be required to serve a hard
copy of system maps prepared in accordance with new Sec. 154.106, even
if the parties agree that tariff filings may be served via electronic
mail, in diskette form, or otherwise.
The Commission will not adopt NGSA's suggestion to require a more
detailed map in the tariff. A detailed map with the facilities NGSA
wishes identified is filed annually with the Form No. 2. Since the
Commission is not discontinuing paper filing of tariffs, all parties
receiving service of the tariff sheets are entitled to a paper copy
unless they agree otherwise. It is up to the parties and the pipeline
to determine the terms of electronic service, including exceptions to
electronic service.
g. Section 154.107 Currently Effective Rates. New Sec. 154.107
governs the tariff sheets setting forth the natural gas company's
currently effective rates. In part, this new section replaces
Sec. 154.38(d) (1) and (2). The section requires that rates be stated
in thermal units, as is the prevalent practice, rather than in units of
volume.
APGA points out that Sec. 154.107 formalizes the current practice
of providing a detailed statement of rates and charges in a particular
location in a pipeline's tariff. APGA supports this requirement. They
state it will be particularly helpful for customers to receive a
complete picture of effective and proposed rates upon the filing of a
new rate case.
Williston states that the language in this section appears to be
adding a level of complexity to the rate schedules that is unnecessary.
Williston requests clarification of a ``limited rate change.''
The Commission believes that Williston misunderstands the purpose
of this section. The summary of rates would not appear in the rate
schedule. This section is intended to codify the nearly universal
practice of placing a summary of rates on a tariff sheet or sheets
which generally appears in the tariff after the map. It is not part of
the rate schedule. We note that Williston's summary of rates fully
complies with Sec. 154.107.25 Proposed subpart E details the
filing requirements for limited rate changes. To avoid confusion, the
Commission will modify this section to reference Subpart E. Northwest/
Williams asks whether the required ``total rate'' column applies only
to the maximum rate and whether surcharges, ACA, and GRI charges are to
be included in the ``total rate.''

\25\Ninth Revised Sheet No. 15 to its FERC Tariff Second Revised
Volume No. 1.
---------------------------------------------------------------------------

Section 284.7(d)(5) requires that rate schedules filed under that
section must state a maximum and minimum rate. Therefore, the summary
of rates must show the total maximum and minimum rates. It is
preferable for all surcharges to be added into the maximum rate and, if
appropriate, into the minimum rate. However, it has been the
Commission's past practice, in appropriate cases, to accept summaries
of rates in which the GRI surcharge is noted in a footnote at the
bottom of the summary rate sheet but not added into the total rate.
This has been acceptable since the GRI surcharge does not necessarily
apply to all transactions under a rate schedule. The reverse is
accepted also--the GRI surcharge is listed in a column and added into
the total rate. In this case, a footnote states the GRI surcharge is
not applicable in certain circumstances.26 To a lesser degree, the
same can be said of the ACA surcharge. The Commission will not depart
from past practice on this issue. The regulations will be modified to
allow the ACA and GRI surcharges to be noted in a footnote. If the
footnote option is elected, the charges must be stated in the footnote,
it must be clear when the charges apply,27 and the footnote must
indicate that these charges are added to the total stated rate.

\26\Northwest's summary of rates reports the GRI and ACA
surcharges in separate columns and adds the charges into the total
rate, where appropriate. Williams, in contrast, states the level and
applicability of the GRI and ACA surcharges in footnotes on its
summary of rates but does not include them in the total rate.
\27\A reference to the section in the tariff where the
applicability of the surcharge is explained is acceptable.
---------------------------------------------------------------------------

Columbia, AGD, and APGA are in favor of the requirement to state
rates in thermal units. APGA points out that many of its members and
most LDCs bill their retail customers on the basis of units of volume.
The use of units of heat content has been the standard measure for
pipelines for some time.
Great Lakes requests that the Commission clarify that, for
pipelines whose rates are currently stated on a volumetric basis,
inclusion of a statement of rates in thermal units should take place in
the pipeline's next section 4 rate case. Great Lakes also asks that the
Commission clarify whether ``thermal units'' refers to dekatherms or to
some other measurement. NGSA recommends that the rates be stated on the
same basis (Mcf or MMBtu) as they are charged, with the units clearly

