Revisions to Forms, Statements, and Reporting Requirements for Natural Gas Pipelines, 4516-4529 [2011-1493]
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Federal Register / Vol. 76, No. 17 / Wednesday, January 26, 2011 / Rules and Regulations
those forms, and to include on those
forms the amount of fuel waived,
discounted or reduced as part of a
negotiated rate agreement. In addition,
the Commission also is revising page
520 for consistency.
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
18 CFR Part 260
[Docket No. RM07–9–003; Order No. 710–
B]
Revisions to Forms, Statements, and
Reporting Requirements for Natural
Gas Pipelines
Federal Energy Regulatory
Commission.
ACTION: Final rule.
AGENCY:
In this Final Rule, the Federal
Energy Regulatory Commission
(Commission) is revising its financial
forms, statements, and reports for
natural gas companies, contained in
FERC Form Nos. 2, 2–A, and 3–Q, to
include functionalized fuel data on
pages 521a through 521c of those forms,
and to include on those forms the
amount of fuel waived, discounted or
reduced as part of a negotiated rate
agreement. For consistency, the
Commission also is revising page 520.
The revisions are designed to enhance
the forms’ usefulness by providing
greater transparency as to fuel data.
DATES: Effective Date: This rule will
become effective February 25, 2011.
FOR FURTHER INFORMATION CONTACT:
Brian Holmes (Technical Information),
Office of Enforcement, Federal Energy
Regulatory Commission, 888 First
Street, NE., Washington, DC 20426.
Telephone: (202) 502–6008, e-mail:
brian.holmes@ferc.gov.
Robert Sheldon (Technical Information),
Office of Energy Market Regulation,
Federal Energy Regulatory
Commission, 888 First Street, NE.,
Washington, DC 20426. Telephone:
(202) 502–8672, e-mail:
robert.sheldon@ferc.gov.
Gary D. Cohen (Legal Information),
Office of the General Counsel, Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC
20426. Telephone: (202) 502–8321,
e-mail: gary.cohen@ferc.gov.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Jon
Wellinghoff, Chairman; Marc Spitzer,
Philip D. Moeller, John R. Norris, and
Cheryl A. LaFleur.
Issued January 20, 2011.
1. The Federal Energy Regulatory
Commission (Commission) is revising
its financial forms, statements, and
reports for natural gas companies,
contained in FERC Form Nos. 2, 2–A,
and 3–Q, to include functionalized fuel
data on pages 521a through 521c of
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SUMMARY:
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I. Background
2. In Order No. 710, the Commission
revised its financial forms, statements,
and reports for natural gas companies,
contained in FERC Form Nos. 2, 2–A,
and 3–Q, to make the information
reported in these forms more useful by
updating them to reflect current market
and cost information relevant to
interstate natural gas pipelines and their
customers.1 The information provided
in these forms included data on fuel
use, but did not require these data to be
functionally disaggregated.
3. On rehearing, the American Gas
Association (AGA) argued that the fuel
data would be more useful if such data
were broken out by different pipeline
functions, including transportation,
storage, gathering, and exploration/
production, and should include, by
function, the amount of fuel waived,
discounted or reduced as part of a
negotiated rate agreement. This
argument originally was rejected in
Order No. 710–A, and Chairman (then
Commissioner) Wellinghoff issued a
partial dissent arguing that AGA’s
proposals should have been adopted.2
4. Subsequently, AGA filed a petition
for review in the United States Court of
Appeals for the District of Columbia
Circuit arguing that the Commission
erred by not addressing the concerns
raised by Chairman Wellinghoff in his
partial dissent to Order No. 710–A. The
court agreed and remanded the matter
back to the Commission for further
proceedings.3
5. On June 17, 2010, the Commission
issued a notice of proposed rulemaking
proposing to revise pages 521a, 521b,
and page 520, and proposing to add
pages 521c and 521d to FERC Form Nos.
2, 2–A, and 3–Q to include
functionalized fuel data, including the
amount of fuel waived, discounted or
reduced as part of a negotiated rate
agreement.4
1 Revisions to Forms, Statements, and Reporting
Requirements for Natural Gas Pipelines, Order No.
710, 73 FR 19389 (Apr. 10, 2008), FERC Stats. &
Regs. ¶ 31,267 (2008), order on reh’g and
clarification, Order No. 710–A, 123 FERC ¶ 61,278
(2008), remanded sub nom. American Gas Ass’n v.
FERC, 593 F.3d 14 (D.C. Cir 2010) (D.C. Circuit
Remand Order).
2 Revisions to Forms, Statements, and Reporting
Requirements for Natural Gas Pipelines, Order No.
710–A, 123 FERC at 62,708–9.
3 593 F.3d at 21.
4 Revisions to Forms, Statements, and Reporting
Requirements for Natural Gas Pipelines, Notice of
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6. In response to the June 2010 NOPR,
comments were filed by eight
commenters.5 Certain of the comments
presented proposals that differed from
the Commission’s proposals in the June
2010 NOPR. To give all interested
persons an opportunity to comment on
these proposals prior to making a final
decision, the Commission issued a
notice allowing reply comments. Reply
comments were filed by two
commenters.6
II. Discussion
A. Overview
7. After consideration of the
comments, the Commission will revise
pages 521a, 521b, and page 520 of FERC
Form Nos. 2, 2–A, and 3–Q, and will
add page 521c, as proposed in the June
2010 NOPR.7 We make this
determination because we find that the
additional information to be reported on
pages 521a–521c will allow the user to
match the revenues generated by the
sale of excess fuel with the
functionalized costs reported on page
520 and will allow a user to better
determine if there is a cross-subsidy.
The revised forms will also now allow
the user to determine where on the
pipeline system fuel costs are being
incurred and how they are being
allocated. This added transparency will
ensure that the Commission and
pipeline customers have information
critical to assessing the justness and
reasonableness of pipeline rates. The
collection and public availability of this
information is consistent with our goal
of having sufficient information
reported to allow the Commission and
pipeline customers to assess the impact
on pipeline rates of changing fuel costs.
The Commission also gave
consideration to whether the data
reported on FERC Form Nos. 2, 2–A,
and 3–Q discussed herein should be
reported on a monthly or quarterly
basis. We have determined to require
that the page 521 fuel use information
should be reported on a monthly basis
in the quarterly reports,8 as that
provides greater transparency.
8. These revisions to FERC Form Nos.
2, 2–A, and 3–Q do not require the
Proposed Rulemaking, 75 FR 35700 (June 23, 2010),
FERC Stats. & Regs. ¶ 32,659 (June 17, 2010) (June
2010 NOPR).
5 These commenters and the abbreviations used to
identify them are provided in the attached
Appendix.
6 INGAA and AGA.
7 As proposed pages 521c and 521d were
identical, we no longer see a need for a separate
page 521d.
8 The data reported in FERC Form Nos. 2 and
2–A on page 521 represents fourth quarter data and
is not a total of data for all four quarters.
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reporting of previously unreported new
categories of information.9 Instead, the
new requirements merely require greater
transparency through a disaggregation of
existing data categories. Moreover, the
Commission has determined that the
burden on filers of reporting this
information is small and is justified by
the usefulness of the information.
B. Support for the June 2010 NOPR
Proposal
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1. Commenters’ Views
9. Of the eight comments filed in
response to the June 2010 NOPR, six
support the Commission’s proposals.10
One of the six comments offers
suggestions for additional revisions to
the forms.11 In addition, one commenter
seeks clarification as to the scope of the
reporting requirements,12 and another,
while expressing support for the goals of
the June 2010 NOPR, offers a
counterproposal to accomplish these
goals.13
10. APGA urges the Commission to
adopt the proposed revisions to FERC
Form Nos. 2, 2–A, and 3–Q.14 While
AGA also supports the June 2010 NOPR
proposals and urges prompt action on a
final rule,15 AGA requests that the
Commission require monthly reporting
of volume throughput data on page 520
and separate reporting of backhaul
volumes.16 Associations add that the
proposed revised reporting
requirements would provide useful
information.17 TVA likewise supports
the Commission’s proposal to include
additional line items in 521a and 521b
to account for fuel information
disaggregated by function.18 IOGA
supports the proposed changes in
reporting, particularly the inclusion of
lost and unaccounted-for gas (‘‘LAUF’’)
used in transportation, storage,
gathering, and exploration/production
in the fuel data required on FERC Form
Nos. 2, 2–A, and 3–Q as a separate
component of fuel, by function.19
Kansas Commission supports the
changes proposed in the NOPR.20
11. MidAmerican requests
clarification that the reporting of
9 As explained further below, reporting will be
prospective in nature and data for previous periods
need not be corrected and refiled.
10 AGA, APGA, Associations, IOGA, Kansas
Commission and TVA.
11 AGA.
12 MidAmerican.
13 INGAA.
14 APGA Comments at 1.
15 AGA Comments at 1, 5–6.
16 Id. at 6–9.
17 Associations Comments at 3–4.
18 TVA Comments at 2.
19 IOGA Comments at 1–2.
20 Kansas Commission Comments at 1.
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discounted and negotiated fuel should
only contain fuel volumes related to
agreements that contain discounted or
negotiated fuel.21
12. While INGAA expresses support
for the Commission’s goal of enhancing
FERC Form No. 2 fuel use reporting, it
asserts that the Commission’s June 2010
NOPR went beyond AGA’s original
proposal of reporting fuel by function
that has been waived, discounted, or
reduced as part of a negotiated rate
agreement. INGAA offers an alternative
reporting plan that it asserts will meet
the Commission’s stated goals.22
2. Usefulness of Reporting Additional
Details on Fuel Use
13. The Commission’s proposal in the
June 2010 NOPR would disaggregate
fuel use data into Discounted,
Negotiated and Recourse categories. By
contrast, under INGAA’s proposal,
companies would report aggregated
Dths and Total dollars collected by
function for Gas Used for Compressor
Stations, for Gas Used for Other
Deliveries and Other Operations, Gas
Lost and Unaccounted for, Net Excess or
(Deficiency), Disposition of Excess Gas,
and Gas Acquired to meet Deficiency
(eliminating the reporting of data in
columns b, c, d, f, g, and h, as proposed
in the June 2010 NOPR).
14. The Commission’s proposal would
require filers to report Dths not
collected under waived, discounted,
and negotiated for Gas Used for
Compressor Stations, for Gas Used for
Other Deliveries and Other Operations,
Gas Lost and Unaccounted for, Net
Excess or (Deficiency), Disposition of
Excess Gas, and Gas Acquired to meet
Deficiency. Under INGAA’s proposal,
this reporting requirement (Dths not
collected by function under waived and
negotiated deals) would apply to
shipper supplied gas only, including
Lines 2–7 on pages 521a and 521b. This
change would eliminate the reporting of
waived, negotiated and total fuel for
lines 9 through 64 that was proposed in
the June 2010 NOPR.
15. Six of the seven commenters that
addressed this issue contend that the
NOPR proposal reports an appropriate
level of detail on fuel use.23 INGAA was
the sole commenter arguing against the
NOPR proposal in this regard.
16. INGAA urges that the Commission
limit its revisions to FERC Form No. 2
to AGA’s proposal in its response 24 to
21 MidAmerican
Comments at 3–4.
Comments at 1.
23 MidAmerican Comments do not take a position
on this issue.
24 AGA Comments filed November 13, 2007 at
4–5 to the September 2007 NOPR. See Revisions to
Forms, Statements, and Reporting Requirements for
22 INGAA
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the September 2007 NOPR, arguing that
the June 2010 NOPR went further than
necessary to accomplish what AGA
proposed, and objects to the June 2010
NOPR proposal as providing more
information than necessary.25 INGAA
demonstrates its point by referring to
AGA’s November 13, 2007 comments
which referenced pages 4, 5, and 6 of
Workpaper 2, and Workpaper 10 of the
Informational Fuel Report filed by
Dominion Transmission, Inc., (DTI) in
Docket No. RP00–632–023 on June 27,
2007, as an example of what should be
included on page 521.26 INGAA argues
that neither the Commission nor AGA
has made a case that the additional
degree of reporting is required to
facilitate monitoring for potential crosssubsidies among services.27
17. By contrast, AGA agrees that the
level of detail in the information to be
reported under the NOPR proposal is
needed to adequately assess the justness
and reasonableness of pipeline fuel
charges, addresses the D.C. Circuit
Remand Order, and the burden of
producing such information is small
and nonetheless justified.28
18. APGA also states that the
additional reporting requirements
proposed in the NOPR will better ensure
that pipeline customers and the
Commission have sufficient information
to identify unjust and unreasonable
rates and services and to support
potential complaints.29 APGA states
that, under the Commission’s current
reporting requirements, customers and
the Commission currently cannot match
the revenues generated by the sale of
excess gas with the reported
functionalized fuel costs.30 Information
regarding both fuel costs and excess gas
revenues, broken-down and reported by
function (including gathering,
transmission, distribution, storage and
production/extraction/processing), will
allow customers and the Commission to
better assess how pipeline fuel costs are
incurred and allocated.31 Requiring
pipelines to disaggregate their excess
gas revenue information and report it by
function will thus provide customers
and the Commission with information
Natural Gas Pipeline, Notice of Proposed
Rulemaking, 72 FR 54860 (Sept. 27, 2007), FERC
Stats. & Regs. ¶ 32,623 (2007) (September 2007
NOPR).
25 INGAA Comments at 3.
26 Id. at 4.
27 Id. at 11.
28 AGA Comments at 5–6.
29 APGA Comments at 2.
30 Id. at 3.
31 Id.
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necessary to better determine the
reasonableness of pipeline fuel rates.32
19. APGA also supports the
Commission’s proposal to require
pipelines to report the amount of fuel by
function that has been waived,
discounted or reduced in negotiated rate
agreements.33 It states that, under the
Commission’s policy, existing shippers
are protected from subsidizing pipeline
customers who have negotiated rates.34
It adds that the Commission’s proposal
to require pipelines to report fuel costs
and revenues associated with each type
of rate structure (i.e., negotiated,
discounted, or recourse) by function
will aid customers and the Commission
in identifying inappropriate crosssubsidization.35
20. Associations assert that the
revised reporting requirements will
improve the reporting of fuel data in
FERC Form No. 2.36 Associations
maintain that pipeline fuel revenues can
constitute a substantial percentage of a
pipeline’s total system revenues, and
therefore, ensuring that shippers are not
paying excessive fuel rates or
percentages is extremely important.37
21. Associations comment that
shippers will benefit from having
functionalized fuel data reported on
FERC Form No. 2 because this will
allow shippers: (1) To ensure that rates
are just and reasonable, as the greater
level of detail will allow them to better
assess whether pipelines are
substantially over recovering fuel from
their shippers 38 and (2) to assess
whether they are subsidizing other
shippers.39 In this regard, Associations
state that functionalized reporting will
show the sources and uses of a
pipeline’s fuel by service type on FERC
Form No. 2. Associations state that
functionalized fuel reporting, for
example, will show a pipeline’s
shippers the amount of fuel that storage
users provided to the pipeline, as well
as how much of that fuel the pipeline
actually used for storage services.40 If
storage users in this example provided
less fuel than the pipeline used for
storage services, shippers using other
pipeline services might want to take a
closer look at the pipeline’s fuel to
determine whether they are subsidizing
the storage shippers’ fuel.41 Thus,
Associations assert that functionalized
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32 Id.
