Revisions to Page 700 of FERC Form No. 6, 59348-59354 [2012-23807]
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59348
Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Proposed Rules
Regulation Z (Reg Z), an application fee
may only serve to recoup the actual
costs incurred by an FCU to process a
PAL loan application. FCUs would still
need to accurately account for their
costs in determining a permissible
application fee, and they would not be
able to use this fee to offset losses
associated with this type of lending.
NCUA will continue to scrutinize these
fees to ensure compliance with Reg Z
and ensure PAL loans remain a
beneficial product for FCU members.
In addition to seeking comment on
the application fee and interest rate, the
Board seeks comment on all aspects of
the regulation. The questions
enumerated below are intended to
stimulate commenter response and
suggest areas where NCUA may improve
the rule to encourage more FCUs to offer
PAL loans. Commenters should feel free
to comment on any aspect of the PAL
regulation. Of course, commenters
should include reasonable justification
for all comments provided.
Additional Questions for Consideration
(1) Should the Board increase the
permissible PAL loan interest rate,
which is currently set at 28% (based on
1000 basis points above the maximum
interest rate established by the Board for
non-PAL loans)?
(2) Should the Board expand the
permissible loan range, which is
currently set from $200 to $1000?
(3) Should the Board permit PAL loan
maturities of shorter than one month or
longer than six months?
(4) Should the Board allow FCUs to
make more than one PAL loan at a time
to a borrower?
(5) Should the Board eliminate or
decrease the one-month minimum
length of membership requirement?
(6) Should the Board increase the
limit on the permissible aggregate dollar
amount of loans made, which currently
is 20% of an FCU’s net worth?
In addition to soliciting comments on
the current PAL rule, the Board is also
interested in learning about viable
payday-alternative products credit
unions are currently offering their
members. The Board invites
commenters to describe products and
programs they offer and to share details
about the business models they use to
execute successful programs.
By the National Credit Union
Administration Board on September 21,
2012.
Mary Rupp,
Secretary of the Board.
[FR Doc. 2012–23718 Filed 9–26–12; 8:45 am]
BILLING CODE 7535–01–P
DEPARTMENT OF ENERGY
Federal Energy Regulatory
Commission
regarding rate base (line 5), rate of
return (line 6), return on rate base (line
7), and income tax allowance (line 8).
DATES:
Comments are due November 26,
2012.
Comments, identified by
docket number, may be filed in the
following ways:
• Electronic Filing through: https://
www.ferc.gov. Documents created
electronically using word processing
software should be filed in native
applications or print-to-PDF format and
not in a scanned format.
• Mail/Hand Delivery: Those unable
to file electronically may mail or handdeliver comments to: Federal Energy
Regulatory Commission, Secretary of the
Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions
on submitting comments and additional
information on the rulemaking process,
see the Comment Procedures Section of
this document
ADDRESSES:
FOR FURTHER INFORMATION CONTACT:
18 CFR Part 357
[Docket No. RM12–18–000]
Revisions to Page 700 of FERC Form
No. 6
Federal Energy Regulatory
Commission, DOE.
ACTION: Notice of proposed rulemaking.
AGENCY:
The Federal Energy
Regulatory Commission (Commission)
proposes to modify Page 700 of FERC
Form No. 6 (Form 6) to facilitate the
calculation of a pipeline’s actual return
on equity. The Commission proposes to
expand the information provided
SUMMARY:
James Sarikas (Technical Information),
Office of Energy Market Regulation,
888 First Street NE., Washington, DC
20426, (202) 502–6831, James.
Sarikas@ferc.gov.
Brian Holmes (Technical Information),
Office of Enforcement, 888 First Street
NE., Washington, DC 20426, (202)
502–6008, Brian.Holmes@ferc.gov.
Andrew Knudsen (Legal Information),
Office of the General Counsel, 888
First Street NE., Washington, DC
20426, (202) 502–6527, Andrew.
Knudsen@ferc.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph
Nos.
I. Background ............................................................................................................................................................................................
II. Discussion ............................................................................................................................................................................................
A. Rate Base .......................................................................................................................................................................................
B. Rate of Return ...............................................................................................................................................................................
C. Composite Tax Return ..................................................................................................................................................................
III. Information Collection Statement ......................................................................................................................................................
IV. Environmental Analysis .....................................................................................................................................................................