[[Page 52969]]
labeled. NGSA maintains that the proper unit for stating rates has been
and can continue to be determined on an individual pipeline basis.
NGSA is opposed to a generic rulemaking which mandates the use of a
standard unit of measure in rate case filings at this time. NGSA states
that rates and tariffs should be stated in the same units as charged.
NGSA states that calculating the rates based on one unit of measurement
and then converting those rates to a different unit of measurement for
billing purposes creates confusion. Further, NGSA states, some
pipelines and shippers have negotiated private contracts based on an
``Mcf'' basis of measurement. NGSA states that the proposed requirement
is a substantive change in the Commission's rate policy which was not
the purpose of this rulemaking. NGSA states that in order to protect
the due process rights of all parties, any Commission imposed change in
measurement standards should be implemented on an individual pipeline,
on a prospective basis, when the pipeline files its next major rate
case. NGSA states that conversion to the thermal units will not be a
simple process. Therefore, NGSA states, parties should be able to
present the issues of material fact brought about by such conversion in
the context of a full evidentiary hearing, wherein disputes as to the
methodology of conversion may be resolved.
Kern River objects to the proposal and states that changing
measurement standards at this time from volumetric to thermal would be
a substantive change and would needlessly put it to the expense of
converting its tariff, contracts, and business systems. Whittier adds
that, at a minimum, individual pipelines, like Kern River should be
permitted to be exempt, if the thermal billing mandate would impair
individual shippers. Kern River states that if the final rule requires
billing unit uniformity, then the new Sec. 154.107 should be modified
to require only volumetric billing units.
Whittier states that volumetric billing is good policy because
volumetric rates; (1) Equitably allocate to shippers the capital and
operating cost of the pipeline on the basis of the units actually
transported; (2) allow shippers efficiently to use their contracted
space to transport as many Btu's as the quality specifications allow,
and gas suppliers are able to optimize the economic efficiency of their
own facilities by making the economic decision whether to leave
liquefiable hydrocarbon gases in the gaseous form and transport them in
the gas pipeline or to incur the cost of extracting and marketing them
as liquids; and (3) allow the appropriate costs to be divided by the
appropriate throughput in volume units. Whittier argues that there is
no reason for a commodity to be transported on the same basis that it
is purchased.
Whittier states that forcing pipelines that are content with
volumetric-based rates to change to thermal-based rates would be making
a substantive change in the contracts of shippers on pipelines that
measure and bill on a volumetric basis. Whittier states that this could
result in reopening contracts and rates.
Chevron, Whittier, and Kern River recommend deletion of the word
``thermal'' so that the proper unit for stating rates can continue to
be determined on an individual pipeline basis.
A significant majority of pipelines state their rates on the basis
of either MMBtu or Dth. Only a few pipelines continue to state their
rates in Mcf.28 The Commission earlier adopted the MMBtu
measurement base for all reports submitted under part 284, in
Sec. 284.4. The change to the regulations in this rulemaking expands on
the Commission's earlier action and reflects the prevalent practice in
the industry. The Commission recognizes that some companies perceive a
hardship in switching from Mcf to Dth or MMBtu. However, the Commission
also recognizes the ongoing industry concern with standardizing certain
practices as expressed at the EBB conference held on September 21,
1995. Standardizing industry practices, such as stating rates in
thermal units, facilitates cross-pipeline business. Accordingly, the
Commission will maintain this standard in the regulations. However, in
light of the difficulties expressed by some pipelines, the Commission
does not intend to actively enforce this section until one year after
the effective date of this rule.

\28\Approximately a dozen pipelines continue to state their
rates in Mcf. Another five state their reservation rates in Mcf but
state their usage rates in Dth or MMBtu.
---------------------------------------------------------------------------

NGSA recommends that the rate sheets should state the amount of
each applicable surcharge and include a citation to the docket in which
such surcharge level was accepted by the Commission. The Commission
will not adopt NGSA's suggestion that the summary statement of rates
include the citation to the docket in which each surcharge level was
accepted. This would add a great deal of complexity to the summary
statement of rates. The information NGSA is interested in is available
publicly. Since comments in this docket were filed, the Commission
provided access to each company's electronic tariff sheets on the
Commission's bulletin board system.29 Each tariff sheet which is
not pending contains the citation to the order which acted on the
tariff sheet. With some careful checking, a researcher can identify
each tariff sheet containing a surcharge change and readily identify
the order acting on that sheet.

\29\Pipelines began filing electronic versions of their tariff
sheets with tariff sheets effective November 1, 1989. Some of the
tariff sheets filed early in the process are contained in separate
archive databases.
---------------------------------------------------------------------------

h. Section 154.108 Composition of Rate Schedules. Section 154.108
replaces current Sec. 154.38. Current Sec. 154.38(d)(4), Refunds, is
moved to Sec. 154.501. Current Sec. 154.38(d)(5), RD&D, is moved to
Sec. 154.401. Current Sec. 154.38(d)(6), ACA expenditures, is moved to
Sec. 154.402. Current Secs. 154.38(d) (1) and (2) are revised and moved
to Sec. 154.107. Current Sec. 154.38(d)(3) is moved to Sec. 154.3.
Current Sec. 154.38(e), minimum bill, is deleted.
Williston objects to the requirement that pipelines provide a
description of the calculation of the monthly charges for each rate
component. It argues this would cause a pipeline's tariff to become
even more voluminous and onerous without serving any useful purpose.
Williston requests that the Commission eliminate this proposed
requirement.
Section 154.108 merely formalizes current practice. Virtually all
current tariffs include a section in the rate schedules explaining how
the rate is to be applied to derive monthly billings. This section of
the tariff is essential to determining the accuracy of a shipper's
bill. Under current practice, this section provides both a textual
description of the components of the rate and the mathematical method
to determine charges each month. The Commission notes that almost all
pipelines appear to comply with this regulation already.
i. Section 154.109 General Terms and Conditions. Section 154.109
replaces current Sec. 154.39. The company's discounting policies are
added to the tariff.
AGD, NI-Gas, and the LDC Caucus support the proposed requirement
that the pipeline set forth in its tariff its discount policy and the
order in which each pipeline charge will be discounted. The LDC Caucus
states that this would assist customers in ensuring that the pipeline's
discount policy is consistently applied and that adjustment to rates to
reflect discounted revenues are proper.

[[Page 52970]]