33 Id.
fuel data will allow shippers to confirm
that they are providing the appropriate
amount of fuel to the pipeline and are
not subsidizing other shippers.42
22. Associations also support breaking
out fuel volumes and revenues into rate
types—discounted rates, negotiated
rates or recourse rates—and maintain
that this level of detail will provide
shippers and the Commission with
information that will be useful in
assessing fuel rates.43 Associations
maintain that reporting fuel volumes
and revenues by rate type will help
shippers ensure: (1) The prevention of
inappropriate subsidization; (2) the
accuracy of pipeline fuel trackers; and
(3) the compliance of pipelines with the
Commission’s fuel discounting
policies.44
23. Associations also state that
requiring pipelines to report fuel data by
rate type would prevent subsidization of
some shippers by allowing the
Commission and shippers to distinguish
between those fuel discounts that are
eligible for a discount adjustment in a
rate case and those that are not.45
Associations add that, as the new FERC
Form No. 2 will require pipelines to
identify discounted fuel volumes and
revenues as either ‘‘discounted,’’
‘‘negotiated,’’ or ‘‘recourse,’’ shippers
could use these data to distinguish
between those fuel discounts that are
appropriately included as adjustments
in a rate case (e.g., backhauls) and those
that are not (e.g., discounts that are part
of a negotiated rate).46 Moreover,
Associations assert that this detail gives
shippers a better indication of what
appropriate fuel rates should be,
allowing the shippers to determine if
fuel rate changes are warranted.47
24. Finally, Associations argue that
reporting fuel data by rate type could
provide an added check on fuel tracker
calculations and on pipelines’
compliance with fuel discounting
policies.48
25. IOGA maintains that it is critical
to include and break out LAUF, which
it asserts, has been far in excess of
actual fuel use on certain Appalachian
pipelines.49 In this regard, IOGA posits
that requiring interstate pipelines to
break out fuel and LAUF by function in
FERC Form Nos. 2, 2–A, and 3–Q would
be helpful to IOGA’s efforts to limit fuel
and LAUF assessed to shippers and
at 3.
ultimately netted back to Appalachian
producers.50 Because the Appalachian
pipelines are part of integrated energy
companies engaged in exploration,
production, gathering, storage and
transportation of natural gas, IOGA
asserts that it has long been concerned
that unmetered gas flow allocable to
affiliated exploration and production
affiliates or farm tap customers of
affiliated LDCs becomes LAUF charged
to other shippers, instead.51 It states that
increasing the transparency of FERC
Form Nos. 2, 2–A, and 3–Q could help
alleviate those concerns.52
26. IOGA also argues that requiring
the filing of more transparent fuel and
LAUF data will allow the Commission
and interested market participants to
better analyze allegedly extraordinary
fuel and LAUF experienced by certain
interstate pipelines.53 For example,
IOGA notes that one interstate pipeline
serving the Appalachian basin recently
made a filing with the Commission
claiming that its actual gathering fuel
and LAUF during a 12-month period
was in excess of 11 percent.54 IOGA
asserts that pipeline recovery of fuel and
LAUF should be minimized to the
extent possible. If gas is disappearing
between the wellhead and the
interconnection between a pipeline’s
gathering and transmission facilities,
IOGA argues that producers and
shippers deserve to know why.55 IOGA
further argues that, by increasing its
ability to compare fuel and LAUF
experienced among pipelines, the
Commission will be better equipped to
determine whether a given level of fuel
and LAUF is unjust and unreasonable
and whether the cost should be borne by
the pipeline rather than by its
customers.56
27. Kansas Commission asserts that
the information submitted on the
Commission’s financial forms is critical
to the ability of shippers and other
interested parties to assess pipeline
rates, and as such should be as complete
and detailed as practical.57
28. TVA agrees with the June 2010
NOPR assertion that breaking down fuel
costs and revenues associated with
negotiated, discounted, or recourse rate
structures by function will provide
greater clarity on the justness and
reasonableness of rates.58 In addition,
TVA agrees that reporting the amount of
50 Id.
34 Id.
42 Id.
35 Id.
43 Id.
53 Id.
45 Id.
54 Id.
46 Id.
at 2–3.
at 3.
52 Id.
44 Id.
55 Id.
36 Associations
Comments at 3.
37 Id.
at 3.
38 Id. at 4.
39 Id.
40 Id.
41 Id.
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at 5.
51 Id.
at 5–6.
47 Id. at 6.
48 Id.
49 IOGA Comments at 2.
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56 Id.
57 Kansas
58 TVA
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Commission Comments at 1.
Comments at 2–3.
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fuel by function that has been waived,
discounted, or reduced as part of a
negotiated rate agreement will allow for
the determination of whether crosssubsidization is occurring, and thus, is
critical to assessing the justness and
reasonableness of the pipeline’s fuel
rates in the absence of mandated rate
cases.59
29. Further, TVA hopes that the
added transparency will encourage
support for pipelines to develop, and
customers to support, incentive fuel
initiatives, as tracking mechanisms with
a true-up process do little to promote
capital investment for energy
efficiency.60 In addition, it states that
the proposed changes will add detail
and promote transparency when
considering the unknown impact of
cost-recovery resulting from potential
carbon legislation requirements
associated with monitoring and/or
reporting greenhouse gas emissions.61
30. INGAA, by contrast, would have
the pipelines aggregate fuel use data by
function along with the volume of fuel
‘‘not collected.’’ 62 INGAA asserts that
this approach has the benefit of focusing
the additional fuel use reporting on the
areas that gave rise to AGA’s original
concerns of fuel waivers and negotiated
rate contracts that could present cross
subsidy concerns.63
31. Specifically, INGAA suggests the
following revisions to page 521a and b:
(1) Lines 1–7: Total volume and the dollar
value of shipper-supplied fuel gas, by
function, with volumes ‘‘not collected’’
because the otherwise applicable fuel rate
was waived (column (d)) or because a
negotiated fuel rate was less than the
recourse rate (column (e)), along with the
pertinent account(s) under the Uniform
System of Accounts.
(2) Lines 8–14: Total volume and dollar
value of gas used in compressor stations, by
function.
(3) Lines 15–22: Same data for
miscellaneous ‘‘other deliveries’’ and ‘‘other
operations.’’
(4) Lines 23–30: Same data for LAUF.
(5) Lines 31–37: A calculation of the excess
or deficiency by function.
(6) Lines 38–51 and 52–65: Disposition of
the excess or source of gas acquired to meet
a deficiency.64
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32. INGAA also suggests that the
Commission not include a separate
reporting category for discounted rates
because pipelines cannot discount the
fuel use component of a discounted rate
59 Id.
because it is a non-discountable variable
cost.65
33. AGA responds that, as recognized
in the June 2010 NOPR, the Commission
has a policy against existing shippers
subsidizing the negotiated rate program,
and it notes that the June 2010 NOPR
properly concluded that the information
proposed to be required could be useful
in identifying potential violations of
that policy.66 AGA objects to INGAA’s
counterproposal, arguing that the NOPR
proposal would increase the ability of
the Commission and interested parties
to assess whether a pipeline’s existing
shippers are subsidizing the pipeline’s
negotiated rate program, while INGAA’s
counterproposal would effectively
delete much of the information sought
in the June 2010 NOPR.67
34. AGA notes that INGAA argued in
its comments that reporting fuel use
data by customer contract would require
pipelines to establish mechanisms for
allocating fuel use among the types of
contracts (negotiated, discounted, or
recourse).68 AGA believes that it would
be appropriate for pipelines to make
those allocations transparent through
the reporting requirements proposed in
the NOPR.69
35. Unless the pipeline itself provides
its allocation methods on its financial
forms, AGA argues that customers
cannot adequately assess the costs and
revenues associated with fuel charges to
discounted and negotiated rate
customers.70 Commission staff and
interested parties cannot be expected to
estimate or otherwise discern a
pipeline’s allocation scheme in the
absence of information from the
pipeline itself. Accordingly, AGA urges
the Commission to require pipelines to
report fuel costs and revenues by rate
structure (discounted, negotiated,
recourse) broken down by function as
proposed in the June 2010 NOPR.71
Thus, AGA supports the June 2010
NOPR proposal and urges the
Commission to reject the proposals
advanced by INGAA.72
3. Commission Determination
36. In Order No. 710–A, the
Commission found that the detail
sought by AGA might provide
additional clarity with respect to fuel
costs, but decided not to require the
reporting of this information based on
concerns over the burden associated
65 Id.
at 3.
60 Id.
66 AGA
61 Id.
67 Id.
62 INGAA
69 Id.
with compliance with such a
requirement.73 The Commission also
declined to accept AGA’s proposal to
require natural gas pipelines to report
details about the amount of fuel that
they waived, discounted or reduced as
part of a negotiated rate agreement
based on concerns that this information
might not be significant and might not
be readily available, as many pipelines
do not periodically file to adjust fuel
rates and may not keep records of this
type of information.74
37. After consideration of the
comments and reply comments to the
June 2010 NOPR, the Commission finds
that the additional information to be
reported on pages 521a and 521b will
allow users to match the revenues
generated by the sale of excess fuel with
the functionalized costs reported on
page 520 and will allow users to better
determine if there is a cross-subsidy,
which is critical to assessing the
justness and reasonableness of the
pipeline’s fuel rates particularly in the
context of pipelines’ negotiated rate
program. We find that requiring the
reporting of fuel costs and revenues by
rate structure broken down by function
will increase the ability of the
Commission and interested parties to
assess whether a pipeline’s existing
shippers are subsidizing the pipeline’s
negotiated rate program. Thus, we find
that INGAA’s proposal would
effectively delete much of the valuable
information sought in the June 2010
NOPR.
38. The revised forms also will now
allow the user to better determine where
on the pipeline system fuel costs are
being incurred and how they are being
allocated. This added transparency,
which is supported by the majority of
the commenters, will ensure that the
Commission and pipeline customers
have sufficient information to be able to
assess the justness and reasonableness
of pipeline rates. The collection and
public availability of this information is
consistent with our goal of having
sufficient information to allow the
Commission and pipeline customers to
assess the impact on pipeline rates of
changing fuel costs.
39. By contrast, if we adopted
INGAA’s suggestion to limit the
revisions to FERC Form No. 2 to those
originally proposed by AGA, then the
benefits of increased transparency of
rates, particularly within the negotiated
rate program, which are described in the
two preceding paragraphs, would not be
68 Id.
63 Id.
Comments at 2.
at 6. INGAA provides its recommended
revisions for a revised page 521a in Appendix A to
its comments.
64 Id. at 7.
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73 Revisions to Forms, Statements, and
Requirements for Natural Gas Pipelines Order No.
710–A, 123 FERC ¶ 61,278 at P 10.
74 Id. P 11.
70 Id.
71 Id.
72 Id.
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fully realized. The Commission’s
proposal better captures important
information about a company’s fuel use.
The fact that this is not identical to that
proposed by AGA to the September
2007 NOPR in no way refutes the
usefulness of these data being reported
and made available to the Commission
and the public.
40. Moreover, requiring the reporting
by function of the amount of fuel
waived, discounted or reduced as part
of a negotiated rate agreement will
enable pipeline customers to better
determine if inappropriate crosssubsidization is occurring. The
Commission has a policy that existing
shippers must not subsidize the
negotiated rate program; this additional
information would be useful in
identifying potential violations of that
policy.75 The revised schedules adopted
in this Final Rule will functionally
disaggregate the fuel costs and revenues
associated with each type of rate
structure (i.e., negotiated, discounted, or
recourse) to provide users with better
information to assess the justness and
reasonableness of a pipeline’s fuel rates.
41. In this Final Rule, therefore, the
Commission is revising the financial
reporting forms required to be filed by
natural gas companies (FERC Form Nos.
2, 2–A, and 3–Q) to include
functionalized fuel data on pages 521a,
521b, and 521c of those forms, and to
include on such forms the amount of
fuel waived, discounted or reduced as
part of a negotiated rate agreement.
Specifically, the Commission is revising
pages 521a and 521b in the following
manner:
Emcdonald on DSK2BSOYB1PROD with RULES
(1) Expanding line 1 to separately reflect
shipper supplied fuel by function (now
shown on lines 1–7 on page 521a), i.e.,
production/extraction/processing, gathering,
transmission, distribution, and storage;
(2) Expanding lines 2, 3, and 4 to
separately list the volumes for each of these
functions (now shown on lines 8–30 on page
521a);76
(3) Expanding the listing of volumes in
columns (b), (c), and (d) to include
discounted, negotiated and recourse rates;
(4) Expanding line 6, net excess or
deficiency, to separately list the volumes for
each of these functions (now shown on lines
31–37 on page 521b);
75 See Alternative to Traditional Cost-of-Service
Ratemaking for Natural Gas Pipelines; Regulations
of Negotiated Transportation Services of Natural
Gas Pipeline (Alternative Rate Policy Statement), 74
FERC ¶ 61,076, at 61,242 (1996), order granting
clarification, 74 FERC ¶ 61,194 (1996), and NorAm
Gas Transmission Company, 77 FERC ¶ 61,011
(1996).
76 Lines 2–4 previously consisted of: (2) Less gas
used in compressors; (3) Less gas used for other
operational purposes (footnote); and (4) Less gas
lost and unaccounted for.
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(5) Expanding the reporting of dollar
amounts in columns (f) through (i) to include
amounts collected under discounted,
negotiated and recourse rates;
(6) Requiring the reporting of volumes of
gas (in dekatherms) in columns (j) through
(m) not collected where the request for that
gas has been waived or reduced under
discounted or negotiated rates; and
(7) Directing filers (if the pipeline does not
use a particular function) to enter a zero for
that field.