V. Regulatory Flexibility Act [Analysis or Certification] .......................................................................................................................
VI. Comment Procedures .........................................................................................................................................................................
VII. Document Availability ......................................................................................................................................................................
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(Issued September 20, 2012)
1. The Federal Energy Regulatory
Commission (Commission) proposes to
modify the reporting requirements on
Page 700, Annual Cost of Service Based
Analysis Schedule, of FERC Form No. 6,
Annual Report of Oil Pipeline
Companies (Form 6), to facilitate the
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calculation of a pipeline’s actual rate of
return on equity based upon Page 700
data. The modifications to Page 700
include requiring additional
information regarding rate base, rate of
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6
9
11
13
19
25
26
27
31
return, return on rate base, and income
taxes.1
1 Concurrent with the issuance of this NOPR, the
Commission is issuing a final rule in Docket No.
RM11–21–000, Revision to Form No. 6.
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Proposed Rules
I. Background
2. The Commission is responsible for
regulating the rates, terms and
conditions that oil pipelines charge for
transportation under the Interstate
Commerce Act (ICA).2 The ICA
prohibits pipelines from charging rates
that are ‘‘unjust and unreasonable’’ and
permits shippers and the Commission to
challenge both pre-existing and newly
filed rates.3
3. To assist the Commission in the
administration of its jurisdictional
responsibilities, the ICA authorizes the
Commission to prescribe annual or
other periodic reports.4 Through Form
6, the Commission collects annual
financial information from crude and
refined product pipelines 5 subject to
the Commission’s jurisdiction, as
prescribed in section 357.2 of the
Commission’s regulations.6 Form 6 ‘‘is
intended to be both a financial and
ratemaking document.’’ 7
4. Page 700 of Form 6 provides a
simplified presentation of an oil
pipeline’s jurisdictional cost-of-service.
Page 700 serves as a preliminary
screening tool to evaluate pipeline
rates.8 However, ‘‘Page 700 information
alone is not intended to show what a
just and reasonable rate should be.’’ 9
Currently, pipelines are required to
provide the following on Page 700:
Operating and Maintenance Expenses
(line 1), Depreciation Expense (line 2),
AFUDC Depreciation (line 3),
Amortization of Deferred Earnings (line
4), Rate Base (line 5), Rate of Return
(line 6), Return on Rate Base (line 7),
Income Tax Allowance (line 8), Total
Cost of Service (line 9), Total Interstate
Operating Revenues (line 10),
2 49
U.S.C. 1, et seq.
U.S.C. 13(1), 15(1), (7). Just and reasonable
rate are ‘‘rates yielding sufficient revenue to cover
all proper costs, including federal income taxes,
plus a specified return on invested capital.’’ City of
Charlottesville v. FERC, 774 F.2d 1205, 1207 (D.C.
Cir. 1985).
4 49 App. U.S.C. 1–85 (2000).
5 Hereafter, the term ‘‘oil pipeline’’ shall include
both crude and refined product pipelines.
6 18 CFR 357.2 (2012).
7 Revisions to and Electronic Filing of the FERC
Form No. 6 and Related Uniform Systems of
Accounts, Order No. 620, FERC Stats. & Regs.,
Regulation Preambles July 1996–December 2000
¶ 31,115, at p. 31,954 (2000) (citing Cost of Service
Requirements and Filing Requirements for Oil
Pipelines, Order No. 571, FERC Stats. & Regs.,
Regulation Preambles Jan. 1991–June 1996 ¶ 31,006,
at p. 31,169 (1995) and Form 6, p. I, Roman
Numeral 1; on reh’g, Order No. 620–A, 94 FERC
61,130 (2001); order on reh’g, Order No. 620–A, 94
FERC ¶ 61,130 (2001)).
8 All jurisdictional pipelines are required to file
page 700, including pipelines exempt from filing
the full Form 6. 18 CFR 357.2(a)(2) and (a)(3)
(2012).
9 Order No. 571–A, 69 FERC ¶ 61,411, at p.
31,254 (1994).
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Throughput in Barrels (line 11), and
Throughput in Barrel-Miles (line 12).