INGAA supports a requirement of providing broad policy statements
by pipeline companies concerning nondiscriminatory discounts but
objects to disclosure of management policies or any specific order in
which rate components would be discounted. The statement specifying the
order in which each rate component will be discounted must be in
accordance with Commission policy. This proposed regulation could be
interpreted to require pipelines to disclose the order in which each
rate component will be discounted. This portion of proposed
Sec. 154.109(c) reduces pipeline rights and flexibility as granted in
Order Nos. 436 and 500. Great Lakes, Columbia, KN, MRT, and Panhandle
concur.
Panhandle and Great Lakes state that a company's discount policy is
commercially sensitive information. Disclosure of this information may
interfere with a pipeline's ability to compete in the marketplace,
thwarting the Commission's goals in Order No. 636 to foster competition
and provide natural gas transportation service to the customer which
values it most. Great Lakes submits that a general statement of policy
will meet the Commission's intent without requiring the disclosure of
commercially sensitive information.
Columbia argues the proposed requirement is too broad. Columbia
notes that pipelines are already subject to nondiscriminatory standards
with respect to the granting of discounts, and must post/disclose
discounts to affiliates. Columbia requests deletion of this requirement
to the extent it requires setting forth the ``manner'' in which rates
are discounted.
KN fears that this provision would allow each pipeline to review
the discounting policies of other pipelines that compete with it for
business. KN states that the disclosure rule would serve to reward
those pipelines that are evasive or simplistic in their policy
statements and would punish those that are more descriptive or
detailed. KN states that there is no valid competitive purpose served
by compelling pipelines to reveal all their discount policies.
MRT fails to see the relevance of this provision. MRT states that
pipelines already file discount reports and report marketing affiliate
discounts on their Electronic Bulletin Boards. MRT states that this
provides sufficient information for both the Commission and the
pipeline's customers to monitor the discounts a pipeline is granting.
Great Lakes also states its opposition to the proposed section
requiring the pipeline to state in its general terms and conditions its
policy for financing and constructing laterals. Great Lakes states that
pipelines must be able to evaluate each proposal to finance and
construct lateral facilities on a case-by-case basis. Great Lakes
states that no set policy can contemplate all of the factors which
contribute to a pipeline's decision to finance and construct these
facilities. Great Lakes states that a pipeline's decisions with regard
to laterals are public knowledge since the financing, cost, location,
and customer information related to the construction of any lateral
facilities are disclosed in a pipeline's certificate application. Great
Lakes state that the Commission and others have the ability to
determine whether or not a pipeline is unduly discriminatory in its
decision regarding the financing and construction of laterals and so,
proposed Sec. 154.109(b) is not necessary for regulatory purposes.
Section 154.109(c) merely formalizes the Commission's policy on
recognition of discounts as enunciated in Natural.30 Under the
policy, the pipeline must recognize discounts in a specified order. The
first item of the overall reservation charge discounted will be the GRI
surcharge (for member pipelines), followed by the base rate reservation
charge, Account 858 or other Order No. 636 transition cost surcharges,
and, last, all GSR reservation surcharges. Other non-transition
reservation surcharges will be attributed as agreed by the pipeline and
its customers in individual proceedings.31

\30\Natural Gas Pipeline Company of America (Natural), 69 FERC
para. 61,029, (1994), reh'g, 70 FERC para. 61,317 (1995). Policy
applied in ANR, 69 FERC para. 61,322 (1994), and Tennessee, 69 FERC
para. 61,094 (1994). Policy applied to interruptible transportation
in Southern, 69 FERC para. 61,093 (1994), and MRT, 69 FERC para.
61,112 (1994).
\31\In Algonquin Gas Transmission Company, 69 FERC para. 61,105
(1994), the Commission clarified its policy with respect to
surcharges designed to collect costs in Account No. 858. If the
Account No. 858 costs at issue are not Order No. 636 transition
costs, but relate to upstream capacity retained by the pipeline for
operational use and are embedded in the pipeline's base rates, the
policy announced in Natural does not apply.
---------------------------------------------------------------------------

In adopting the policy in Natural, the Commission saw the need for
a generic methodology to recognize discounts in a transition cost
recovery filing. The Commission enumerated the advantages of its policy
as follows:
Maximize the pipeline's recovery of transition costs from
its discounted customers,
Minimize the need for a subsequent true-up to implement
the Commission's policy of permitting full recovery of transition
costs,
Ensure transition costs are spread as evenly and widely as
possible, and
Minimize discount adjustments in periodic filings.
The requirement, in Sec. 154.109(b), for a general statement of the
pipeline's policies on laterals formalizes the Commission's policy of
assuring that laterals are built on a non-discriminatory basis. By
placing the general policy in the tariff, parties may more effectively
monitor its application.
j. Section 154.110 Form of Service Agreement. Section 154.110
replaces current Sec. 154.40 with the addition of receipt points as an
item for insertion on the form when appropriate.
k. Section 154.111 Index of Customers. Section 154.111 replaces
current Sec. 154.41, Index of Purchasers, but with applicability
specifically limited to natural gas activities not subject to part 284
of this chapter. The Commission has expanded the Index of Customers to
include all firm transportation services and contract demand for each
customer for each rate schedule. In the order issued in Tennessee Gas
Pipeline Company's restructuring proceeding,32 the Commission
clarified that current Sec. 154.41 is not limited to the requirement to
file sales-related information. The changes here make that
interpretation explicit. Some pipelines have provided contract demand
information on a voluntary basis before this. The information has
proven valuable to the Commission in analyzing pipelines' filings and
in eliminating additional requests for information.

\32\Tennessee Gas Pipeline Company, 65 FERC para. 61,224 (1993).
---------------------------------------------------------------------------

Pipelines that offer services under part 284 of this chapter,
exclusively or in addition to services authorized under part 157 of
this chapter, must comply with the requirements in the companion
rulemaking instead of this provision. In the companion rulemaking,
pipelines providing service pursuant to part 284 of this chapter,
provide an Index of Customers on their electronic bulletin board (EBB).
As an interim measure, we will require pipelines providing
transportation service under part 284 to comply with the Index of
Customers requirements as set forth in Sec. 154.111 until the
electronic index is implemented.
Panhandle recommends that the Index of Customers requirement remain
the same as that contained in the current regulations. Panhandle
objects to the expansion of the index as being anti-competitive.
Panhandle objects to the inclusion of the term of each contract,
arguing the duration of the contract is sensitive information. Further,
Panhandle believes this