42. FERC Form Nos. 2, 2–A, and 3–
Q involve estimates and allocations and
the methods for making these
allocations are to be documented in
FERC Form Nos. 2, 2–A, and 3–Q. Thus,
we will add an instruction to page 521a
to require that companies disclose their
fuel use allocation method(s) in a note
to these financial forms.
C. Separate Reporting of Forwardhaul
and Backhaul Throughput Volumes
1. Comments
43. AGA favors further revisions to
the forms to require interstate pipelines
to separately report forwardhaul and
backhaul throughput volumes
associated with detailed fuel use, LAUF,
and fuel collections data reported on the
revised FERC Form No. 2.77 AGA cites
a recent case involving the calculation
of retention percentages for fuel use and
LAUF where, it asserts, the Commission
determined that additional data were
required regarding forwardhaul and
backhaul deliveries in order to properly
determine a pipeline’s level of fuel
use.78
44. AGA argues that in Columbia Gulf
the Commission stated that it was
unable to determine whether the
throughput figures set forth on page 305
of the pipeline’s FERC Form No. 2
filings included or excluded backhaul
volumes and that the Commission
accordingly directed the pipeline to
provide ‘‘[f]orward haul and backhaul
deliveries stated separately for the
mainline, onshore, and offshore zones
for each month’’ for a specified period
of time.79 AGA asserts that the
Commission recognized in that case that
accurate forwardhaul and backhaul
throughput data are important for the
Commission and shippers to properly
assess fuel use and LAUF, and that the
current FERC Form No. 2 is not
adequate to collect the separate
forwardhaul and backhaul throughput
data needed to conduct a proper
analysis of fuel use and lost and
unaccounted for fuel costs.80
77 AGA
Comments at 1, 7–9.
Columbia Gulf Transmission Co., 132
FERC ¶ 61,009, at P 38 (2010) (Columbia Gulf)).
79 AGA Comments at 8.
80 Id.
78 (Citing
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45. AGA maintains that the current
rulemaking is the proper proceeding in
which to consider this revision, even
though it was not raised earlier, because
the purpose of this proceeding is to
revise the financial forms for interstate
pipelines ‘‘to provide, in greater detail,
the information the Commission needs
to carry out its responsibilities under
the NGA to ensure that rates are just and
reasonable, and to provide pipeline
customers and the public the
information they need to assess the
justness and reasonableness of pipeline
rates.’’ 81
46. In its reply comments INGAA
disagrees with AGA’s proposal for an
additional breakout of forwardhaul and
backhaul data, arguing that this is
neither practical nor necessary to
achieve the Commission’s FERC Form
No. 2 reporting goals.82 In INGAA’s
view, the fact that this information was
deemed important by the Commission
in Columbia Gulf does not warrant a
general requirement that it be reported
across the industry on an ongoing
basis.83 INGAA also notes that
‘‘typically no fuel is used for backhaul
volumes, although the Commission
requires an allocation of LAUF gas [to]
be attributed to backhauls.’’ 84
47. INGAA cautions that if the
proposal involves the reporting of fuel
retained and fuel used on backhaul
volumes, this would present practical
difficulties with respect to backhauls
that use no compressor fuel (citing
Mississippi River Transmission Corp.,
98 FERC ¶ 61,119 at 61,353 (2002) in
this regard). However, INGAA agrees
that these problems would not be
present if the proposal only requires the
reporting of forwardhaul and backhaul
throughput volumes, which is all that is
being required in this Final Rule.
48. INGAA comments that,
particularly on a reticulated pipeline,
gas flows in each direction, depending
on demand and storage operations, and
there may be no specific or designated
transportation path for many services,
which makes reporting problematic or
impossible.85 INGAA argues that the
current gas system does not provide
shippers with a set capacity path and
that gas flows in each direction,
depending on demand and storage, and
this is why the Commission declined to
adopt a generic requirement to establish
81 Id. Revisions to Forms, Statements, and
Reporting Requirements for Natural Gas Pipelines,
citing Order No. 710, FERC Stats. & Regs. ¶ 31,267
at P 1.
82 INGAA Reply Comments at 2.
83 Id.
84 Id. at n.1.
85 Id. at 3.
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a path priority system in Order No.
637.86
49. In addition, INGAA argues that a
single transportation service can involve
a combination of forwardhauls or
backhauls; thus, classifying each
dekatherm of transportation as
forwardhaul or backhaul is
impossible.87
Emcdonald on DSK2BSOYB1PROD with RULES
2. Commission Determination
50. Currently FERC Form No. 2 does
not require a distinction between
forwardhaul and backhaul volumes.
Since compressor fuel use is not
assessed to backhaul volumes, it is
inaccurate to include backhaul volumes
for throughput.
51. After consideration of all the
arguments on this issue, we find that it
would be informative and useful for
pipelines to separately report their
forwardhaul and backhaul volumes,
because this would allow the
Commission and customers to
determine whether the fuel use being
assigned to customers in their bills
contain any cross-subsidies, based on
the inclusion of backhaul volumes in
their gas purchases, and thus help
ensure that rates are just and reasonable.
We also find that the benefits arising
from this reporting, providing the
opportunity to track fuel costs and
examine cross-subsidies, outweigh the
burden of reporting such data.
52. As to INGAA’s argument that it
would not be possible, even for the
services that are pathed, to classify each
dekatherm of transportation as either
forwardhaul or backhaul, we conclude
that, for a majority of pipelines, this is
not a significant problem. Many
pipelines offer clearly defined backhaul
services that are defined in their tariffs.
In order to offer and, ultimately, provide
that service, those pipelines must be
able to determine the volumes for which
the service is provided. However, some
pipelines do not offer backhaul service,
and for these pipelines it is reasonable
to expect that backhaul volumes may
not be able to be tracked. Therefore, the
Commission will require reporting on
this matter depending on the service
identified in the tariff. If backhaul
service is not offered under the tariff,
the reporting pipeline may report as if
the service it offers is entirely
forwardhaul. The reporting pipeline
must separately identify backhaul
volumes only if it offers backhaul
service in its tariff and provides this
service to customers.
D. Clarification of Whether Additional
Details on Fuel Use Only Apply in
Instances Where Contract Provides for
Discounted or Negotiated Fuel Rates
1. Comments
53. MidAmerican comments that, to
its knowledge, very few discounted and
negotiated rate agreements include a
provision for discounted or negotiated
fuel.88 Thus, MidAmerican suggests that
the Commission clarify that columns (b)
and (c) of pages 521a and 521b and
columns (f) and (g) of pages 521c and
521d include only contracts with
discounted or negotiated fuel rates, and
the column headings be revised to read
‘‘Discounted Fuel Rate’’ and ‘‘Negotiated
Fuel Rate.’’ 89
54. MidAmerican further argues that
the columns should only contain
volumes related to agreements with
discounted or negotiated fuel, not fuel
volumes related to all discounted or
negotiated agreements, if the purpose of
the information is to determine if there
is a cross subsidy.90
2. Commission Determination
55. In this Final Rule, we are
requiring pipelines to report fuel use by
function for all contracts involving
discounted rates, negotiated rates, or
recourse rates. We reject MidAmerican’s
proposal to only require the reporting of
fuel costs in contracts where the fuel
rate is discounted. Under
MidAmerican’s proposal, how a
contract is structured would dictate
whether it would be within the scope of
the reporting requirements of this Final
Rule and MidAmerican states that very
few discounted and negotiated rate
agreements include a provision for
discounted or negotiated fuel. If this is
so, or if future contracts are specifically
written to make it so, then, under
MidAmerican’s proposal, many
contracts that otherwise would be
included in the reporting requirements
would not be reported. This would have
the consequence of diminishing the
benefits of enhanced transparency that
we hope to achieve with this Final Rule
and thus we reject MidAmerican’s
suggestion.
56. As to MidAmerican’s suggestion
that columns (b) and (c) on pages 521a
and 521b, and columns (f) and (g) on
pages 521c and 521d, should only
contain volumes and dollars related to
agreements with discounted or
negotiated fuel, not fuel volumes or
dollars related to discounted or
negotiated agreements, for the reasons
88 MidAmerican
86 Id.
at 4.
87 Id. at 4–5.
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89 Id.
90 Id.
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4521
stated, we clarify that the amounts
reported on pages 521a and 521b in
columns (b) and (c) and on page 521c at
columns (f) and (g) reflect shipper
supplied gas collected under all
discounted or negotiated rate
agreements.91
E. Monthly v. Quarterly Reporting
57. As mentioned above, FERC Form
Nos. 2 and 2–A are annual reports and
FERC Form 3–Q is a quarterly report. In
the June 2010 NOPR, the Commission
invited comments on whether the data
reported on FERC Form Nos. 2, 2–A,
and 3–Q should be reported on a
monthly or quarterly basis (i.e., whether
the data should provide separate entries
for each month, or one entry covering
the entire quarter).
1. Comments
58. AGA favors continuation of the
requirement for monthly reporting of
fuel use on page 521, asserting that
important seasonal changes would be
obscured by quarterly reporting.92 AGA
states that the consumption of natural
gas in the United States varies
significantly from one month to the next
and, while demand in the industrial
sector is largely constant, demand in the
residential and commercial sector is
weather-driven and has a dramatic
seasonal shape with a winter
peak.93AGA also notes that demand in
the power generation sector is weather
sensitive with a summer peak, or in
some cases bi-modal with both winter
and summer peaks.94 AGA states that,
because fuel is a variable cost and varies
with consumption, the amount of fuel
costs and revenues experienced by
interstate pipelines varies by month and
the fuel cost and revenue data of
interstate pipelines does not fit neatly
into calendar quarters. Consequently,
significant variations in fuel data would
be masked by fuel reporting only on a
quarterly basis.95
59. AGA further recommends that the
fuel information on page 520 be
reported on a monthly basis.96 AGA
argues that, as the Commission noted in
the June 2010 NOPR, the fuel
information reported on page 520 works
in tandem with the information reported
on page 521 and should allow a shipper
to match the functionalized costs on
page 520 with the functionalized
91 As discussed above, the revised forms we are
adopting in this Final Rule do not include page
521d.
92 AGA Comments at 1, 6–7.
93 Id. at 6.
94 Id.
95 Id.
96 Id. at 7, AGA Reply Comments at 5, and AGA
Further Reply Comments at 4.
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revenues on page 521.97 Having only
quarterly information reported on page
520 would impede the ability of
shippers and the Commission to match
costs and revenues with the monthly
information reported on page 521.98
Therefore, AGA requests that page 520
of the financial reports be revised to add
the appropriate columns to reflect the
reporting of the information on that
page on a monthly basis.99
60. Associations also argue that
providing shippers with access to
detailed fuel information on a monthly
basis, such as functionalized fuel data
by rate type on FERC Form No. 2, would
allow the Commission and shippers to
ensure that fuel rates remain just and
reasonable.100 Associations state that
better information would also help the
Commission and shippers to develop a
Natural Gas Act (NGA), section 5
complaint proceeding case and, further,
would allow parties to confirm fuel
tracker reports.101
61. IOGA urges the Commission to
retain the requirement for the monthly
filing of fuel data.102 In IOGA’s
experience, fuel and LAUF can vary
significantly from month to month.
Monthly breakdowns in FERC Form
Nos. 2, 2–A, and 3–Q could provide
valuable data that might be masked by
aggregated quarterly data.103 IOGA notes
that pipelines already report
transportation and gathering quantities
by month, and contends that quarterly
reporting of fuel and LAUF as proposed
by INGAA will foreclose accurate
comparative analysis of the relationship
between quantities shipped and fuel
and LAUF on a monthly basis.104
62. IOGA further argues that, as
pipelines track throughput, fuel and
LAUF data monthly for invoicing and
other purposes, a requirement to report
fuel and LAUF by month will not pose
additional administrative burden or
expense.105
63. Kansas Commission believes that
monthly reporting of this information is
not necessary to provide the information
required to effectively evaluate a
pipeline’s rates. Therefore, Kansas
Commission supports INGAA’s
suggestion to change the reporting
requirements to quarterly.106
Emcdonald on DSK2BSOYB1PROD with RULES
97 AGA
Comments at 7.
2. Commission Determination
66. In Order No. 710, the Commission
eliminated FERC Form No. 11, the
Natural Gas Pipeline Company
Quarterly Statement of Monthly Data,
and shifted the reporting of that
information to FERC Form Nos. 2 and
3–Q.113 We found that this fuel use
information provides critical data for
detecting trends, determining seasonal
variation of fuel use, and testing the
reasonableness of a pipeline’s fuel costs.
Upon further consideration of this issue
in the instant docket, the Commission
finds that monthly reporting provides
greater transparency and provides more
representative information about a
pipeline’s fuel use than quarterly
reporting and we will retain this
requirement.
67. Reporting data on a monthly basis
provides more accurate accounting of
fuel use, allowing for a better
understanding of pipeline operations,
and provides critical detail to
understand how the pipeline treats its
107 INGAA
98 Id.
Comments at 3.
108 Id.
99 Id.
100 Associations
109 Id.
Comments at 4.
102 IOGA
111 Id.
Comments at 3.
112 Id.
103 Id.
at 4.
105 Id.
106 Kansas
Commission Comments at 2.
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at 11.
Reply Comments at 3.
110 AGA
101 Id.
104 Id.
64. INGAA argues that the reporting
requirements should be quarterly.107
INGAA comments that, because of
weather events and anomalous events in
the data, monthly data cannot provide
an accurate picture or trend.108 INGAA
also asserts that pipelines with storage
assets or significant line pack do not
need to dispose of excess fuel, so
monthly data would not provide an
accurate picture of fuel use.109
65. In response to INGAA, AGA
argues that monthly reporting is
preferable, because significant
variations in fuel data can be masked by
fuel reporting on a quarterly basis,110
and quarterly data cannot be
disaggregated to obtain monthly
information to determine what costs or
revenues were experienced and by what
functions. Only monthly fuel
information will provide sufficient
transparency to allow the Commission
and interested parties to assess the
justness and reasonableness of interstate
pipeline fuel charges.111 AGA also notes
that INGAA did not contradict AGA’s
observation that weather variations and
the location of shipper-scheduled
volumes on the pipeline from month to
month have a substantial effect on fuel
consumption.112
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Order No. 710, FERC Stats. & Regs. ¶ 31,267 at P
51, Order No. 710–A, 123 FERC ¶ 61,278 at P 3.