II. Discussion
5. The Commission proposes to
modify Page 700 to more easily enable
the calculation of a pipeline’s actual rate
of return on equity consistent with the
ratemaking principles embodied in
Opinion 154–B, et al. The actual rate of
return on equity reflects the relationship
between a pipeline’s revenues and its
cost of service. As a result, the actual
rate of return on equity is particularly
useful information when using Page 700
to evaluate whether a pipeline’s rates
are just and reasonable consistent with
the Commission’s mandate under the
ICA.
6. To provide the data necessary to
calculate the actual return on equity,
Page 700 must be modified to include
additional information related to rate
base, rate of return, return on rate base,
and income tax rates.
A. Rate Base
7. The Commission seeks to enhance
the information provided on Page 700
related to rate base, rate of return, and
return on rate base. The components of
an oil pipeline’s rate base are governed
by the Trended Original Cost
Methodology adopted by the
Commission in Opinion No. 154–B. 10
Under this methodology, a pipeline’s
Rate Base consists of (1) The Original
Cost Rate Base, (2) any unamortized
amounts from the oil pipeline’s Starting
Rate Base Write-Up (SRB),11 and (3)
Accumulated Net Deferred Earnings.12
8. Consistent with Opinion No. 154–
B, the Commission proposes to enhance
the Rate Base information provided on
line 5 of Page 700 by adding (1) Rate
Base¥Original Cost (proposed line 5a),
(2) Rate Base¥Unamortized Starting
10 See Williams Pipeline Co., Opinion No. 154–B,
31 FERC ¶ 61,377 (1985), order on reh’g, Opinion
No. 154–C, 33 FERC ¶ 61,327 (1985). Instruction
No. 2 of Page 700 of the FERC Form No. 6 requiring
the values ‘‘be computed consistent with the
Commission’s Opinion No. 154–B et al.
methodology * * *.’’
11 The Starting Rate Base Write-Up is a
transitional rate base element employed to bridge
the transition from a valuation ratemaking
methodology to the Trended Original Cost
methodology as adopted in Opinion 154–B. The
SRB was to be amortized over the estimated life of
the pipeline at the time the SRB was established.
12 The trended original cost methodology divides
the nominal return on equity component of the cost
of service into real return and an inflationary
return. The real return is collected in the current
year. The Net Deferred Earnings consists of the
inflation component, which is deferred to be
recovered in annual installments over the
remaining life of the pipeline. See Opinion No.
154–B, 31 FERC ¶ 61,377 (1985), order on reh’g,
Opinion No. 154–C, 33 FERC ¶ 61,327 (1985). See,
e.g., BP West Coast Prods., LLC v. FERC, 374 F.3d
1263, 1282–83 (D.C. Cir. 2004).
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59349
Rate Base Write-Up (proposed line 5b),
(3) Rate Base¥Accumulated Net
Deferred Earnings (proposed line 5c).
The sum of proposed lines 5a, 5b and
5c comprise the pipeline’s Trended
Original Cost Rate Base, which is
currently reported on line 5 of Page 700
and which the Commission proposes to
move to line 5d entitled Total Rate
Base¥Trended Original Cost¥(5a + 5b
+ 5c).
B. Rate of Return
9. The Commission proposes to
require oil pipelines to report the cost
of equity and cost of debt components
that constitute the overall Weighted
Cost of Capital currently reported as
‘‘Rate of Return’’ on line 6, Page 700.
Specifically, the Commission proposes
to include additional information
related to debt and equity capital
structure ratios, i.e. (1) Rate of
Return¥Adjusted Capital Structure
Ratio for Long Term Debt (proposed line
6a), (2) Rate of Return¥Adjusted
Capital Structure Ratio for Proprietary
Capital (proposed line 6b).13 The
Commission further proposes to add
information related to the cost of debt
and the cost of equity, specifically: (1)
Rate of Return¥Cost of Long Term Debt
Capital (proposed line 6c), (2) Rate of
Return¥Real Cost of Proprietary
Capital 14 (proposed line 6d). This
additional information forms the basis
for the Rate of Return¥Weighted
Average Cost of Capital (the total of 6a
* 6c + 6b * 6d), which is now reported
as ‘‘Rate of Return’’ on line 6 on Page
700 and which the Commission
proposes to move to line 6e.
C. Return on Rate Base
10. The Commission proposes to
require oil pipelines to report additional
information related to the Return on
Rate Base in line 7. The Return on Rate
Base currently reported on line 7
combines the pipeline’s return on equity
and the portion of the pipeline’s return
allocated to paying its cost of debt. The
13 The Adjusted Capital Structure Ratio adjusts
upward the level of equity in capital structure to
account for the treatment of Accumulated Deferred
Earnings under the Opinion 154–B Methodology.