[[Page 52971]]
information serves no valid regulatory purpose.
Columbia objects to the requirement to include contract demand for
each customer for each rate schedule in the Index of Customers.
Columbia believes public disclosure of such commercially-sensitive
information unfairly places pipelines and their customers at a
competitive disadvantage in the marketplace.
AGD supports the provision and suggests that this information
should be provided in both print and electronic media in order to
facilitate its full use by interested parties. AGD recommends that the
regulations be amended to require each pipeline to provide a sum of the
MDQ contract levels by rate schedule, at least in the paper copy of the
index of purchasers. This information is valuable because it
facilitates analysis of billing determinants in rate cases and between
rate cases.
The Pacific Northwest Commenters urge the Commission to continue to
require that the tariff include a reasonably current index of all firm
customers. Pipelines should be required to provide a completely current
customer index on their EBBs--but on a semi-annual basis the pipeline
should still file updated indices or firm customers in their tariffs.
Consistent with the action being taken in the companion rule, the
Index of Customers will include the full legal name of the shipper, the
rate schedule number of the service under contract, the effective date
of the contract, the termination date of the contract, and the maximum
daily contract quantity under the contract.
We will not adopt Columbia or Panhandle's recommendations. As we
note in our companion rulemaking, the index will contain fundamental
data about the natural gas industry--how much of the pipeline's
capacity shippers have under firm contract. This information is basic
to the Commission's understanding of events taking place in the
industry. With this information, the Commission will remain apprised of
trends in the industry, the willingness of shippers to hold firm
capacity, the average length of time capacity remains under contract,
the proportion of capacity rolling over under evergreen provisions,
etc. Pipelines are beginning to deal with complex issues related to
shippers' contracts coming up for renewal in the post restructuring
period.33 The lack of easily accessible data regarding customers'
contract levels and contract terms could hamper the Commission's
ability to assess the impact of this phenomenon on the industry. The
index will provide key data for this purpose. The Index of Customers
which is the subject of this section will be included in the tariff.
Currently, the tariff is filed both electronically and on paper.
Therefore, AGD's suggestion is moot.

\33\For example, Transwestern Pipeline Co. recently filed a
settlement in Docket No. RP95-271-000 to deal with the turn back of
significant amounts of capacity by a key customer.
---------------------------------------------------------------------------

We will not require the pipelines offering service under part 284
to maintain the Index of Customers in both their tariff and on their
EBBs. It is the Commission's intention to reduce the filing burden on
the pipelines. Access to the Index of Customers through a downloadable
file or through the tariff should be sufficient. The Commission will
hold future conferences on the appropriate format for the electronic
Index of Customers.
The language originally proposed in Sec. 154.111 required the index
to be updated coincident with the filing of the Form No. 2 and Form No.
11. At the time, Form No. 11 was proposed to be filed semi-annually. In
our companion rulemaking, we are revising the Form No. 11 and requiring
it to be filed quarterly. In light of the change to the frequency of
the filing of Form No. 11, we will remove the reference to Form No. 11
and modify the language in this section to preserve the semi-annual
schedule originally contemplated.
l. Section 154.112 Exception to Form and Composition of Tariff.
Section 154.112(a) replaces current Sec. 154.52, but deletes those
paragraphs dealing with the sale of gas or purchased gas cost tracking.
Because the requirements of Sec. 154.101 (Form) and Sec. 154.102 (Title
page and arrangements) are applicable, Sec. 154.112(a) does not refer
to those matters.
Section 154.112(a) specifies that special rate schedules for
service under part 157 of this chapter are to be included in FERC
Volume No. 2. Section 154.112(b) mirrors the provision in Sec. 154.1(d)
which requires that contracts that deviate in any material aspect from
the form of service agreement must be filed with the Commission.34
Section 154.112(b) also requires that such contracts be referenced in
FERC Volume No. 1.

\34\The language proposed in the NOPR for Sec. 154.112(b), which
would require the filing of contracts ``that do not conform to the
form of service agreement'' has been changed to be consistent with
the provision of Sec. 154.1(d).
---------------------------------------------------------------------------

m. Miscellaneous Subpart B Comments. AGD commented that proposed
Subpart B should be supplemented to include a provision requiring a
pipeline seeking a rate increase to identify (a) the new rate being
proposed by rate schedule and (b) for each proposed new rate the rate
which represents the refund floor or ``last clean rate.'' AGD states
that this information should be presented in a simple, easy-to-
understand format such as a chart or matrix so that interested parties
can quickly find in one place the rate levels which quantify the
totality of the applicant's rate increase proposal. Pipeline rate
changes are routinely made in response to various factors. Some of the
resultant adjustments are made effective subject to refund. AGD state
that these circumstances have the effect of obscuring the underlying
rate and that AGD's recommendation is intended to simplify the task of
the staff and the pipeline customer in discovering what rate is
proposed and what portion of that rate is already subject to change as
a result of some regulatory contingency.
AGD also suggests that many pipelines follow a practice of
providing to their customers a quarterly statement summarizing the
currently effective tariff sheets. This practice should be required of
all pipelines as it is an efficient mechanism for keeping abreast of
the developments affecting pipeline services.
Subpart B sets out the proper contents of a pipeline's tariff.
AGD's suggested summary appears in Sec. 154.7(a)(6) which requires ``a
summary of the changes or additions made to the tariff'' to be included
in the statement of the nature, the reasons, and the basis for the
filing. Thus, what AGD seeks is already required. No additional
language needs to be added to the regulations.
AGD's suggestion that the pipeline identify the last ``clean rate''
when it proposes an increased rate has merit. The identification will
assist the Commission and other interested parties in determining the
level of potential refunds if the proposed rate is suspended and
ultimately found unjust or unreasonable. It will also alert interested
parties to the fact that the underlying rate may also be in effect
subject to refund. Proposed Sec. 154.7(a) was modified to require that
the letter of transmittal identify the last rate found to be just and
reasonable that underlies the proposed rate.
The NGA requires a pipeline to ``keep open in convenient form and
place for public inspection, schedules showing all rates and charges
for any transportation or sale subject to the jurisdiction of the
Commission, * * *''35 Historically, this provision

[[Page 52972]]
has not been interpreted as requiring pipelines to provide periodic
copies of effective tariffs to each customer. The Commission notes that
much more can be done through electronic means, today. As a result, the
Commission makes available through its electronic bulletin board
system, each pipeline's complete tariff for downloading. As this
information is available through the Commission's EBB, we will not
require the pipelines to send their customers a copy of the pipeline's
current tariff on a quarterly basis.