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fuel. It would not be unexpected that a
pipeline’s operating parameters would
change from January to March, from
April to June, from July to September,
or from October to December. It would
seem counter to the interest of increased
transparency to reduce the granularity
of fuel use data over these periods. The
monthly data are more representative of
the pipeline’s varying operations,
enabling the transparency required by
Order No. 710 to more fully evaluate a
pipeline’s fuel use and address the
concerns of the remand. We conclude
that moving to quarterly reporting
would gloss over natural gas monthly
fluctuations, thus distorting what
actually occurred during the reporting
period. Thus, we find that fuel use data
should continue to be reported on a
monthly basis, and not on a quarterly
basis.
68. As to AGA’s proposal to modify
page 520 to have respondent companies
report transmission throughput volumes
on a monthly basis, we note that AGA
did not provide specific reasons
supporting the imposition of this
requirement. Currently, page 520 only
requires that transmission volumes be
reported on a quarter and year to date
basis and we see no need to revise this
requirement. The reporting of
transmission volume throughput and
the reporting of fuel data are separate
matters and the additional information
to be provided on fuel use does not
provide a reason to further break down
transportation volume throughput.
Thus, we find that the quarterly
separation of that data is sufficient and
we will not impose the additional
burden on filers to break down these
data in the absence of demonstrated
benefits.
F. Burden
1. Comments
69. AGA, APGA, and Kansas
Commission comment that the burden
of producing and reporting the
additional details on fuel use proposed
in the June 2010 NOPR is both small
and justified.114 By contrast, INGAA
finds the June 2010 NOPR proposal
unduly burdensome.115
70. Specifically, APGA comments that
pipelines should have this information
readily available because they maintain
it for their own purposes.116 Given the
potential benefit of the information and
the relatively low compliance burden on
pipelines, APGA supports the
Commission’s proposal to require
pipelines to report the amount of fuel
114 See,
e.g., AGA Comments at 5.
Comments at 3.
116 APGA Comments at 3.
115 INGAA
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waived, discounted or reduced as part
of negotiated rate agreements.117
71. Kansas Commission states that the
benefits of the additional reporting
outweigh any burden that might be
placed on the reporting pipelines.118
Given that pipelines already
functionalize this data for ratemaking
purposes, Kansas Commission
concludes that the burden on pipelines
will be minimal.119
72. Kansas Commission further argues
that, in the absence of a mandatory
requirement for pipelines to
periodically restate their base tariff
rates, the Commission must rely on
section 5 of the NGA to police pipeline
rates. Under these circumstances, the
need for functionalized data is
heightened.120 Without functionalized
data, shippers and other interested
parties cannot determine whether a
pipeline is cross-subsidizing service,
and the efficacy of the NGA section 5
complaint process is undermined.121
Accordingly, the Kansas Commission
supports the Commission’s proposal to
require functionalized fuel data to be
included on pages 521a and 521b of
FERC Form No. 2.122 Kansas
Commission also supports the
Commission’s proposal to require
pipelines to report the amount of fuel
waived, discounted or reduced as part
of a negotiated rate agreement.123
73. INGAA maintains that the
Commission’s proposal is unnecessarily
burdensome.124 First, INGAA maintains
that it is difficult for pipelines to track
fuel use by individual contract or
contract type because pipelines operate
on an integrated basis.125 Second,
INGAA asserts that it would require
substantially more information than
would be provided under this proposal
to enable FERC Form No. 2 users to
monitor potential cross-subsidy
concerns.126 Third, INGAA comments
that pipelines will have to establish a
mechanism for allocating fuel use
between or among services and
contracts.127
2. Commission Determination
74. The Commission finds that fuel
use data on a functionalized basis is
needed to obtain the transparency
necessary to ensure just and reasonable
117 Id.
at 4.
Emcdonald on DSK2BSOYB1PROD with RULES
118 Kansas
Commission Comments at 1.
119 Id.
120 Id.
at 2.
121 Id.
122 Id.
123 Id.
124 INGAA
125 Id.
Comments at 2.
rates. Additionally, we find that this
reporting requirement is not
unnecessarily burdensome. Currently,
pipelines that file annual fuel use
trackers assign fuel to their individual
shippers. In this Final Rule, the
Commission is not imposing any
additional reporting requirements that
change how those pipelines track fuel.
Pipeline billings are provided on an
integrated basis, accounting for sales
based on whether the volumes are
negotiated, recourse, or discounted.
Moreover, contrary to INGAA’s
assertions, the Commission is not
requiring pipelines to track fuel by
individual contracts, but merely
continuing the current practice of
requiring the assignment of fuel based
on an allocation of throughput or stated
fuel rate. The revisions to page 521a
through 521c require the same
accounting mechanism for fuel,
enabling parties to better understand
how fuel use costs are assigned.
75. The Commission in the June 2010
NOPR estimated the annual burden to
comply with the requirements
established in Docket No. RM07–9–003
while inviting comments on the cost to
comply with the proposed
requirements. We estimated that the
additional collection costs would not be
overly burdensome.128 The Commission
provided its best estimate of the time
required to complete page 521a through
521d. No party presented data
contradicting the Commission’s
estimate. While INGAA contends that
the proposal is burdensome, INGAA did
not identify any inaccuracies in the
Commission’s estimate, did not quantify
its own estimate of the impact of
reporting fuel on a functionalized basis,
and did not provide any support for its
contention that functionalizing fuel
would be burdensome to the pipelines.
In this Final Rule, as discussed above,
we are adding a requirement to report
information on forwardhauls and
backhauls and we are revising our
burden estimate to account for this
requirement. The Commission finds
that, even with this minor additional
reporting requirement, the benefits of
enhanced transparency provided by the
additional reporting proposed in the
June 2010 NOPR outweigh the burden
placed on the pipelines. Further, we
find that our estimated burden hours (as
adjusted) are small and reasonable, and
we will continue to require fuel to be
reported on a functionalized basis.
at 2.
126 Id.
128 June 2010 NOPR, FERC Stats. & Regs. ¶ 32,659
at P 19.
127 Id.
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G. Implementation Date
1. Comments
76. AGA contends that the new rules
should apply to the financial forms that
are required to be filed beginning in
calendar year 2011.129 AGA states that
the annual financial reports (FERC Form
Nos. 2 and 2–A) showing data for
calendar year 2010 would be required to
be filed on April 18, 2011. Quarterly
financial reports (FERC Form No. 3–Q)
would be required to be filed 60 days
(for major pipelines) or 70 days (for nonmajor pipelines) after the end of the
reporting quarter. Thus, the first
quarterly financial reports in 2011
would be due March 1, 2011 (for majors)
and March 10, 2011 (for non-majors),
based on fourth quarter 2010 data.130
77. INGAA comments that changes to
FERC Form No. 2 should be
prospective.131 It states that this
approach will provide pipelines
adequate time to put data collection
software in place.132 In addition, it
states that implementing the changes
prospectively will allow time for
pipelines to complete any engineering
or other operational studies that might
be needed for pipelines that do not
already have accounting systems in
place to make reasonably accurate
estimates.133 INGAA urges that
pipelines be permitted to collect any
additional data the Commission may
require in 2011, with reporting to begin
in 2012.134
2. Commission Determination
78. We conclude that the information
to be reported under this Final Rule may
require some companies to revise
accounting systems to accurately
allocate fuel use. While this is already
reflected in the burden estimate, we
nonetheless will revise the
implementation schedule that we
proposed in the June 2010 NOPR to
address this concern. Additionally, we
are not requiring companies subject to
this Final Rule to refile the FERC Form
Nos. 2, 2–A, and 3–Q that they have
already filed.
79. Companies subject to these new
requirements must begin collecting the
more detailed data starting on July 1,
2011, and must use that data in
completing their FERC Form Nos. 2, 2–
A, and 3–Q thereafter. The revised data
requirements would first be reflected in
the FERC Form No. 3–Q filings for the
129 AGA
Comments at 5–6.
at 6.
131 INGAA Comments at 3.
132 Id. at 12.
133 Id.
134 INGAA Reply Comments at 2.
130 Id.
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period July 1 through September 30,
2011, which must be filed within 60
days of the end of the reporting quarter
for majors and within 70 days of the end
of the reporting quarter for non-majors
(i.e., by November 29, 2011 for majors
and December 9, 2011 for non-majors)
and in the FERC Form Nos. 2 and 2–A
filings for 2011, which must be filed by
April 18, 2012.135
80. As noted above,136 page 521 only
reports fourth quarter data and not
yearly data. By contrast, page 520 gives
yearly totals. However, while page 520
currently breaks down LAUF into
several subcategories, the revised page
520 adopted in this Final Rule combines
these subcategories into a single total
that is reported on line 32 of the revised
page 520. Thus, the FERC Form Nos. 2
and 2–A, filings for 2011, which must
be filed by April 18, 2012, should report
LAUF as a single line item on line 32,
and should not report the breakdowns
of these data for the first six months of
the reporting year.
III. Information Collection Statement
81. The Office of Management and
Budget’s (OMB) regulations require
approval of certain information
collection requirements imposed by
agency rules.137 Previously, the
Commission submitted to OMB the
information collection requirements
arising from Order No. 710 and OMB
approved those requirements.138 The
revisions to FERC Form Nos. 2, 2–A,
and 3–Q adopted in this Final Rule
consist of giving additional details about
certain fuel cost data that the
Commission already required to be
reported in less detail in Order No. 710.
82. The Commission is submitting the
information collection requirements
imposed in this Final Rule to OMB for
review and approval under section
3507(d) of the Paperwork Reduction Act
of 1995.139 Comments are solicited on
the Commission’s need for this
information, whether the information
will have practical utility, the accuracy
of the burden estimates, ways to
enhance the quality, utility, and clarity
of the information to be collected, and
any suggested methods of minimizing
respondent’s burden, including the use
of automated information techniques.
83. This Final Rule affects the
following existing data collections:
Title: FERC Form No. 2, ‘‘Annual
Report for Major Natural Gas
Companies’’; FERC Form No. 2–A,
‘‘Annual Report for Nonmajor Natural
Gas Companies’’; FERC Form No. 3–Q,
‘‘Quarterly Financial Report of Electric
Utilities, Licensees, and Natural Gas
Companies.’’
Action: Proposed information
collection.
OMB Control Nos. 1902–0028 (FERC
Form No. 2); 1902–0030 (FERC Form
No. 2–A); and 1902–0205 (FERC Form
No. 3–Q).
Respondents: Businesses or other for
profit.
Frequency of responses: Annually
(FERC Form Nos. 2 and 2–A) and
quarterly (FERC Form No. 3–Q).
Necessity of the information: The
information maintained and collected
under the requirements of 18 CFR 260.1,
18 CFR 260.2, and 18 CFR 260.300 is
Change in the
number of hours
per respondent
Number of
respondents
Data collection form
essential to the Commission’s oversight
duties. The data now reported in the
forms does not provide sufficient
information to the Commission and the
public to permit an evaluation of the
filers’ jurisdictional rates. Since the
triennial restatement of rates
requirement was abolished and
pipelines are no longer required to
submit this information, the need for
current and relevant data is greater than
in the past. The information collection
required by this Final Rule will increase
the forms’ usefulness to both the public
and the Commission.
84. Without this information, it is
difficult for the Commission and the
public to perform an assessment of
pipeline costs, and thereby help to
ensure that rates are just and reasonable.
The pipelines should already have this
information readily available for their
own use in developing separately stated
fuel rates in their tariffs. In any event,
we believe this additional information
will allow the Commission and form
users to better analyze pipeline fuel
costs, an important component in
assessing the justness and
reasonableness of pipelines’ rates.
Burden Statement: The Commission
estimates that on average it will take
each respondent six additional hours
per collection to comply with the
proposed requirements.140 Most of the
additional information required to be
reported is already compiled and
maintained by the pipelines. This
proposal will increase the burden hours
as follows:
Filings per year
Change in the
total annual
hours for this
form
84
44
128
6
6
6
1
1
3
504
264
2304
Totals ........................................................................................
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FERC Form No. 2 ............................................................................
FERC Form No. 2–A .......................................................................
FERC Form No. 3–Q .......................................................................
............................
............................
............................
3072
Information Collection Costs: 3072
hours at $120/hour = $368,640.
85. Given that none of the
commenters identified any errors or
inaccuracies in the estimates we used in
the June 2010 NOPR, we will adopt
these same estimates in this Final Rule,
with the exception that we are adjusting
our estimate to account for our
requirement to report on forwardhauls
and backhauls. At paragraphs 73–74
above, we address and reject INGAA’s
contention that certain parts of our
proposal would be burdensome.
86 Internal Review: The Commission
has reviewed the proposed changes and
has determined that the changes are
necessary. These requirements conform
135 See 18 CFR 260.300(b)(2)(vii), 18 CFR
260.1(b)(2), and 18 CFR 260.2(b)(2).
136 See n.8, supra.
137 5 CFR 1320.11.
138 OMB approved the information collections
prescribed in Order No. 710 on June 27, 2008 for
FERC Form No. 2 (OMB Control No. 1902–0028,
ICR# 200804–1902–005) and FERC Form No. 2–A
(OMB Control No. 1902–0030, ICR# 200804–1902–
007) and on Oct. 8, 2008 for FERC Form No. 3–Q
(OMB Control No. 1902–0205, ICR# 200804–1902–
008).
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to the Commission’s need for efficient
information collection, communication,
and management within the energy
industry. The Commission has assured
itself, by means of internal review, that
there is specific, objective support
associated with the information
requirements.
139 44
U.S.C. 3507(d).
revised this number from five hours to six
hours to reflect our additional requirement to report
information on forwardhauls and backhauls.
140 We
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87. Interested persons may obtain
information on the reporting
requirements by contacting: Federal
Energy Regulatory Commission, 888
First Street, NE., Washington, DC 20426
[Attention: Ellen Brown, Office of the
Executive Director, phone (202) 502–
8663, fax: (202) 273–0873, e-mail:
DataClearance@ferc.gov. For submitting
comments concerning the collections of
information and the associated burden
estimates, please send your comments
to the contact listed above and to the
Office of Information and Regulatory
Affairs, Office of Management and
Budget, 725 17th Street, NW.,
Washington, DC 20503 [Attention: Desk
Officer for the Federal Energy
Regulatory Commission, phone: (202)
395–4638, fax: (202) 395–7285]. Due to
security concerns, comments should be
sent electronically to the following
e-mail address:
oira_submission@omb.eop.gov. Please
refer to OMB Control Nos. 1902–0028
(FERC Form No. 2), 1902–0030 (FERC
Form No. 2–A), and 1902–0205 (FERC
Form No. 3–Q), and the docket number
of this Final Rule in your submission.