Under the 154–B Methodology, a pipeline’s return
on the Original Cost and the SRB Write-Up is based
on a weighted average of the cost of debt and the
return on equity. However, a pipeline’s rate of
return on Accumulated Net Deferred Earnings is the
equivalent to the rate of return on equity (proposed
line 6d) and does not include a cost of debt
component. The upward adjustment to equity ratio
allows the pipeline to apply its weighted average
cost of capital consisting of debt and equity to one
rate base. ARCO Pipe Line Co., 53 FERC ¶ 61,398
at 62,388–89.
14 The real cost of capital excludes the
inflationary component of the nominal return that
is placed in Net Deferred Earnings pursuant to the
trended original cost methodology.
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Proposed Rules
Commission proposes to require the
pipeline to include on Page 700 the
Return on Rate Base¥Debt Component
(proposed line 7a) 15 and the Return on
Rate Base¥Equity Component
(proposed line 7b).16 The Commission
proposes to report on proposed on line
7c the Total Return on Rate Base¥(7a +
7b), which is the same information
currently reported on line 7.
D. Composite Tax Rate
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11. The Commission proposes to
modify the Page 700 to include the
Composite Tax Rate used to determine
the ‘‘Income Tax Allowance.’’ 17 Line 8
of the Page 700 currently requires each
pipeline to report the total dollar
amount attributable to the ‘‘Income Tax
Allowance’’ in its cost-of-service. The
Commission proposes to add a new line
8a which will require a pipeline to
report its ‘‘Composite Tax Rate
Percentage.’’
12. The Commission defines the
Composite Tax Rate Percentage as the
sum, adjusted consistent with
Commission policy, of (a) the applicable
state income tax rate and (b) a federal
income tax rate. As filed on Page 700,
the Composite Tax Rate Percentage
should reflect the income tax rate used
pursuant to Commission’s policies to
determine the Income Tax Allowance
reported on line 8.18
13. The Composite Tax Rate
Percentage will create a better
understanding of the differential
between a pipeline’s Total Interstate
Operating Revenues (line 10) and the
pipeline’s Total Cost of Service (line 9).
Specifically, the Composite Tax Rate
Percentage may be used to determine
the portion of this differential that is
attributable to income taxes under
Commission policy, and the portion that
may be treated as part of a pipeline’s
actual return on equity.
15 Return on Rate Base¥Debt Component will be
the equivalent of the weighted average cost of debt
(product of proposed lines 6a and 6c) multiplied by
the Trended Original Cost Rate Base (proposed line
5d).
16 Return on Rate Base¥Equity Component will
be the equivalent of the weighted average cost of
equity (product of proposed lines 6b and 6d)
multiplied by the Trended Original Cost Rate Base
(proposed line 5d).
17 The Commission’s income tax policy permits
‘‘an income tax allowance for all entities or
individuals owning public utility assets, provided
that entity or individual has an actual or potential
income tax liability to be paid on that income from
those assets.’’ Inquiry Regarding Income Tax
Allowances, 111 FERC ¶ 61,139 (2005).
18 For instance, the business structure for a large
number of oil pipelines is a Master Limited
Partnership (MLP). The income tax allowance for an
MLP pipeline is based upon the tax liability of the
owners.
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E. Calculation of Actual Rate of Return
on Equity
herein are sufficient for the goals we
have described above.
14. These modifications to Page 700
will provide information that may be
used to calculate a pipeline’s actual rate
of return on equity. The actual rate of
return on equity is determined by
dividing (a) the actual return on equity
by (b) the equity portion of Trended
Original Cost Rate Base reported on line
5d. The actual return on equity is the
sum of three components that can be
derived using the proposed
modifications to Page 700: (a) The
return on equity embedded in a
pipeline’s Page 700 Total Cost of Service
(proposed line 7b); (b) the difference,
adjusted for taxes, between a pipeline’s
Total Interstate Operating Revenues
(proposed Line 10) and a pipeline’s
Total Cost of Service (proposed Line
9); 19 and (c) the current year’s
contribution to Net Deferred Earnings,
which is calculated by multiplying the
equity portion of the Trended Original
Cost Rate Base (line 5d) by the current
year’s Department of Labor’s consumer
price index for all urban areas (CPI–
U).20
15. Once the actual return on equity
has been derived, it may be divided by
the equity portion of Trended Original
Cost Rate Base. The equity portion of
the Trended Original Cost Rate base
consists of the Trended Original Cost
Rate Base (proposed line 5d) multiplied
by the equity component of capital
structure (proposed line 6b).