\35\15 U.S.C. 717c.
---------------------------------------------------------------------------

3. Subpart C--Procedures for Changing Tariffs
a. Section 154.201 Filing Requirements. New Sec. 154.201(a) is a
replacement for current Sec. 154.63(b)(1)(v), Marked Versions of Tariff
Changes. The new section clarifies that changes to both text and
numbers must be marked. New Sec. 154.201(b) is a replacement for
current Sec. 154.63(e)(4), Workpapers and Supporting Data. The intent
of this regulation is to ensure that all mathematical calculations are
complete and logically follow from the first calculation to the last;
so that, anyone attempting to recreate the calculations can do so. This
requirement will also ensure that any numbers that are not directly
from the company's source documents are explained.
Other parts of current Sec. 154.63 are revised and distributed
elsewhere in revised part 154.
Northwest/Williams requests clarification as to when the filing
requirements of subpart C or D apply. The confusion over the
applicability of subparts C and D turns on the inclusion of the section
titled ``Changes in rate schedules, forms of service agreements, or the
general terms and conditions,'' as proposed in subpart D, Sec. 154.301.
Some of subpart C applies to all changes to a tariff or executed
service agreement, such as Sec. 154.201 and the notice, service, and
protest requirements. There are other sections in subpart C which have
a more limited scope, such as the provisions for submission of new rate
schedules, filing of compliance filings, and changes to suspended
tariffs. The subject section is better positioned in subpart C since it
applies when a pipeline submits changes to specific portions of the
tariff. Subpart D applies to changes in rates other than those
described in subparts E, F, G, and H. To avoid any confusion, the
subject section is now Sec. 154.204 in Subpart C.
NI-Gas supports Sec. 154.201(a) but seeks clarification that all
changes be marked, not just substantive changes. The Commission
clarifies that the regulation applies to all changes in text and
numbers whether substantive or not.
Williston states that Sec. 154.201(a) should not apply to maps. The
regulation requires that changes in text and numbers be marked. This
includes text and numbers on pages containing maps. Whenever possible,
text and numbers on maps should be marked in the same manner as text
and numbers elsewhere in the filing. However, the Commission recognizes
that maps are often produced in such a fashion that this is not
practical. In such cases, the text and numbers on maps may be marked in
any clear fashion. Further, the Commission is not specifying any
particular method for marking changes to boundary lines, symbols, and
representative drawings. Such changes may also be demonstrated in any
clear fashion.
NI-Gas supports Sec. 154.201(b). NGSA approves of 201(b) (2) and
(4). Columbia states that while it supports adherence to principles of
disclosure and open communication with Commission staff and parties
concerning calculations and workpapers, Columbia avers that this
regulation is too broad and subjective. Columbia states that the
determination whether the calculations are complete and logically
follow so that anyone can recreate them, is a subjective standard which
is particularly onerous given that an incomplete filing may be rejected
pursuant to Sec. 154.5.
The Commission disagrees with Columbia. It has been the
Commission's experience that pipelines have not always included all of
the calculations necessary to support the proposed rate modification
even though the pipeline must have these calculations in order to
establish the rates in its filing. The lack of these calculations
causes unnecessary delay and raises questions about the filing. It is
impossible for the parties to determine if the proposed rate is just
and reasonable if the calculations are incomplete or unexplained.
Section 154.201(b) serves two purposes: it gives specific guidance
to the pipeline as to what is needed to fulfill the pipeline's
obligation to support proposed rates; and, it gives interested parties
useful information in a timely manner. This regulation should reduce
the necessity for data requests.
Columbia states that if this regulation is promulgated, pipelines
should not be subject to additional data requests about calculations.
Columbia's suggestion is not adopted. The Commission cannot anticipate
all of the information the parties may need in a rate case. It would be
improper to generalize that, under any circumstances, no pipeline would
be subject to additional data requests. Eliminating the possibility of
any data requests concerning the pipeline's rate calculations would
restrict the parties' options unnecessarily.
Pacific Northwest Commenters urge the Commission to require that
each filing contain a summary customer impact comparison setting forth
the amounts paid by customers under the current rates based on the most
recent test period determinants compared to what they would pay under
the proposed change based on the same determinants. Statements G-1 and
G-2 provide this information. The Commission will not require the
pipeline to provide an additional customer impact comparison. There
should be sufficient information available through the filing to allow
each customer to conduct its own comparison.
Pacific Northwest Commenters request that the current provision in
Sec. 154.63(e)(1) that pipelines include material reflecting rate
fixing adjustments in accord with Commission orders be included here.
AGD recommends that the regulation require a description of any Dth-
mile study relied upon by the applicant for the rate change.
The regulations already require that the pipeline provide
documentation to support proposed changes. It is not necessary to list
each and every document that might be needed for such support. It is
the pipelines' responsibility to provide the documents that prove that
its proposed rate change is just and reasonable.
The Commission modified proposed Sec. 154.301(c) to reinstate the
original language regarding alternate material reflecting rate fixing
adjustments. A regulation requiring a description of the Dth-mile study
will not be adopted.
b. Section 154.202 Filings to Initiate a New Rate Schedule. New
Sec. 154.202 replaces current Sec. 154.62. The new section does not
apply to initial executed service agreements. Very little data is
currently required to support an initial rate schedule or executed
service agreement. Because many services are now provided under blanket
authorizations, there is no review prior to the tariff filing. Thus,
the current filing requirements are no longer consistent with the needs
of the Commission for reviewing new rate schedules. The new section
relates to the requirements for a new rate schedule under the blanket
authority granted under part 284 of this chapter as well as to other
initial filings.
NI-Gas states that Sec. 154.202(a)(1)(iv)(B) should be expanded to
include information on