IV. Environmental Analysis
88. The Commission is required to
prepare an environmental assessment or
an environmental impact statement for
any action that may have a significant
adverse effect on the human
environment.141 However, in 18 CFR
380.4(a)(5), we categorically excluded
the type of information gathering
required in this Final Rule from the
requirement to prepare an
environmental impact statement. Thus,
we affirm the finding we made in the
June 2010 NOPR that this Final Rule
does not impose any requirements that
might have a significant effect on the
human environment and find that no
environmental impact statement
concerning this rule is required.
V. Regulatory Flexibility Act
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89. The Regulatory Flexibility Act of
1980 (RFA) 142 generally requires a
description and analysis of final rules
that will have significant economic
impact on a substantial number of small
entities.143 However, the RFA does not
141 Regulations Implementing the National
Environmental Policy Act, Order No. 486, FERC
Stats. & Regs., Regulations Preambles 1986–1990
¶ 30,783 (1987).
142 5 U.S.C. 601–612.
143 The RFA definition of ‘‘small entity’’ refers to
the definition provided in the Small Business Act,
which defines a ‘‘small business concern’’ as a
business that is independently owned and operated
and that is not dominant in its field of operation.
15 U.S.C. 632. The Small Business Size Standards
component of the North American Industry
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16:16 Jan 25, 2011
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define ‘‘significant’’ or ‘‘substantial.’’
Instead, the RFA leaves it up to an
agency to determine the effect of its
regulations on small entities. Most filing
companies regulated by the Commission
do not fall within the RFA’s definition
of small entity.
90. The Commission estimates that
there are 84 Major natural gas pipeline
companies and 44 Non-major
companies that will be affected by the
Final Rule.144 As we stated in the June
2010 NOPR, this Final Rule will apply
to all interstate natural gas companies
subject to the Commission’s
jurisdiction. While we do not foresee
that this Final Rule will have a
significant impact on a substantial
number of small entities within the
meaning of the Regulatory Flexibility
Act, we will consider granting waivers
in appropriate circumstances. Moreover,
our most recent information shows that
only six natural gas companies not
affiliated with a large natural gas
company fall within the definition of a
small entity and these six entities
constitute only 4.7 percent of the 128
total companies.
91. Accordingly, the Commission
certifies that this Final Rule will not
have a significant impact on a
substantial number of small entities. As
a result, no regulatory flexibility
analysis is required.
VI. Document Availability
92. In addition to publishing the full
text of this document in the Federal
Register, the Commission provides all
interested persons an opportunity to
view and/or print the contents of this
document via the Internet through
FERC’s Home Page (https://www.ferc.gov)
and in FERC’s Public Reference Room
during normal business hours (8:30 a.m.
to 5 p.m. Eastern time) at 888 First
Street, NE., Room 2A, Washington, DC
20426.
93. From FERC’s Home Page on the
Internet, this information is available on
eLibrary. The full text of this document
is available on eLibrary in PDF and
Microsoft Word format for viewing,
printing, and/or downloading. To access
this document in eLibrary, type the
docket number excluding the last three
digits of this document in the docket
number field.
94. User assistance is available for
eLibrary and the FERC’s Web site during
normal business hours from FERC
Classification System defines a small natural gas
pipeline company as one whose total annual
revenues, including its affiliates, are $6.5 million or
less. 13 CFR parts 121, 201.
144 These numbers are based on the most recent
filings.
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4525
Online Support at 202–502–6652 (toll
free at 1–866–208–3676) or e-mail at
ferconlinesupport@ferc.gov, or the
Public Reference Room at (202) 502–
8371, TTY (202) 502–8659. E-mail the
Public Reference Room at
public.referenceroom@ferc.gov.
VII. Effective Date and Congressional
Notification
95. These regulations are effective
February 25, 2011. Companies subject to
the requirements of this Final Rule must
comply with the requirements of this
rule in accordance with the
implementation timeline prescribed in
this preamble. The Commission has
determined (with the concurrence of the
Administrator of the Office of
Information and Regulatory Affairs of
OMB) that this rule is not a ‘‘major rule’’
as defined in section 351 of the Small
Business Regulatory Enforcement
Fairness Act of 1996.
List of Subjects in 18 CFR Part 260
Natural gas, Reporting and
recordkeeping requirements.
By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
Appendix—
List of Commenters on June 2010 NOPR
(And Abbreviations Used To Identify
Them)
Comments
American Gas Association (AGA)
American Public Gas Association
(APGA)
Independent Oil & Gas Association of
West Virginia (IOGA)
Interstate Natural Gas Association of
America (INGAA)
Kansas Corporation Commission
(Kansas Commission)
Natural Gas Supply Association,
Independent Petroleum Association of
America, Electric Power Supply
Association and Process Gas
Consumers Group (collectively,
Associations)
Northern Natural Gas Company and
Kern Gas Transmission Company
(collectively, MidAmerican)
Tennessee Valley Authority (TVA)
Reply Comments
AGA
INGAA
BILLING CODE 6717–01–P
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BILLING CODE 6717–01–C
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Coast Guard
33 CFR Part 165
[Docket No. USCG–2010–1126]
RIN 1625–AA00
Safety Zone; Underwater Hazard,
Gravesend Bay, Brooklyn, NY
Coast Guard, DHS.
VerDate Mar<15>2010
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Temporary final rule.
The Coast Guard is
establishing a temporary safety zone on
the waters of Gravesend Bay, Brooklyn,
New York. This rule is necessary to
provide for the safety of life and
property on the navigable waters. This
rule is intended to restrict unauthorized
persons and vessels from traveling
through or conducting underwater
activities within a portion of Gravesend
Bay until recently discovered military
munitions are rendered safe and
removed from the area.
DATES: This rule is effective from
January 26, 2011 until 11:59 p.m. on
SUMMARY:
DEPARTMENT OF HOMELAND
SECURITY
AGENCY:
ACTION:
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June 30, 2011. This rule has been
enforced with actual notice since
December 18, 2010.
Documents indicated in this
preamble as being available in the
docket are part of docket USCG–2010–
1126 and are available online by going
to https://www.regulations.gov, inserting
USCG–2010–1126 in the ‘‘Keyword’’
box, and then clicking ‘‘Search.’’ They
are also available for inspection or
copying at the Docket Management
Facility (M–30), U.S. Department of
Transportation, West Building Ground
Floor, Room W12–140, 1200 New Jersey
Avenue, SE., Washington, DC 20590,
ADDRESSES:
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[FR Doc. 2011–1493 Filed 1–25–11; 8:45 am]
4529
]]>Agencies
[Federal Register Volume 76, Number 17 (Wednesday, January 26, 2011)]
[Rules and Regulations]
[Pages 4516-4529]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1493]
[[Page 4516]]
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 260
[Docket No. RM07-9-003; Order No. 710-B]
Revisions to Forms, Statements, and Reporting Requirements for
Natural Gas Pipelines
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission
(Commission) is revising its financial forms, statements, and reports
for natural gas companies, contained in FERC Form Nos. 2, 2-A, and 3-Q,
to include functionalized fuel data on pages 521a through 521c of those
forms, and to include on those forms the amount of fuel waived,
discounted or reduced as part of a negotiated rate agreement. For
consistency, the Commission also is revising page 520. The revisions
are designed to enhance the forms' usefulness by providing greater
transparency as to fuel data.
DATES: Effective Date: This rule will become effective February 25,
2011.
FOR FURTHER INFORMATION CONTACT:
Brian Holmes (Technical Information), Office of Enforcement, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426. Telephone: (202) 502-6008, e-mail: brian.holmes@ferc.gov.
Robert Sheldon (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street,
NE., Washington, DC 20426. Telephone: (202) 502-8672, e-mail:
robert.sheldon@ferc.gov.
Gary D. Cohen (Legal Information), Office of the General Counsel,
Federal Energy Regulatory Commission, 888 First Street, NE.,
Washington, DC 20426. Telephone: (202) 502-8321, e-mail:
gary.cohen@ferc.gov.
SUPPLEMENTARY INFORMATION:
Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer,
Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.
Issued January 20, 2011.
1. The Federal Energy Regulatory Commission (Commission) is
revising its financial forms, statements, and reports for natural gas
companies, contained in FERC Form Nos. 2, 2-A, and 3-Q, to include
functionalized fuel data on pages 521a through 521c of those forms, and
to include on those forms the amount of fuel waived, discounted or
reduced as part of a negotiated rate agreement. In addition, the
Commission also is revising page 520 for consistency.
I. Background
2. In Order No. 710, the Commission revised its financial forms,
statements, and reports for natural gas companies, contained in FERC
Form Nos. 2, 2-A, and 3-Q, to make the information reported in these
forms more useful by updating them to reflect current market and cost
information relevant to interstate natural gas pipelines and their
customers.\1\ The information provided in these forms included data on
fuel use, but did not require these data to be functionally
disaggregated.
---------------------------------------------------------------------------
\1\ Revisions to Forms, Statements, and Reporting Requirements
for Natural Gas Pipelines, Order No. 710, 73 FR 19389 (Apr. 10,
2008), FERC Stats. & Regs. ] 31,267 (2008), order on reh'g and
clarification, Order No. 710-A, 123 FERC ] 61,278 (2008), remanded
sub nom. American Gas Ass'n v. FERC, 593 F.3d 14 (D.C. Cir 2010)
(D.C. Circuit Remand Order).
---------------------------------------------------------------------------
3. On rehearing, the American Gas Association (AGA) argued that the
fuel data would be more useful if such data were broken out by
different pipeline functions, including transportation, storage,
gathering, and exploration/production, and should include, by function,
the amount of fuel waived, discounted or reduced as part of a
negotiated rate agreement. This argument originally was rejected in
Order No. 710-A, and Chairman (then Commissioner) Wellinghoff issued a
partial dissent arguing that AGA's proposals should have been
adopted.\2\
---------------------------------------------------------------------------
\2\ Revisions to Forms, Statements, and Reporting Requirements
for Natural Gas Pipelines, Order No. 710-A, 123 FERC at 62,708-9.
---------------------------------------------------------------------------
4. Subsequently, AGA filed a petition for review in the United
States Court of Appeals for the District of Columbia Circuit arguing
that the Commission erred by not addressing the concerns raised by
Chairman Wellinghoff in his partial dissent to Order No. 710-A. The
court agreed and remanded the matter back to the Commission for further
proceedings.\3\
---------------------------------------------------------------------------
\3\ 593 F.3d at 21.
---------------------------------------------------------------------------
5. On June 17, 2010, the Commission issued a notice of proposed
rulemaking proposing to revise pages 521a, 521b, and page 520, and
proposing to add pages 521c and 521d to FERC Form Nos. 2, 2-A, and 3-Q
to include functionalized fuel data, including the amount of fuel
waived, discounted or reduced as part of a negotiated rate
agreement.\4\
---------------------------------------------------------------------------
\4\ Revisions to Forms, Statements, and Reporting Requirements
for Natural Gas Pipelines, Notice of Proposed Rulemaking, 75 FR
35700 (June 23, 2010), FERC Stats. & Regs. ] 32,659 (June 17, 2010)
(June 2010 NOPR).
---------------------------------------------------------------------------
6. In response to the June 2010 NOPR, comments were filed by eight
commenters.\5\ Certain of the comments presented proposals that
differed from the Commission's proposals in the June 2010 NOPR. To give
all interested persons an opportunity to comment on these proposals
prior to making a final decision, the Commission issued a notice
allowing reply comments. Reply comments were filed by two
commenters.\6\
---------------------------------------------------------------------------
\5\ These commenters and the abbreviations used to identify them
are provided in the attached Appendix.
\6\ INGAA and AGA.
---------------------------------------------------------------------------
II. Discussion
A. Overview
7. After consideration of the comments, the Commission will revise
pages 521a, 521b, and page 520 of FERC Form Nos. 2, 2-A, and 3-Q, and
will add page 521c, as proposed in the June 2010 NOPR.\7\ We make this
determination because we find that the additional information to be
reported on pages 521a-521c will allow the user to match the revenues
generated by the sale of excess fuel with the functionalized costs
reported on page 520 and will allow a user to better determine if there
is a cross-subsidy. The revised forms will also now allow the user to
determine where on the pipeline system fuel costs are being incurred
and how they are being allocated. This added transparency will ensure
that the Commission and pipeline customers have information critical to
assessing the justness and reasonableness of pipeline rates. The
collection and public availability of this information is consistent
with our goal of having sufficient information reported to allow the
Commission and pipeline customers to assess the impact on pipeline
rates of changing fuel costs. The Commission also gave consideration to
whether the data reported on FERC Form Nos. 2, 2-A, and 3-Q discussed
herein should be reported on a monthly or quarterly basis. We have
determined to require that the page 521 fuel use information should be
reported on a monthly basis in the quarterly reports,\8\ as that
provides greater transparency.
---------------------------------------------------------------------------
\7\ As proposed pages 521c and 521d were identical, we no longer
see a need for a separate page 521d.
\8\ The data reported in FERC Form Nos. 2 and 2-A on page 521
represents fourth quarter data and is not a total of data for all
four quarters.
---------------------------------------------------------------------------
8. These revisions to FERC Form Nos. 2, 2-A, and 3-Q do not require
the
[[Page 4517]]
reporting of previously unreported new categories of information.\9\
Instead, the new requirements merely require greater transparency
through a disaggregation of existing data categories. Moreover, the
Commission has determined that the burden on filers of reporting this
information is small and is justified by the usefulness of the
information.
---------------------------------------------------------------------------
\9\ As explained further below, reporting will be prospective in
nature and data for previous periods need not be corrected and
refiled.
---------------------------------------------------------------------------
B. Support for the June 2010 NOPR Proposal
1. Commenters' Views
9. Of the eight comments filed in response to the June 2010 NOPR,
six support the Commission's proposals.\10\ One of the six comments
offers suggestions for additional revisions to the forms.\11\ In
addition, one commenter seeks clarification as to the scope of the
reporting requirements,\12\ and another, while expressing support for
the goals of the June 2010 NOPR, offers a counterproposal to accomplish
these goals.\13\
---------------------------------------------------------------------------
\10\ AGA, APGA, Associations, IOGA, Kansas Commission and TVA.
\11\ AGA.
\12\ MidAmerican.
\13\ INGAA.