16. These proposed modifications to
Page 700 will increase the usefulness of
Page 700. Prior to this proposal, any
attempt to estimate an oil pipeline’s
actual return on equity required
assumptions regarding several cost of
service components, including capital
structure (proposed lines 6a and 6b), the
composite income tax rate (proposed
line 8a), and the return on equity
embedded in a pipeline’s Page 700 cost
of service (proposed line 7b). The
Commission believes this additional
information will make Page 700 a more
useful tool for evaluating a pipeline’s
rates; however, it welcomes comments
as to whether the proposed changes
F. Conclusion
17. As discussed herein, the proposed
modifications will facilitate the
calculation of the actual rate of return
on equity based upon Page 700 data.
The actual rate of return on equity is
particularly useful information when
using Page 700 to evaluate a pipeline’s
rates. The additional information
proposed to be reported will impose
almost no additional burden on oil
pipelines because pipelines already
must develop cost of service supporting
calculations to determine the Income
Tax Allowance, Rate Base, Rate of
Return, and Return on Rate Base
reported on Page 700. Given these
existing requirements, the Commission
does not anticipate that these proposed
additions to Page 700 of Form 6 will
impose a significant burden on oil
pipelines.
19 The difference between the pipeline’s Total
Interstate Operating Revenues (Line 10) and Total
Cost of Service (proposed Line 9) provides the
pipeline’s earnings above its Total Cost of Service.
As described above, the Composite Tax Rate
Percentage may be used to determine the portion of
this differential that is attributable to income taxes
under Commission policy and the portion that may
be treated as part of a pipeline’s actual return on
equity.
20 As noted in footnote 16, the trended original
cost methodology divides the nominal return on
equity component of the cost of service into real
return and an inflationary return.
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G. Effective Date
18. The Commission proposes that the
changes to Form 6 are to be effective for
reporting in the 2013 Form 6. The 2013
Form 6 must be filed on or before April
18, 2014.21 The new schedule appearing
on Page 700 therefore would not be
required for Form 6 filings until April
18, 2014, for the reporting year ending
December 31, 2013.
III. Information Collection Statement
19. The Office of Management and
Budget (OMB) regulations require
approval of certain information
collection requirements imposed by
agency rules.22 Upon approval of a
collection(s) of information, OMB will
assign an OMB control number and an
expiration date. Respondents subject to
the filing requirements of an agency rule
will not be penalized for failing to
respond to these collections of
information unless the collections of
information display a valid OMB
control number. The Paperwork
Reduction Act (PRA) 23 requires each
federal agency to seek and obtain OMB
approval before undertaking a collection
of information directed to ten or more
persons or contained in a rule of general
applicability.24
20. The Commission is submitting
these reporting requirements to OMB for
its review and approval under section
21 18
CFR 357.1.
CFR 1320.
23 44 U.S.C. 3501–3520.
24 OMB’s regulations at 5 CFR 1320.3(c)(4)(i)
require that ‘‘Any recordkeeping, reporting, or
disclosure requirement contained in a rule of
general applicability is deemed to involve ten or
more persons.’’
22 5
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Proposed Rules
3507(d) of the PRA. Comments are
solicited on the Commission’s need for
this information, whether the
information will have practical utility,
the accuracy of provided burden
estimates, ways to enhance the quality,
utility, and clarity of the information to
be collected, and any suggested methods
for minimizing the respondent’s burden,
including the use of automated
information techniques.
21. The Commission’s estimate of the
additional Public Reporting Burden and
cost related to the proposed rule in
Docket RM12–18–000 follow.
59351
22. For the recurring effort involved
in filing the data on proposed lines 5a–
5c, 6a–6e, 7a–7c, and 8a of Page 700 for
2013 and future years, we estimate that
the change in burden is 0.5 hours per
year per respondent.