[[Page 52973]]
surcharges and crediting. On the other hand, Williston states that
Sec. 154.202(a) should be deleted because it requires filing data not
previously required, is burdensome, and prolongs review by staff.
Section 154.202(a) requires the pipeline to file basic information
about the proposed service which the Commission needs to know to make
an informed and timely decision. The current regulations are adapted
for individually certificated services where the information would be
provided in the certificate proceeding. Section 154.202(a) recognizes
the transition from individually certificated services to blanket
certificates. It requires less information than previously required for
an individual certificate application. It is designed to provide
Commission staff and others with enough information to review the rates
and charges for an initial service or service provided under a blanket
certificate authority. By requiring pipelines to submit this necessary
information when they make their initial filing, the Commission avoids
the need to formulate data requests which only delay the proceedings.
NI-Gas' interest in the applicability of surcharges to the new
service is understandable. However, no modifications to the proposed
regulations are necessary to accomplish NI-Gas' goal. Section 154.107
requires all surcharges applicable to a service to be displayed on the
tariff sheet showing currently effective rates. If a new rate is
proposed for the new service, a separate line or lines will appear on
this tariff sheet. All applicable surcharges would be displayed in
separate columns as provided under Sec. 154.107(d). Therefore, the
surcharges applicable to the new service would be discernible. The
Commission does not believe it is necessary to expand the list under
proposed Sec. 154.202(a)(1)(iv) to list all of the possible affects of
a new service upon existing shipper services since the regulations
state that information is to be provided is ``including but not limited
to'' the specific information noted. Any additional affects on existing
service would be covered by this inclusive phrase.
Panhandle states that the regulation should be clarified to
establish that only where a pipeline is proposing to change a rate
previously established in the section 7 proceeding should there be a
section 4 obligation. Section 154.202(b) states that where a rate,
service, or facility is certificated under section 7, the tariff sheets
filed to implement the terms of the certificate must comply with the
requirements for compliance filings. No change needs to be made to the
regulations to accommodate Panhandle's position. This regulation
creates an obligation applicable to initial rates and rates and charges
for services under a blanket authorization. Any proposed rate or charge
that differs from the rate or charge approved in a section 7 proceeding
is governed by Sec. 154.202(b)(2).
c. Section 154.203 Compliance Filings. Section 154.203 is a new
section addressing filings that are made to comply with a Commission
order. Filings made to comply with Commission orders must include only
those changes required to comply with the order. Such compliance
filings must not be combined with other rate or tariff change filings.
A compliance filing that includes other changes or that does not comply
with the applicable order in every respect may be rejected.
APGA and NI-Gas support this regulation.
Pacific Northwest Commenters states that compliance filings should
be designated and noticed as such, and recognized as not mandating
action within 30 days. The form of notice now requires the pipeline to
designate compliance filings.
CNG believes that Sec. 154.203(b) lacks flexibility. CNG states
that an alternate or creative response to a Commission requirement may
obviate the need for a rehearing request or court appeal. CNG argues
that including related rate or tariff changes in a compliance filing
saves parties time and money. On the other hand, Brooklyn Union
requests confirmation that compliance filings that do not conform to
the applicable order in all respects will be rejected.
The regulation states that a compliance filing that includes other
changes or that does not comply with the applicable order in every
respect ``may be rejected.'' In practice, the Commission regularly
rejects filings that go beyond the order. The Commission chose not to
use the phrase ``will be rejected'' in order to allow for some
flexibility to accommodate minor variations in special and rare
circumstances. However, the Commission will not accept any compliance
filing that contains any substantive difference from the underlying
order.
d. Section 154.204--Changes in Rate Schedules, Forms of Service
Agreements, or the General Terms and Conditions. Section 154.204
provides distinct requirements for filings to change rate schedules,
forms of service agreements, or the general terms and conditions of a
tariff.36 Such filings must explain the necessity for the change
and the impact on existing customers.

\36\This regulation appeared in the NOPR as Sec. 154.301.
---------------------------------------------------------------------------

NI-Gas states that the inclusion of the information required in
Secs. 154.204 (b) and (c) will help in the timely analysis of tariff
changes by interested parties.
NDG supports the proposed requirement that the filing company must
include with its filing an explanation of why the proposed change is
necessary and the impact on existing customers. NDG also believes that
several additional filing requirements would further improve the rate
review process, including requiring the distribution of workpapers
provided to FERC staff in support of a filing to customers. Pipelines
should be required to (1) allow interested parties to notify the filing
pipeline that they wish to receive a copy of the workpapers on the
filing data, and (2) include with the copy of the filing served on
interested parties a notice describing the content of the workpapers.
It is unclear to what workpapers NDG refers. All workpapers
referred to in Sec. 154.204 are to be submitted as part of the filing.
Thus, the pipeline is already required to submit all workpapers.
Generally, Columbia does not object to the requirements of this
section. However, Columbia believes that much of the requested
information is irrelevant to many tariff filings e.g., workpapers
showing the estimated effect on revenues and costs over a 12-month
period.
The requirements of Sec. 154.204 are generally applicable. Further,
the specific requirement to which Columbia refers has been a
longstanding requirement for filings for changes other than in rate
level.37 However, if a particular requirement does not happen to
apply, a statement to that effect is all that is necessary.