---------------------------------------------------------------------------
10. APGA urges the Commission to adopt the proposed revisions to
FERC Form Nos. 2, 2-A, and 3-Q.\14\ While AGA also supports the June
2010 NOPR proposals and urges prompt action on a final rule,\15\ AGA
requests that the Commission require monthly reporting of volume
throughput data on page 520 and separate reporting of backhaul
volumes.\16\ Associations add that the proposed revised reporting
requirements would provide useful information.\17\ TVA likewise
supports the Commission's proposal to include additional line items in
521a and 521b to account for fuel information disaggregated by
function.\18\ IOGA supports the proposed changes in reporting,
particularly the inclusion of lost and unaccounted-for gas (``LAUF'')
used in transportation, storage, gathering, and exploration/production
in the fuel data required on FERC Form Nos. 2, 2-A, and 3-Q as a
separate component of fuel, by function.\19\ Kansas Commission supports
the changes proposed in the NOPR.\20\
---------------------------------------------------------------------------
\14\ APGA Comments at 1.
\15\ AGA Comments at 1, 5-6.
\16\ Id. at 6-9.
\17\ Associations Comments at 3-4.
\18\ TVA Comments at 2.
\19\ IOGA Comments at 1-2.
\20\ Kansas Commission Comments at 1.
---------------------------------------------------------------------------
11. MidAmerican requests clarification that the reporting of
discounted and negotiated fuel should only contain fuel volumes related
to agreements that contain discounted or negotiated fuel.\21\
---------------------------------------------------------------------------
\21\ MidAmerican Comments at 3-4.
---------------------------------------------------------------------------
12. While INGAA expresses support for the Commission's goal of
enhancing FERC Form No. 2 fuel use reporting, it asserts that the
Commission's June 2010 NOPR went beyond AGA's original proposal of
reporting fuel by function that has been waived, discounted, or reduced
as part of a negotiated rate agreement. INGAA offers an alternative
reporting plan that it asserts will meet the Commission's stated
goals.\22\
---------------------------------------------------------------------------
\22\ INGAA Comments at 1.
---------------------------------------------------------------------------
2. Usefulness of Reporting Additional Details on Fuel Use
13. The Commission's proposal in the June 2010 NOPR would
disaggregate fuel use data into Discounted, Negotiated and Recourse
categories. By contrast, under INGAA's proposal, companies would report
aggregated Dths and Total dollars collected by function for Gas Used
for Compressor Stations, for Gas Used for Other Deliveries and Other
Operations, Gas Lost and Unaccounted for, Net Excess or (Deficiency),
Disposition of Excess Gas, and Gas Acquired to meet Deficiency
(eliminating the reporting of data in columns b, c, d, f, g, and h, as
proposed in the June 2010 NOPR).
14. The Commission's proposal would require filers to report Dths
not collected under waived, discounted, and negotiated for Gas Used for
Compressor Stations, for Gas Used for Other Deliveries and Other
Operations, Gas Lost and Unaccounted for, Net Excess or (Deficiency),
Disposition of Excess Gas, and Gas Acquired to meet Deficiency. Under
INGAA's proposal, this reporting requirement (Dths not collected by
function under waived and negotiated deals) would apply to shipper
supplied gas only, including Lines 2-7 on pages 521a and 521b. This
change would eliminate the reporting of waived, negotiated and total
fuel for lines 9 through 64 that was proposed in the June 2010 NOPR.
15. Six of the seven commenters that addressed this issue contend
that the NOPR proposal reports an appropriate level of detail on fuel
use.\23\ INGAA was the sole commenter arguing against the NOPR proposal
in this regard.
---------------------------------------------------------------------------
\23\ MidAmerican Comments do not take a position on this issue.
---------------------------------------------------------------------------
16. INGAA urges that the Commission limit its revisions to FERC
Form No. 2 to AGA's proposal in its response \24\ to the September 2007
NOPR, arguing that the June 2010 NOPR went further than necessary to
accomplish what AGA proposed, and objects to the June 2010 NOPR
proposal as providing more information than necessary.\25\ INGAA
demonstrates its point by referring to AGA's November 13, 2007 comments
which referenced pages 4, 5, and 6 of Workpaper 2, and Workpaper 10 of
the Informational Fuel Report filed by Dominion Transmission, Inc.,
(DTI) in Docket No. RP00-632-023 on June 27, 2007, as an example of
what should be included on page 521.\26\ INGAA argues that neither the
Commission nor AGA has made a case that the additional degree of
reporting is required to facilitate monitoring for potential cross-
subsidies among services.\27\
---------------------------------------------------------------------------
\24\ AGA Comments filed November 13, 2007 at 4-5 to the
September 2007 NOPR. See Revisions to Forms, Statements, and
Reporting Requirements for Natural Gas Pipeline, Notice of Proposed
Rulemaking, 72 FR 54860 (Sept. 27, 2007), FERC Stats. & Regs. ]
32,623 (2007) (September 2007 NOPR).
\25\ INGAA Comments at 3.
\26\ Id. at 4.
\27\ Id. at 11.
---------------------------------------------------------------------------
17. By contrast, AGA agrees that the level of detail in the
information to be reported under the NOPR proposal is needed to
adequately assess the justness and reasonableness of pipeline fuel
charges, addresses the D.C. Circuit Remand Order, and the burden of
producing such information is small and nonetheless justified.\28\
---------------------------------------------------------------------------
\28\ AGA Comments at 5-6.
---------------------------------------------------------------------------
18. APGA also states that the additional reporting requirements
proposed in the NOPR will better ensure that pipeline customers and the
Commission have sufficient information to identify unjust and
unreasonable rates and services and to support potential
complaints.\29\ APGA states that, under the Commission's current
reporting requirements, customers and the Commission currently cannot
match the revenues generated by the sale of excess gas with the
reported functionalized fuel costs.\30\ Information regarding both fuel
costs and excess gas revenues, broken-down and reported by function
(including gathering, transmission, distribution, storage and
production/extraction/processing), will allow customers and the
Commission to better assess how pipeline fuel costs are incurred and
allocated.\31\ Requiring pipelines to disaggregate their excess gas
revenue information and report it by function will thus provide
customers and the Commission with information
[[Page 4518]]
necessary to better determine the reasonableness of pipeline fuel
rates.\32\
---------------------------------------------------------------------------
\29\ APGA Comments at 2.
\30\ Id. at 3.
\31\ Id.
\32\ Id.
---------------------------------------------------------------------------
19. APGA also supports the Commission's proposal to require
pipelines to report the amount of fuel by function that has been
waived, discounted or reduced in negotiated rate agreements.\33\ It
states that, under the Commission's policy, existing shippers are
protected from subsidizing pipeline customers who have negotiated
rates.\34\ It adds that the Commission's proposal to require pipelines
to report fuel costs and revenues associated with each type of rate
structure (i.e., negotiated, discounted, or recourse) by function will
aid customers and the Commission in identifying inappropriate cross-
subsidization.\35\
---------------------------------------------------------------------------
\33\ Id. at 3.
\34\ Id.
\35\ Id.
---------------------------------------------------------------------------
20. Associations assert that the revised reporting requirements
will improve the reporting of fuel data in FERC Form No. 2.\36\
Associations maintain that pipeline fuel revenues can constitute a
substantial percentage of a pipeline's total system revenues, and
therefore, ensuring that shippers are not paying excessive fuel rates
or percentages is extremely important.\37\
---------------------------------------------------------------------------
\36\ Associations Comments at 3.
\37\ Id. at 3.
---------------------------------------------------------------------------
21. Associations comment that shippers will benefit from having
functionalized fuel data reported on FERC Form No. 2 because this will
allow shippers: (1) To ensure that rates are just and reasonable, as
the greater level of detail will allow them to better assess whether
pipelines are substantially over recovering fuel from their shippers
\38\ and (2) to assess whether they are subsidizing other shippers.\39\
In this regard, Associations state that functionalized reporting will
show the sources and uses of a pipeline's fuel by service type on FERC
Form No. 2. Associations state that functionalized fuel reporting, for
example, will show a pipeline's shippers the amount of fuel that
storage users provided to the pipeline, as well as how much of that
fuel the pipeline actually used for storage services.\40\ If storage
users in this example provided less fuel than the pipeline used for
storage services, shippers using other pipeline services might want to
take a closer look at the pipeline's fuel to determine whether they are
subsidizing the storage shippers' fuel.\41\ Thus, Associations assert
that functionalized fuel data will allow shippers to confirm that they
are providing the appropriate amount of fuel to the pipeline and are
not subsidizing other shippers.\42\
---------------------------------------------------------------------------
\38\ Id. at 4.
\39\ Id.
\40\ Id.
\41\ Id.
\42\ Id. at 5.
---------------------------------------------------------------------------
22. Associations also support breaking out fuel volumes and
revenues into rate types--discounted rates, negotiated rates or
recourse rates--and maintain that this level of detail will provide
shippers and the Commission with information that will be useful in
assessing fuel rates.\43\ Associations maintain that reporting fuel
volumes and revenues by rate type will help shippers ensure: (1) The
prevention of inappropriate subsidization; (2) the accuracy of pipeline
fuel trackers; and (3) the compliance of pipelines with the
Commission's fuel discounting policies.\44\
---------------------------------------------------------------------------
\43\ Id.
\44\ Id.
---------------------------------------------------------------------------
23. Associations also state that requiring pipelines to report fuel
data by rate type would prevent subsidization of some shippers by
allowing the Commission and shippers to distinguish between those fuel
discounts that are eligible for a discount adjustment in a rate case
and those that are not.\45\ Associations add that, as the new FERC Form
No. 2 will require pipelines to identify discounted fuel volumes and
revenues as either ``discounted,'' ``negotiated,'' or ``recourse,''
shippers could use these data to distinguish between those fuel
discounts that are appropriately included as adjustments in a rate case
(e.g., backhauls) and those that are not (e.g., discounts that are part
of a negotiated rate).\46\ Moreover, Associations assert that this
detail gives shippers a better indication of what appropriate fuel
rates should be, allowing the shippers to determine if fuel rate
changes are warranted.\47\
---------------------------------------------------------------------------
\45\ Id.
\46\ Id. at 5-6.
\47\ Id. at 6.
---------------------------------------------------------------------------
24. Finally, Associations argue that reporting fuel data by rate
type could provide an added check on fuel tracker calculations and on
pipelines' compliance with fuel discounting policies.\48\
---------------------------------------------------------------------------
\48\ Id.
---------------------------------------------------------------------------
25. IOGA maintains that it is critical to include and break out
LAUF, which it asserts, has been far in excess of actual fuel use on
certain Appalachian pipelines.\49\ In this regard, IOGA posits that
requiring interstate pipelines to break out fuel and LAUF by function
in FERC Form Nos. 2, 2-A, and 3-Q would be helpful to IOGA's efforts to
limit fuel and LAUF assessed to shippers and ultimately netted back to
Appalachian producers.\50\ Because the Appalachian pipelines are part
of integrated energy companies engaged in exploration, production,
gathering, storage and transportation of natural gas, IOGA asserts that
it has long been concerned that unmetered gas flow allocable to
affiliated exploration and production affiliates or farm tap customers
of affiliated LDCs becomes LAUF charged to other shippers, instead.\51\
It states that increasing the transparency of FERC Form Nos. 2, 2-A,
and 3-Q could help alleviate those concerns.\52\
---------------------------------------------------------------------------
\49\ IOGA Comments at 2.
\50\ Id. at 2-3.
\51\ Id. at 3.
\52\ Id.
---------------------------------------------------------------------------
26. IOGA also argues that requiring the filing of more transparent
fuel and LAUF data will allow the Commission and interested market
participants to better analyze allegedly extraordinary fuel and LAUF
experienced by certain interstate pipelines.\53\ For example, IOGA
notes that one interstate pipeline serving the Appalachian basin
recently made a filing with the Commission claiming that its actual
gathering fuel and LAUF during a 12-month period was in excess of 11
percent.\54\ IOGA asserts that pipeline recovery of fuel and LAUF
should be minimized to the extent possible. If gas is disappearing
between the wellhead and the interconnection between a pipeline's
gathering and transmission facilities, IOGA argues that producers and
shippers deserve to know why.\55\ IOGA further argues that, by
increasing its ability to compare fuel and LAUF experienced among
pipelines, the Commission will be better equipped to determine whether
a given level of fuel and LAUF is unjust and unreasonable and whether
the cost should be borne by the pipeline rather than by its
customers.\56\
---------------------------------------------------------------------------
\53\ Id.
\54\ Id.
\55\ Id.
\56\ Id.
---------------------------------------------------------------------------
27. Kansas Commission asserts that the information submitted on the
Commission's financial forms is critical to the ability of shippers and
other interested parties to assess pipeline rates, and as such should
be as complete and detailed as practical.\57\
---------------------------------------------------------------------------
\57\ Kansas Commission Comments at 1.
---------------------------------------------------------------------------
28. TVA agrees with the June 2010 NOPR assertion that breaking down
fuel costs and revenues associated with negotiated, discounted, or
recourse rate structures by function will provide greater clarity on
the justness and reasonableness of rates.\58\ In addition, TVA agrees
that reporting the amount of
[[Page 4519]]
fuel by function that has been waived, discounted, or reduced as part
of a negotiated rate agreement will allow for the determination of
whether cross-subsidization is occurring, and thus, is critical to
assessing the justness and reasonableness of the pipeline's fuel rates
in the absence of mandated rate cases.\59\
---------------------------------------------------------------------------
\58\ TVA Comments at 2-3.
\59\ Id. at 3.
---------------------------------------------------------------------------
29. Further, TVA hopes that the added transparency will encourage
support for pipelines to develop, and customers to support, incentive
fuel initiatives, as tracking mechanisms with a true-up process do
little to promote capital investment for energy efficiency.\60\ In
addition, it states that the proposed changes will add detail and
promote transparency when considering the unknown impact of cost-
recovery resulting from potential carbon legislation requirements
associated with monitoring and/or reporting greenhouse gas
emissions.\61\
---------------------------------------------------------------------------
\60\ Id.
\61\ Id.
---------------------------------------------------------------------------
30. INGAA, by contrast, would have the pipelines aggregate fuel use
data by function along with the volume of fuel ``not collected.'' \62\
INGAA asserts that this approach has the benefit of focusing the
additional fuel use reporting on the areas that gave rise to AGA's
original concerns of fuel waivers and negotiated rate contracts that
could present cross subsidy concerns.\63\
---------------------------------------------------------------------------
\62\ INGAA Comments at 2.
\63\ Id. at 6. INGAA provides its recommended revisions for a
revised page 521a in Appendix A to its comments.