RM12–18–000, FERC Form 6
Annual
number of
fliers
Estimated
additional
burden per
filer
(Hr)
Total
estimated
additional
burden
(Hr)
Estimated
additional
cost per filer
($) 25
Total
estimated
additional
cost
($)
Filing new proposed lines on page 700 ..............................
166
0.5
88
$34.51
$3,036.88
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23. Information Collection Cost and
Burden: The Commission seeks
comments on the costs and burden to
comply with these requirements.
Title: FERC Form 6, Annual Report of
Oil Pipeline Companies.
Action: Proposed Revisions to the
FERC Form 6.
OMB Control No: 1902–0022.
Respondents: Oil pipelines.
Frequency of Responses: Annual.
Necessity of the Information: This
action ensures the availability of data
consistent with the Commission’s
obligation to regulate interstate oil and
petroleum product pipeline rates and
the intent of Page 700, to enable the
Commission and shippers to monitor
and analyze interstate pipeline costs.
Internal review: The Commission has
reviewed the proposed changes and has
determined that the changes are
necessary. These requirements conform
to the Commission’s need for efficient
and sufficient information collection,
communication, and management with
regard to the oil pipeline sector of the
energy industry. The Commission has,
by means of internal review, assured
itself that there is specific, objective
support for the burden estimates
associated with the information
collection requirements.
24. 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, email:
DataClearance@ferc.gov, Phone: (202)
502–8663, fax: (202) 273–0873].
Comments on the requirements of this
rule may also be sent to the Office of
25 Based on an estimated average cost per
employee for 2012 (including salary plus benefits)
of $143,540, the estimated average hourly cost per
employee is $69.01. The average work year is 2,080
hours.
26 Order No. 486, Regulations Implementing the
National Environmental Policy Act, 52 FR 47897
(Dec. 17, 1987), FERC Stats. & Regs. ¶ 30,783 (1987).
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Information and Regulatory Affairs,
Office of Management and Budget,
Washington, DC 20503 [Attention: Desk
Officer for the Federal Energy
Regulatory Commission]. For security
reasons, comments should be sent by
email to OMB at
oira_submission@omb.eop.gov. Please
reference OMB Control No. 1902–0022,
FERC–6 and the docket number of this
proposed rulemaking in your
submission.
IV. Environmental Analysis
25. 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.26 The actions taken here
fall within categorical exclusions in the
Commission’s regulations for
information gathering, analysis, and
dissemination.27 Therefore, an
environmental assessment is
unnecessary and has not been prepared
in this rulemaking.
V. Regulatory Flexibility Act
26. The Regulatory Flexibility Act of
1980 (RFA) generally requires agencies
to prepare certain statements,
descriptions, and analyses of proposed
rules that will have a significant
economic impact on a substantial
number of small business entities.28
Agencies are not required to make such
an analysis if a rule would not have
such an effect.
27. The Commission does not believe
that this proposed rule will have an
adverse impact on small entities, nor
will it impose upon them any
significant costs of compliance. The
27 18
CFR 380.4(a)(5).
U.S.C. 601–12.
29 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.
28 5
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Commission identified 29 small entities
as respondents to the requirements in
the proposed rule.29 As explained
above, the Commission estimates that
the change to Page 700 will increase the
paperwork burden of preparing Page
700 by approximately $34.51 per
respondent. The Commission does not
estimate that there are any other
regulatory burdens associated with this
proposed rule. Therefore the
Commission certifies that the proposed
rule will not have a significant impact
on a substantial number of small
entities. Accordingly, no regulatory
flexibility analysis is required.
VI. Comment Procedures
28. The Commission invites interested
persons to submit comments on the
matters and issues proposed in this
notice to be adopted, including any
related matters or alternative proposals
that commenters may wish to discuss.
Comments are due 60 days from
publication in the Federal Register.
Comments must refer to Docket No.
RM12–18–000, and must include the
commenter’s name, the organization
they represent, if applicable, and their
address in their comments.
29. The Commission encourages
comments to be filed electronically via
the eFiling link on the Commission’s
web site at https://www.ferc.gov. The
Commission accepts most standard
word processing formats. Documents
created electronically using word
processing software should be filed in
native applications or print-to-PDF
format and not in a scanned format.
Commenters filing electronically do not
need to make a paper filing.
15 U.S.C. 632. The Small Business Size Standards
component of the North American Industry
Classification System defines a small oil pipeline
company as one with less than 1,500 employees.
See 13 CFR parts 121, 201.