\37\See Sec. 154.63(b)(2).
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e. Section 154.205 Changes Related to Suspended Tariffs, Executed
Service Agreements or Parts Thereof. Section 154.205 replaces current
Sec. 154.66.38 The change adds two exceptions to the rule
prohibiting tariff filings during a suspension period. The exceptions
are ``changes made under previously accepted tariff provisions
permitting periodic limited rate changes'' and ``accepted limited rate
changes.'' Section 154.205 recognizes that the Commission allows
periodic limited rate changes pursuant to accepted tariff

[[Page 52974]]
provisions and ACA and GRI surcharge changes to take place during the
period of suspension. This reflects current Commission policy.

\38\This regulation appeared in the NOPR as Sec. 154.204.
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Williston commented that the provision in current Sec. 154.66
providing that a proposed tariff or executed service agreement may be
withdrawn during the suspension period with special permission should
be retained. That provision has been reintroduced into the final rule.
f. Section 154.206 Motion to Place Suspended Rates Into Effect.
Section 154.206 replaces current Sec. 154.67(a).39 Current
Sec. 154.67(b), Reports, is deleted. This section requires that, when
rates have been suspended for more than a minimal period and the
Commission has ordered changes or the rates include costs of facilities
that are not in service, the motion to place suspended tariff sheets
into effect must be filed at least one day prior to the date the sheets
are to take effect. A motion is required where: The Commission has
ordered changes; the rates include facilities that are not in service;
or, the transmittal letter specifically reserves the pipeline's right
to file a motion.

\39\This regulation appeared in the NOPR as Sec. 154.205.
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Section 154.7(a)(9) adds a new provision whereby the transmittal
letter must include either a motion to place suspended rates into
effect, or a specific statement that the pipeline reserves its right to
file a later motion. If the pipeline includes a motion in its
transmittal letter, then the proposed rates will go into effect at the
end of the minimal suspension period. If the pipeline specifically
states that it reserves its right to file a later motion, then the
proposed rates will go into effect only after such later motion is
filed. Also, if a pipeline fails to comply with Sec. 154.7(a)(9) by not
including either a motion or a statement, the proposed rates will not
go into effect until the pipeline files a motion.
APGA requests that Sec. 154.206(a) be amended to make the form of
motion clear. However, the Commission does not believe that it is
necessary to standardize such a motion.
The NOPR had proposed that when rates have been suspended for more
than a minimal period and the Commission has ordered changes or the
rates include costs of facilities that are not in service, the motion
to place suspended tariff sheets into effect must be filed no less than
30 days nor more than 60 days prior to the date the sheets would take
effect. Columbia commented that the proposed requirement would cause
pipelines to estimate test period data for that portion of the test
period occurring after the date the pipeline must make the motion rate
filing. Columbia stated that this would only be acceptable if the
Commission accepted such estimates as of the end of the test period.
CNG and Columbia recommended no change to the current practice of
allowing pipelines to file motion rates one day before the effective
date. CNG commented that the current rules work well but the proposed
rule would require pipelines to rely on estimated plant balances in
determining the level of plant in service at the end of the test
period. Further, CNG stated, the pipeline would be unable to determine
the status of negotiations 30 days in the future, and would be
compelled to move to make the rate increase effective at the earliest
possible date. In the alternative, CNG states, the longest notice
period should be 6 to 10 days.
In light of these comments, the revised regulation has been
modified to be consistent with the current practice of allowing
pipelines to file motion rates one day before the effective date.
However, individual suspension orders may require pipelines to make
compliance filings earlier, to reflect changes required by the
Commission.
Columbia states that Sec. 154.206(c) should not state ``for less
than one day,'' but ``for one day.'' JMC suggests a change to ``one day
or less.''
Pacific Northwest Commenters suggest that the Commission retain the
motion filing requirement for all suspensions of more than one day and
delete the requirement for suspensions of one day or less. To comply
with section 4 of the NGA, Pacific Northwest Commenters argue that the
Commission should issue an express blanket grant of a motion for any
filing suspended for one day or less. Pacific Northwest Commenters
state that this approach would recognize the past practice of generally
suspending rate increases for 5 months and other changes for less than
one day. Thus, a pipeline could delay implementation where parties are
resolving issues through negotiation. Pacific Northwest Commenters
state that automatic implementation of a rate increase would restrict
this flexibility.
JMC supports the proposal to formalize the Commission's practice of
not requiring a motion when rates are suspended for a minimal period.
Panhandle states that the NGA requires that suspended rates only go
into effect upon motion by the pipeline. Panhandle recommends that when
the suspension period is minimal, the regulations should recognize that
the transmittal letter constitutes the requisite motion unless the
pipeline reserves the right to file a separate motion. This
recommendation has not been adopted. Unless the pipeline reserves the
right to file a separate motion, it must include a motion in the
transmittal letter.
JMC requests clarification that rates for separate, distinct
classes of customers need not be suspended for the same time period nor
be combined together for purposes of determining whether the proposed
rate is a decrease or increase. The Commission's policy is that
customers should only pay for the services they receive. Rates need not
be aggregated for the purpose JMC suggests.40

\40\See Tennessee Gas Pipeline Company, 62 FERC para.61,250 at
62,642 (1993).
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The revised regulation is consistent with current Commission
practice and the purposes of the NGA. Section 4(e) of the NGA
authorizes the Commission to suspend operation of a schedule and defer
the use of a rate pending a hearing ``but not for a longer period than
five months beyond the time when it would otherwise go into
effect.''41 If the proceeding has not been concluded and an order
made at the expiration of the suspension period, the proposed change
shall go into effect ``on motion of the natural gas company making the
filing.''42 The NGA continues that refunds may be ordered ``where
increased rates or charges are thus made effective.''43
Historically, the Commission has considered the suspension of a rate as
a necessary step to assure that refunds may be ordered when
appropriate.