---------------------------------------------------------------------------
31. Specifically, INGAA suggests the following revisions to page
521a and b:
(1) Lines 1-7: Total volume and the dollar value of shipper-
supplied fuel gas, by function, with volumes ``not collected''
because the otherwise applicable fuel rate was waived (column (d))
or because a negotiated fuel rate was less than the recourse rate
(column (e)), along with the pertinent account(s) under the Uniform
System of Accounts.
(2) Lines 8-14: Total volume and dollar value of gas used in
compressor stations, by function.
(3) Lines 15-22: Same data for miscellaneous ``other
deliveries'' and ``other operations.''
(4) Lines 23-30: Same data for LAUF.
(5) Lines 31-37: A calculation of the excess or deficiency by
function.
(6) Lines 38-51 and 52-65: Disposition of the excess or source
of gas acquired to meet a deficiency.\64\
---------------------------------------------------------------------------
\64\ Id. at 7.
32. INGAA also suggests that the Commission not include a separate
reporting category for discounted rates because pipelines cannot
discount the fuel use component of a discounted rate because it is a
non-discountable variable cost.\65\
---------------------------------------------------------------------------
\65\ Id.
---------------------------------------------------------------------------
33. AGA responds that, as recognized in the June 2010 NOPR, the
Commission has a policy against existing shippers subsidizing the
negotiated rate program, and it notes that the June 2010 NOPR properly
concluded that the information proposed to be required could be useful
in identifying potential violations of that policy.\66\ AGA objects to
INGAA's counterproposal, arguing that the NOPR proposal would increase
the ability of the Commission and interested parties to assess whether
a pipeline's existing shippers are subsidizing the pipeline's
negotiated rate program, while INGAA's counterproposal would
effectively delete much of the information sought in the June 2010
NOPR.\67\
---------------------------------------------------------------------------
\66\ AGA Reply Comments at 2.
\67\ Id.
---------------------------------------------------------------------------
34. AGA notes that INGAA argued in its comments that reporting fuel
use data by customer contract would require pipelines to establish
mechanisms for allocating fuel use among the types of contracts
(negotiated, discounted, or recourse).\68\ AGA believes that it would
be appropriate for pipelines to make those allocations transparent
through the reporting requirements proposed in the NOPR.\69\
---------------------------------------------------------------------------
\68\ Id.
\69\ Id.
---------------------------------------------------------------------------
35. Unless the pipeline itself provides its allocation methods on
its financial forms, AGA argues that customers cannot adequately assess
the costs and revenues associated with fuel charges to discounted and
negotiated rate customers.\70\ Commission staff and interested parties
cannot be expected to estimate or otherwise discern a pipeline's
allocation scheme in the absence of information from the pipeline
itself. Accordingly, AGA urges the Commission to require pipelines to
report fuel costs and revenues by rate structure (discounted,
negotiated, recourse) broken down by function as proposed in the June
2010 NOPR.\71\ Thus, AGA supports the June 2010 NOPR proposal and urges
the Commission to reject the proposals advanced by INGAA.\72\
---------------------------------------------------------------------------
\70\ Id.
\71\ Id.
\72\ Id.
---------------------------------------------------------------------------
3. Commission Determination
36. In Order No. 710-A, the Commission found that the detail sought
by AGA might provide additional clarity with respect to fuel costs, but
decided not to require the reporting of this information based on
concerns over the burden associated with compliance with such a
requirement.\73\ The Commission also declined to accept AGA's proposal
to require natural gas pipelines to report details about the amount of
fuel that they waived, discounted or reduced as part of a negotiated
rate agreement based on concerns that this information might not be
significant and might not be readily available, as many pipelines do
not periodically file to adjust fuel rates and may not keep records of
this type of information.\74\
---------------------------------------------------------------------------
\73\ Revisions to Forms, Statements, and Requirements for
Natural Gas Pipelines Order No. 710-A, 123 FERC ] 61,278 at P 10.
\74\ Id. P 11.
---------------------------------------------------------------------------
37. After consideration of the comments and reply comments to the
June 2010 NOPR, the Commission finds that the additional information to
be reported on pages 521a and 521b will allow users to match the
revenues generated by the sale of excess fuel with the functionalized
costs reported on page 520 and will allow users to better determine if
there is a cross-subsidy, which is critical to assessing the justness
and reasonableness of the pipeline's fuel rates particularly in the
context of pipelines' negotiated rate program. We find that requiring
the reporting of fuel costs and revenues by rate structure broken down
by function will increase the ability of the Commission and interested
parties to assess whether a pipeline's existing shippers are
subsidizing the pipeline's negotiated rate program. Thus, we find that
INGAA's proposal would effectively delete much of the valuable
information sought in the June 2010 NOPR.
38. The revised forms also will now allow the user to better
determine where on the pipeline system fuel costs are being incurred
and how they are being allocated. This added transparency, which is
supported by the majority of the commenters, will ensure that the
Commission and pipeline customers have sufficient information to be
able to assess the justness and reasonableness of pipeline rates. The
collection and public availability of this information is consistent
with our goal of having sufficient information to allow the Commission
and pipeline customers to assess the impact on pipeline rates of
changing fuel costs.
39. By contrast, if we adopted INGAA's suggestion to limit the
revisions to FERC Form No. 2 to those originally proposed by AGA, then
the benefits of increased transparency of rates, particularly within
the negotiated rate program, which are described in the two preceding
paragraphs, would not be
[[Page 4520]]
fully realized. The Commission's proposal better captures important
information about a company's fuel use. The fact that this is not
identical to that proposed by AGA to the September 2007 NOPR in no way
refutes the usefulness of these data being reported and made available
to the Commission and the public.
40. Moreover, requiring the reporting by function of the amount of
fuel waived, discounted or reduced as part of a negotiated rate
agreement will enable pipeline customers to better determine if
inappropriate cross-subsidization is occurring. The Commission has a
policy that existing shippers must not subsidize the negotiated rate
program; this additional information would be useful in identifying
potential violations of that policy.\75\ The revised schedules adopted
in this Final Rule will functionally disaggregate the fuel costs and
revenues associated with each type of rate structure (i.e., negotiated,
discounted, or recourse) to provide users with better information to
assess the justness and reasonableness of a pipeline's fuel rates.
---------------------------------------------------------------------------
\75\ See Alternative to Traditional Cost-of-Service Ratemaking
for Natural Gas Pipelines; Regulations of Negotiated Transportation
Services of Natural Gas Pipeline (Alternative Rate Policy
Statement), 74 FERC ] 61,076, at 61,242 (1996), order granting
clarification, 74 FERC ] 61,194 (1996), and NorAm Gas Transmission
Company, 77 FERC ] 61,011 (1996).
---------------------------------------------------------------------------
41. In this Final Rule, therefore, the Commission is revising the
financial reporting forms required to be filed by natural gas companies
(FERC Form Nos. 2, 2-A, and 3-Q) to include functionalized fuel data on
pages 521a, 521b, and 521c of those forms, and to include on such forms
the amount of fuel waived, discounted or reduced as part of a
negotiated rate agreement. Specifically, the Commission is revising
pages 521a and 521b in the following manner:
(1) Expanding line 1 to separately reflect shipper supplied fuel
by function (now shown on lines 1-7 on page 521a), i.e., production/
extraction/processing, gathering, transmission, distribution, and
storage;
(2) Expanding lines 2, 3, and 4 to separately list the volumes
for each of these functions (now shown on lines 8-30 on page
521a);\76\
---------------------------------------------------------------------------
\76\ Lines 2-4 previously consisted of: (2) Less gas used in
compressors; (3) Less gas used for other operational purposes
(footnote); and (4) Less gas lost and unaccounted for.
---------------------------------------------------------------------------
(3) Expanding the listing of volumes in columns (b), (c), and
(d) to include discounted, negotiated and recourse rates;
(4) Expanding line 6, net excess or deficiency, to separately
list the volumes for each of these functions (now shown on lines 31-
37 on page 521b);
(5) Expanding the reporting of dollar amounts in columns (f)
through (i) to include amounts collected under discounted,
negotiated and recourse rates;
(6) Requiring the reporting of volumes of gas (in dekatherms) in
columns (j) through (m) not collected where the request for that gas
has been waived or reduced under discounted or negotiated rates; and
(7) Directing filers (if the pipeline does not use a particular
function) to enter a zero for that field.
42. FERC Form Nos. 2, 2-A, and 3-Q involve estimates and
allocations and the methods for making these allocations are to be
documented in FERC Form Nos. 2, 2-A, and 3-Q. Thus, we will add an
instruction to page 521a to require that companies disclose their fuel
use allocation method(s) in a note to these financial forms.
C. Separate Reporting of Forwardhaul and Backhaul Throughput Volumes
1. Comments
43. AGA favors further revisions to the forms to require interstate
pipelines to separately report forwardhaul and backhaul throughput
volumes associated with detailed fuel use, LAUF, and fuel collections
data reported on the revised FERC Form No. 2.\77\ AGA cites a recent
case involving the calculation of retention percentages for fuel use
and LAUF where, it asserts, the Commission determined that additional
data were required regarding forwardhaul and backhaul deliveries in
order to properly determine a pipeline's level of fuel use.\78\
---------------------------------------------------------------------------
\77\ AGA Comments at 1, 7-9.
\78\ (Citing Columbia Gulf Transmission Co., 132 FERC ] 61,009,
at P 38 (2010) (Columbia Gulf)).
---------------------------------------------------------------------------
44. AGA argues that in Columbia Gulf the Commission stated that it
was unable to determine whether the throughput figures set forth on
page 305 of the pipeline's FERC Form No. 2 filings included or excluded
backhaul volumes and that the Commission accordingly directed the
pipeline to provide ``[f]orward haul and backhaul deliveries stated
separately for the mainline, onshore, and offshore zones for each
month'' for a specified period of time.\79\ AGA asserts that the
Commission recognized in that case that accurate forwardhaul and
backhaul throughput data are important for the Commission and shippers
to properly assess fuel use and LAUF, and that the current FERC Form
No. 2 is not adequate to collect the separate forwardhaul and backhaul
throughput data needed to conduct a proper analysis of fuel use and
lost and unaccounted for fuel costs.\80\
---------------------------------------------------------------------------
\79\ AGA Comments at 8.
\80\ Id.
---------------------------------------------------------------------------
45. AGA maintains that the current rulemaking is the proper
proceeding in which to consider this revision, even though it was not
raised earlier, because the purpose of this proceeding is to revise the
financial forms for interstate pipelines ``to provide, in greater
detail, the information the Commission needs to carry out its
responsibilities under the NGA to ensure that rates are just and
reasonable, and to provide pipeline customers and the public the
information they need to assess the justness and reasonableness of
pipeline rates.'' \81\
---------------------------------------------------------------------------
\81\ Id. Revisions to Forms, Statements, and Reporting
Requirements for Natural Gas Pipelines, citing Order No. 710, FERC
Stats. & Regs. ] 31,267 at P 1.
---------------------------------------------------------------------------
46. In its reply comments INGAA disagrees with AGA's proposal for
an additional breakout of forwardhaul and backhaul data, arguing that
this is neither practical nor necessary to achieve the Commission's
FERC Form No. 2 reporting goals.\82\ In INGAA's view, the fact that
this information was deemed important by the Commission in Columbia
Gulf does not warrant a general requirement that it be reported across
the industry on an ongoing basis.\83\ INGAA also notes that ``typically
no fuel is used for backhaul volumes, although the Commission requires
an allocation of LAUF gas [to] be attributed to backhauls.'' \84\
---------------------------------------------------------------------------
\82\ INGAA Reply Comments at 2.
\83\ Id.
\84\ Id. at n.1.
---------------------------------------------------------------------------
47. INGAA cautions that if the proposal involves the reporting of
fuel retained and fuel used on backhaul volumes, this would present
practical difficulties with respect to backhauls that use no compressor
fuel (citing Mississippi River Transmission Corp., 98 FERC ] 61,119 at
61,353 (2002) in this regard). However, INGAA agrees that these
problems would not be present if the proposal only requires the
reporting of forwardhaul and backhaul throughput volumes, which is all
that is being required in this Final Rule.
48. INGAA comments that, particularly on a reticulated pipeline,
gas flows in each direction, depending on demand and storage
operations, and there may be no specific or designated transportation
path for many services, which makes reporting problematic or
impossible.\85\ INGAA argues that the current gas system does not
provide shippers with a set capacity path and that gas flows in each
direction, depending on demand and storage, and this is why the
Commission declined to adopt a generic requirement to establish
[[Page 4521]]
a path priority system in Order No. 637.\86\
---------------------------------------------------------------------------
\85\ Id. at 3.
\86\ Id. at 4.
---------------------------------------------------------------------------
49. In addition, INGAA argues that a single transportation service
can involve a combination of forwardhauls or backhauls; thus,
classifying each dekatherm of transportation as forwardhaul or backhaul
is impossible.\87\
---------------------------------------------------------------------------
\87\ Id. at 4-5.
---------------------------------------------------------------------------
2. Commission Determination
50. Currently FERC Form No. 2 does not require a distinction
between forwardhaul and backhaul volumes. Since compressor fuel use is
not assessed to backhaul volumes, it is inaccurate to include backhaul
volumes for throughput.
51. After consideration of all the arguments on this issue, we find
that it would be informative and useful for pipelines to separately
report their forwardhaul and backhaul volumes, because this would allow
the Commission and customers to determine whether the fuel use being
assigned to customers in their bills contain any cross-subsidies, based
on the inclusion of backhaul volumes in their gas purchases, and thus
help ensure that rates are just and reasonable. We also find that the
benefits arising from this reporting, providing the opportunity to
track fuel costs and examine cross-subsidies, outweigh the burden of
reporting such data.
52. As to INGAA's argument that it would not be possible, even for
the services that are pathed, to classify each dekatherm of
transportation as either forwardhaul or backhaul, we conclude that, for
a majority of pipelines, this is not a significant problem. Many
pipelines offer clearly defined backhaul services that are defined in
their tariffs. In order to offer and, ultimately, provide that service,
those pipelines must be able to determine the volumes for which the
service is provided. However, some pipelines do not offer backhaul
service, and for these pipelines it is reasonable to expect that
backhaul volumes may not be able to be tracked. Therefore, the
Commission will require reporting on this matter depending on the
service identified in the tariff. If backhaul service is not offered
under the tariff, the reporting pipeline may report as if the service
it offers is entirely forwardhaul. The reporting pipeline must
separately identify backhaul volumes only if it offers backhaul service
in its tariff and provides this service to customers.