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Proposed Rules
30. Commenters that are not able to
file comments electronically must send
an original of their comments to:
Federal Energy Regulatory Commission,
Secretary of the Commission, 888 First
Street NE., Washington, DC 20426.
31. All comments will be placed in
the Commission’s public files and may
be viewed, printed, or downloaded
remotely as described in the Document
Availability section below. Commenters
on this proposal are not required to
serve copies of their comments on other
commenters.
VII. Document Availability
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32. 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 the
Commission’s Home Page (https://
www.ferc.gov) and in the Commission’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.
33. From the Commission’s Home
Page on the Internet, this information is
available on eLibrary. The full text of
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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.
34. User assistance is available for
eLibrary and the Commission’s Web site
during normal business hours from the
Commission’s Online Support at 202–
502–6652 (toll free at 1–866–208–3676)
or email at ferconlinesupport@ferc.gov,
or the Public Reference Room at (202)
502–8371, TTY (202) 502–8659. Email
the Public Reference Room at
public.referenceroom@ferc.gov.
By direction of the Commission.
Kimberly D. Bose,
Secretary.
Appendix A—Summary of Proposed
Changes to FERC Form 6, Page 700
Line 5a is added to read as follows:
Rate Base¥Original Cost
Line 5b is added to read as follows:
Rate Base¥Unamortized Starting Rate Base
Write-Up
Line 5c is added to read as follows:
Rate Base¥Accumulated Net Deferred
Earnings
PO 00000
Frm 00008
Fmt 4702
Sfmt 4702
Line 5d is added to read as follows:
Total Rate Base¥Trended Original Cost¥(5a
+ 5b + 5c)
Line 6a is added to read as follows:
Rate of Return¥Adjusted Capital Structure
Ratio for Long Term Debt
Line 6b is added to read as follows:
Rate of Return¥Adjusted Capital Structure
Ratio for Proprietary Capital
Line 6c is added to read as follows:
Rate of Return¥Cost of Long Term Debt
Capital
Line 6d is added to read as follows:
Rate of Return¥Real Cost of Proprietary
Capital
Line 6e is added to read as follows:
Rate of Return¥Weighted Average Cost of
Capital¥(6a × 6c + 6b × 6d)
Line 7a is added to read as follows:
Return on Rate Base¥Debt Component
Line 7b is added to read as follows:
Return on Rate Base¥Equity Component
Line 7c is added to read as follows:
Total Return on Rate Base¥(7a + 7b)
Line 8a is added to read as follows:
Composite Tax Rate % (37.50%–37.50)
Note: Appendix B will not be published in
the Code of Federal Regulations
BILLING CODE 6717–01–P
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Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Proposed Rules
59354
Federal Register / Vol. 77, No. 188 / Thursday, September 27, 2012 / Proposed Rules
[FR Doc. 2012–23807 Filed 9–26–12; 8:45 am]
BILLING CODE 6717–01–C
DEPARTMENT OF VETERANS
AFFAIRS
38 CFR Part 51
RIN 2900–AO37
Removal of 30-Day Residency
Requirement for Per Diem Payments
Department of Veterans Affairs.
Proposed rule.
AGENCY:
ACTION:
The Department of Veterans
Affairs (VA) is proposing to amend its
regulations concerning per diem
payments to State homes for the
provision of nursing home care to
veterans. Specifically, this rule would
remove the requirement that a veteran
must have resided in a State home for
30 consecutive days before VA will pay
per diem for that veteran when there is
no overnight stay. The intended effect of
this proposed rule is to permit per diem
payments to State homes for veterans
who do not stay overnight, regardless of
how long the veterans have resided at
the State homes, so that the State homes
will hold the veterans’ beds until the
veterans return.
DATES: Written comments must be
received on or before October 29, 2012.
ADDRESSES: Written comments may be
submitted through https://
www.regulations.gov; by mail or hand
delivery to the Director, Regulation
Policy and Management (02REG),
Department of Veterans Affairs, 810
Vermont Ave., NW., Room 1068,
Washington, DC 20420; or by fax to
(202) 273–9026. Comments should
indicate that they are submitted in
response to ‘‘RIN 2900–AO37, Removal
of 30-Day Residency Requirement for
Per Diem Payments.’’ Copies of
comments received will be available for
public inspection in the Office of
Regulation Policy and Management,
Room 1063B, between the hours of 8
a.m. and 4:30 p.m., Monday through
Friday (except holidays). Please call
(202) 461–4902 for an appointment.