\41\15 U.S.C. 717c(e).
\42\Id.
\43\Id.
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When the maximum five month suspension is applied, the earliest the
rates will become effective is on the day after the date the motion
filing is made. Where the rates have been suspended for the maximum
period, there is sufficient time for the pipeline to modify its
proposal, if necessary, and file the motion. However, as a practical
matter, where rates have been suspended for a minimal period as allowed
under the statute, a hearing could not possibly be concluded by the
expiration of the period. This regulation allows the pipeline to
specify whether or not the filing itself acts as a motion.
g. Section 154.207 Notice Requirements. Section 154.207 replaces
current Sec. 154.22 and Sec. 154.51.44 The new section applies
only to proposed changes. Reference to former Sec. 154.5,

[[Page 52975]]
which is no longer in part 154, is removed.

\44\This regulation appeared in the NOPR as Sec. 154.206.
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h. Section 154.208 Service on Customers and Other Parties. New
Sec. 154.208 formally requires the filing company to serve its
customers and state regulatory commissions on or before the filing
date.45 The regulation requires that all customers and state
commissions receive an abbreviated form of the filing. Customers and
state commissions with an interest may then request a full copy. The
pipeline must provide the full copy within 48 hours. However, pipelines
must comply with any customer's standing request to receive a complete
filing as the initial served filing.

\45\This regulation appeared in the NOPR as Sec. 154.207.
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The NOPR invited comments on whether the informational needs of
customers and state regulatory commissions would be adequately
fulfilled if the filing company was only required to serve the
transmittal letter and provide the rest of the filing upon request.
Some pipelines have used this procedure recently to minimize the costs
of reproduction and mailing where their lists of shippers are quite
large.
MRT, El Paso, NGSA, and NET support serving only a transmittal
letter to customers and state commissions on or before the filing date
with complete copies provided on request. They state that serving
complete copies wastes pipeline resources and annoys customers that are
not interested.
Columbia states that it is unduly burdensome to serve all filings
on all customers and suggests that the regulation be modified to
require service upon firm customers on the filing date. Columbia states
that such service along with the form of notice pursuant to
Sec. 154.209 is sufficient to assure adequate notice.
AF&PA, Arizona Directs, AGD, Industrials, and New York oppose
allowing pipelines to fulfill service by a transmittal letter. APGA
states that the service of only the transmittal letter would be neither
desirable nor lawful. APGA states that without a complete statement of
proposed rates, the notice is not meaningful.
Michigan and MoPSC state that state commissions should receive the
full filing.
Michigan states that, considering the time restraints in which the
Commission must act and the delay of requesting full service, the
burden to request full service should not be on the parties.
Michigan, MoPSC, and New York suggest that the Commission require
pipelines to provide state commissions and customers with notice of a
filing 30 days prior to the filing date.
Michigan and New York would like the pipelines to be required to
serve both the state commission and the designated counsel by the next
day.
Pacific Northwest Commenters points out that ``service'' under
Sec. 385.2010 (Rule 2010) may consist of merely depositing the filing
in the mail which may take 3 or 4 days for delivery. To assure that
customers get more timely notice and may prepare more complete comment
and analysis, they suggest that pipelines be required to certify that
arrangements have been made to assure receipt by customers no later
than the next business day, that customers elect whether to receive
full service or just transmittal letters, and that customers be able to
designate two representatives to receive service. They also request
that the Commission require pipelines to provide service of orders in
specific cases in lieu of Commission service.
APGA requests a requirement that pipelines must, at the request of
a customer, provide next-day service to attorneys or consultants
designated by customers.
AGD states that the regulation should require simultaneous service
upon the Commission and all customers except those known to prefer
transmittal letter service.
Columbia Distribution and NDG do not oppose offering the customers
the option of receiving a transmittal letter instead of the full
filing, however customers should be able to place a standing request
for complete filings by the next day.
Panhandle proposes that firm customers and state commissions
receive full service at the time of filing but that interruptible
customers receive an abbreviated service consisting of: The letter of
transmittal, the Statement of Nature, Reason, and Basis, the changed
tariff sheets, and the Notice. Notice would also be on the EBB.
INGAA and ANR/CIG ask that pipelines be allowed to make an
abbreviated form of service consisting of: The Letter of Transmittal;
the Statement of Nature, Reason, and Basis; the changed tariff sheets;
a summary cost-of-service and rate base; and, summary of magnitude of
change. Customers with an interest may then request a full copy.
El Paso suggests that the service obligation be fulfilled by
posting on the EBB.
In light of the responses to the NOPR, the revised regulation is a
combination of the alternatives suggested by several commenters and
represents a reasonable middle ground between requiring service of a
complete filing and service of just the transmittal letter. The
pipeline must provide the full copy within 48 hours if requested.
Additionally, the pipeline must comply with any customer's standing
request to receive a complete filing as the initial served filing.
Customers are defined as customers of the pipeline with a contract for
service as of the date of the rate case filing. While reducing the
filing burden to the pipeline, this course assures that all interested
parties receive complete notice adequate to making informed decisions
about the proposal. Also, those parties that desire service of complete
filings can make a standing request for such service in lieu of the
abbreviated and 48-hour follow-up services.
i. Section 154.209 Form of Notice for Federal Register. Section
154.209 replaces current Sec. 154.28.\46\ The modified form reflects
current practice. The form has been changed from that in the NOPR to
distinguish compliance filings that do not require Commission action
within 30 days from the date of filing, from other rate filings.

\46\This regulation appeared in the NOPR as Sec. 154.208.
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Michigan and New York request that the notice be modified to
contain a brief narrative discussing the financial impact of the
proposed change on each class of service and any conditions of service
affected by the change. Michigan and New York state that filings that
fail to include such notice should be rejected. The Commission rejects
this

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-24723. Public record. Not legal advice.