D. Clarification of Whether Additional Details on Fuel Use Only Apply
in Instances Where Contract Provides for Discounted or Negotiated Fuel
Rates
1. Comments
53. MidAmerican comments that, to its knowledge, very few
discounted and negotiated rate agreements include a provision for
discounted or negotiated fuel.\88\ Thus, MidAmerican suggests that the
Commission clarify that columns (b) and (c) of pages 521a and 521b and
columns (f) and (g) of pages 521c and 521d include only contracts with
discounted or negotiated fuel rates, and the column headings be revised
to read ``Discounted Fuel Rate'' and ``Negotiated Fuel Rate.'' \89\
---------------------------------------------------------------------------
\88\ MidAmerican Comments at 3.
\89\ Id.
---------------------------------------------------------------------------
54. MidAmerican further argues that the columns should only contain
volumes related to agreements with discounted or negotiated fuel, not
fuel volumes related to all discounted or negotiated agreements, if the
purpose of the information is to determine if there is a cross
subsidy.\90\
---------------------------------------------------------------------------
\90\ Id.
---------------------------------------------------------------------------
2. Commission Determination
55. In this Final Rule, we are requiring pipelines to report fuel
use by function for all contracts involving discounted rates,
negotiated rates, or recourse rates. We reject MidAmerican's proposal
to only require the reporting of fuel costs in contracts where the fuel
rate is discounted. Under MidAmerican's proposal, how a contract is
structured would dictate whether it would be within the scope of the
reporting requirements of this Final Rule and MidAmerican states that
very few discounted and negotiated rate agreements include a provision
for discounted or negotiated fuel. If this is so, or if future
contracts are specifically written to make it so, then, under
MidAmerican's proposal, many contracts that otherwise would be included
in the reporting requirements would not be reported. This would have
the consequence of diminishing the benefits of enhanced transparency
that we hope to achieve with this Final Rule and thus we reject
MidAmerican's suggestion.
56. As to MidAmerican's suggestion that columns (b) and (c) on
pages 521a and 521b, and columns (f) and (g) on pages 521c and 521d,
should only contain volumes and dollars related to agreements with
discounted or negotiated fuel, not fuel volumes or dollars related to
discounted or negotiated agreements, for the reasons stated, we clarify
that the amounts reported on pages 521a and 521b in columns (b) and (c)
and on page 521c at columns (f) and (g) reflect shipper supplied gas
collected under all discounted or negotiated rate agreements.\91\
---------------------------------------------------------------------------
\91\ As discussed above, the revised forms we are adopting in
this Final Rule do not include page 521d.
---------------------------------------------------------------------------
E. Monthly v. Quarterly Reporting
57. As mentioned above, FERC Form Nos. 2 and 2-A are annual reports
and FERC Form 3-Q is a quarterly report. In the June 2010 NOPR, the
Commission invited comments on whether the data reported on FERC Form
Nos. 2, 2-A, and 3-Q should be reported on a monthly or quarterly basis
(i.e., whether the data should provide separate entries for each month,
or one entry covering the entire quarter).
1. Comments
58. AGA favors continuation of the requirement for monthly
reporting of fuel use on page 521, asserting that important seasonal
changes would be obscured by quarterly reporting.\92\ AGA states that
the consumption of natural gas in the United States varies
significantly from one month to the next and, while demand in the
industrial sector is largely constant, demand in the residential and
commercial sector is weather-driven and has a dramatic seasonal shape
with a winter peak.\93\AGA also notes that demand in the power
generation sector is weather sensitive with a summer peak, or in some
cases bi-modal with both winter and summer peaks.\94\ AGA states that,
because fuel is a variable cost and varies with consumption, the amount
of fuel costs and revenues experienced by interstate pipelines varies
by month and the fuel cost and revenue data of interstate pipelines
does not fit neatly into calendar quarters. Consequently, significant
variations in fuel data would be masked by fuel reporting only on a
quarterly basis.\95\
---------------------------------------------------------------------------
\92\ AGA Comments at 1, 6-7.
\93\ Id. at 6.
\94\ Id.
\95\ Id.
---------------------------------------------------------------------------
59. AGA further recommends that the fuel information on page 520 be
reported on a monthly basis.\96\ AGA argues that, as the Commission
noted in the June 2010 NOPR, the fuel information reported on page 520
works in tandem with the information reported on page 521 and should
allow a shipper to match the functionalized costs on page 520 with the
functionalized
[[Page 4522]]
revenues on page 521.\97\ Having only quarterly information reported on
page 520 would impede the ability of shippers and the Commission to
match costs and revenues with the monthly information reported on page
521.\98\ Therefore, AGA requests that page 520 of the financial reports
be revised to add the appropriate columns to reflect the reporting of
the information on that page on a monthly basis.\99\
---------------------------------------------------------------------------
\96\ Id. at 7, AGA Reply Comments at 5, and AGA Further Reply
Comments at 4.
\97\ AGA Comments at 7.
\98\ Id.
\99\ Id.
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60. Associations also argue that providing shippers with access to
detailed fuel information on a monthly basis, such as functionalized
fuel data by rate type on FERC Form No. 2, would allow the Commission
and shippers to ensure that fuel rates remain just and reasonable.\100\
Associations state that better information would also help the
Commission and shippers to develop a Natural Gas Act (NGA), section 5
complaint proceeding case and, further, would allow parties to confirm
fuel tracker reports.\101\
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\100\ Associations Comments at 4.
\101\ Id.
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61. IOGA urges the Commission to retain the requirement for the
monthly filing of fuel data.\102\ In IOGA's experience, fuel and LAUF
can vary significantly from month to month. Monthly breakdowns in FERC
Form Nos. 2, 2-A, and 3-Q could provide valuable data that might be
masked by aggregated quarterly data.\103\ IOGA notes that pipelines
already report transportation and gathering quantities by month, and
contends that quarterly reporting of fuel and LAUF as proposed by INGAA
will foreclose accurate comparative analysis of the relationship
between quantities shipped and fuel and LAUF on a monthly basis.\104\
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\102\ IOGA Comments at 3.
\103\ Id.
\104\ Id. at 4.
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62. IOGA further argues that, as pipelines track throughput, fuel
and LAUF data monthly for invoicing and other purposes, a requirement
to report fuel and LAUF by month will not pose additional
administrative burden or expense.\105\
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\105\ Id.
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63. Kansas Commission believes that monthly reporting of this
information is not necessary to provide the information required to
effectively evaluate a pipeline's rates. Therefore, Kansas Commission
supports INGAA's suggestion to change the reporting requirements to
quarterly.\106\
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\106\ Kansas Commission Comments at 2.
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64. INGAA argues that the reporting requirements should be
quarterly.\107\ INGAA comments that, because of weather events and
anomalous events in the data, monthly data cannot provide an accurate
picture or trend.\108\ INGAA also asserts that pipelines with storage
assets or significant line pack do not need to dispose of excess fuel,
so monthly data would not provide an accurate picture of fuel use.\109\
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\107\ INGAA Comments at 3.
\108\ Id.
\109\ Id. at 11.
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65. In response to INGAA, AGA argues that monthly reporting is
preferable, because significant variations in fuel data can be masked
by fuel reporting on a quarterly basis,\110\ and quarterly data cannot
be disaggregated to obtain monthly information to determine what costs
or revenues were experienced and by what functions. Only monthly fuel
information will provide sufficient transparency to allow the
Commission and interested parties to assess the justness and
reasonableness of interstate pipeline fuel charges.\111\ AGA also notes
that INGAA did not contradict AGA's observation that weather variations
and the location of shipper-scheduled volumes on the pipeline from
month to month have a substantial effect on fuel consumption.\112\
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\110\ AGA Reply Comments at 3.
\111\ Id.
\112\ Id.
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2. Commission Determination
66. In Order No. 710, the Commission eliminated FERC Form No. 11,
the Natural Gas Pipeline Company Quarterly Statement of Monthly Data,
and shifted the reporting of that information to FERC Form Nos. 2 and
3-Q.\113\ We found that this fuel use information provides critical
data for detecting trends, determining seasonal variation of fuel use,
and testing the reasonableness of a pipeline's fuel costs. Upon further
consideration of this issue in the instant docket, the Commission finds
that monthly reporting provides greater transparency and provides more
representative information about a pipeline's fuel use than quarterly
reporting and we will retain this requirement.
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\113\ Revisions to Forms, Statements, and Reporting
Requirements for Natural Gas Pipelines, Order No. 710, FERC Stats. &
Regs. ] 31,267 at P 51, Order No. 710-A, 123 FERC ] 61,278 at P 3.
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67. Reporting data on a monthly basis provides more accurate
accounting of fuel use, allowing for a better understanding of pipeline
operations, and provides critical detail to understand how the pipeline
treats its fuel. It would not be unexpected that a pipeline's operating
parameters would change from January to March, from April to June, from
July to September, or from October to December. It would seem counter
to the interest of increased transparency to reduce the granularity of
fuel use data over these periods. The monthly data are more
representative of the pipeline's varying operations, enabling the
transparency required by Order No. 710 to more fully evaluate a
pipeline's fuel use and address the concerns of the remand. We conclude
that moving to quarterly reporting would gloss over natural gas monthly
fluctuations, thus distorting what actually occurred during the
reporting period. Thus, we find that fuel use data should continue to
be reported on a monthly basis, and not on a quarterly basis.
68. As to AGA's proposal to modify page 520 to have respondent
companies report transmission throughput volumes on a monthly basis, we
note that AGA did not provide specific reasons supporting the
imposition of this requirement. Currently, page 520 only requires that
transmission volumes be reported on a quarter and year to date basis
and we see no need to revise this requirement. The reporting of
transmission volume throughput and the reporting of fuel data are
separate matters and the additional information to be provided on fuel
use does not provide a reason to further break down transportation
volume throughput. Thus, we find that the quarterly separation of that
data is sufficient and we will not impose the additional burden on
filers to break down these data in the absence of demonstrated
benefits.
F. Burden
1. Comments
69. AGA, APGA, and Kansas Commission comment that the burden of
producing and reporting the additional details on fuel use proposed in
the June 2010 NOPR is both small and justified.\114\ By contrast, INGAA
finds the June 2010 NOPR proposal unduly burdensome.\115\
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\114\ See, e.g., AGA Comments at 5.
\115\ INGAA Comments at 3.
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70. Specifically, APGA comments that pipelines should have this
information readily available because they maintain it for their own
purposes.\116\ Given the potential benefit of the information and the
relatively low compliance burden on pipelines, APGA supports the
Commission's proposal to require pipelines to report the amount of fuel
[[Page 4523]]
waived, discounted or reduced as part of negotiated rate
agreements.\117\
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\116\ APGA Comments at 3.
\117\ Id. at 4.
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71. Kansas Commission states that the benefits of the additional
reporting outweigh any burden that might be placed on the reporting
pipelines.\118\ Given that pipelines already functionalize this data
for ratemaking purposes, Kansas Commission concludes that the burden on
pipelines will be minimal.\119\
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\118\ Kansas Commission Comments at 1.
\119\ Id.
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72. Kansas Commission further argues that, in the absence of a
mandatory requirement for pipelines to periodically restate their base
tariff rates, the Commission must rely on section 5 of the NGA to
police pipeline rates. Under these circumstances, the need for
functionalized data is heightened.\120\ Without functionalized data,
shippers and other interested parties cannot determine whether a
pipeline is cross-subsidizing service, and the efficacy of the NGA
section 5 complaint process is undermined.\121\ Accordingly, the Kansas
Commission supports the Commission's proposal to require functionalized
fuel data to be included on pages 521a and 521b of FERC Form No.
2.\122\ Kansas Commission also supports the Commission's proposal to
require pipelines to report the amount of fuel waived, discounted or
reduced as part of a negotiated rate agreement.\123\
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\120\ Id. at 2.
\121\ Id.
\122\ Id.
\123\ Id.
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73. INGAA maintains that the Commission's proposal is unnecessarily
burdensome.\124\ First, INGAA maintains that it is difficult for
pipelines to track fuel use by individual contract or contract type
because pipelines operate on an integrated basis.\125\ Second, INGAA
asserts that it would require substantially more information than would
be provided under this proposal to enable FERC Form No. 2 users to
monitor potential cross-subsidy concerns.\126\ Third, INGAA comments
that pipelines will have to establish a mechanism for allocating fuel
use between or among services and contracts.\127\
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\124\ INGAA Comments at 2.
\125\ Id. at 2.
\126\ Id.
\127\ Id.
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2. Commission Determination
74. The Commission finds that fuel use data on a functionalized
basis is needed to obtain the transparency necessary to ensure just and
reasonable rates. Additionally, we find that this reporting requirement
is not unnecessarily burdensome. Currently, pipelines that file annual
fuel use trackers assign fuel to their individual shippers. In this
Final Rule, the Commission is not imposing any additional reporting
requirements that change how those pipelines track fuel. Pipeline
billings are provided on an integrated basis, accounting for sales
based on whether the volumes are negotiated, recourse, or discounted.
Moreover, contrary to INGAA's assertions, the Commission is not
requiring pipelines to track fuel by individual contracts, but merely
continuing the current practice of requiring the assignment of fuel
based on an allocation of throughput or stated fuel rate. The revisions
to page 521a through 521c require the same accounting mechanism for
fuel, enabling parties to better understand how fuel use costs are
assigned.
75. The Commission in the June 2010 NOPR estimated the annual
burden to comply with the requirements established in Docket No. RM07-
9-003 while inviting comments on the cost to comply with the proposed
requirements. We estimated that the additional collection costs would
not be overly burdensome.\128\ The Commission provided its best
estimate of the time required to complete page 521a through 521d. No
party presented data contradicting the Commission's estimate. While
INGAA contends that the proposal is burdensome, INGAA did not identify
any inaccuracies in the Commission's estimate, did not quantify its own
estimate of the impact of reporting fuel on a functionalized basis, and
did not provide any support for its contention that functionalizing
fuel would be burdensome to the pipelines. In this Final Rule, as
discussed above, we are adding a requirement to report information on
forwardhauls and backhauls and we are revising our burden estimate to
account for this requirement. The Commission finds that, even with this
minor additional reporting requirement, the benefits of enhanced
transparency provided by the additional reporting proposed in the June
2010 NOPR outweigh the burden placed on the pipelines. Further, we find
that our estimated burden hours (as adjusted) are small and reasonable,
and we will continue to require fuel to be reported on a functionalized
basis.
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\128\ June 2010 NOPR, FERC Stats. & Regs. ] 32,659 at P 19.
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G. Implementation Date
1. Comments
76. AGA contends that the new rules should apply to the financial
forms that