(This is not a toll-free number.) In
addition, during the comment period,
comments may be viewed online
through the Federal Docket Management
System at https://www.regulations.gov.
FOR FURTHER INFORMATION CONTACT:
Harold Bailey, Program Management
Officer (Director of Administration), VA
Health Administration Center,
Purchased Care (10NB3), Veterans
Health Administration, Department of
Veterans Affairs, 810 Vermont Ave.,
erowe on DSK2VPTVN1PROD with
SUMMARY:
VerDate Mar<15>2010
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NW., Washington, DC 20420, (303) 331–
7551. (This is not a toll-free number.)
SUPPLEMENTARY INFORMATION: This
proposed rule would amend part 51 of
title 38, Code of Federal Regulations
(CFR), to remove the requirement that a
veteran receiving nursing home care in
a State home must have resided in the
State home for at least 30 consecutive
days before VA would pay per diem
when that veteran does not stay in the
State home overnight. VA pays per diem
to State homes for veterans who stay
elsewhere overnight to create a ‘‘bed
hold,’’ so that the State home reserves
the veteran’s bed until the veteran
returns from a temporary absence.
Typically, these temporary absences
arise from a veteran’s acute need for a
higher level of care, such as a period of
hospitalization. Temporary absences
also arise for reasons other than hospital
care, such as when a veteran travels to
visit family members.
This proposed rule would also clarify
in 38 CFR 51.43 that VA calculates
occupancy rate ‘‘by dividing the total
number of patients in the nursing home
or domiciliary by the total recognized
nursing home or domiciliary beds in
that facility.’’ This would be consistent
with current practice, and would help
ensure that State homes understand our
methodology.
The 30-day residency requirement for
bed hold per diem payments was
established in 2009 in 38 CFR 51.43(c),
which stated: ‘‘Per diem will be paid
under §§ 51.40 and 51.41 for each day
that the veteran is receiving care and
has an overnight stay. Per diem also will
be paid when there is no overnight stay
if the veteran has resided in the facility
for 30 consecutive days (including
overnight stays) and the facility has an
occupancy rate of 90 percent or greater.
However, these payments will be made
only for the first 10 consecutive days
during which the veteran is admitted as
a patient for any stay in a VA or other
hospital (a hospital stay could occur
more than once in a calendar year) and
only for the first 12 days in a calendar
year during which the veteran is absent
for purposes other than receiving
hospital care.’’ See 74 FR 19433.
In the proposed rule that preceded the
addition of § 51.43, we stated that the
basis for the 30-day residency
requirement was that ‘‘State homes
should receive per diem payments to
hold beds only for permanent residents
and only if the State home would likely
fill the bed without such payments.
Allowing payments for bed holds only
after a veteran has been in a nursing
home for at least 30 consecutive days
(including overnight stays) appears to be
PO 00000
Frm 00010
Fmt 4702
Sfmt 4702
sufficient to establish permanent
residency.’’ 73 FR 72402. In addition,
the 2009 final rule confirmed VA’s
intent to make the 30-day rule a factor
that directly affected eligibility for bed
hold payments, stating: ‘‘We believe that
30 days is a minimal amount of time for
demonstrating that a veteran intends to
be a resident at the State home and that
the veteran was not temporarily placed
in the State home.’’ 74 FR 19429.
VA adopted the 30-day residency
requirement as the measure for
determining whether a veteran would
likely return to a State home after not
having stayed there overnight, and in
turn whether the State home should
receive continued per diem payments in
the veteran’s absence to hold the
veteran’s bed. Through application of
this requirement, however, VA has
come to recognize that duration of
residency in a State home is not an
accurate predictor of whether a veteran
is likely to return to a State home after
a temporary absence. For instance, with
absences resulting from the veteran’s
need for hospital care, the veteran’s
health status while hospitalized is
actually what determines whether and
when he or she will return to a nursing
home level of care at the State home.
With absences resulting from nonhospital care reasons, the veteran in
almost all instances communicates an
intent to return to the State home within
a specific period of time, or
communicates that he or she will not be
returning. With both types of absences,
we no longer find that a veteran’s period
of residency at a State home is
determinative as to whether the veteran
will likely return to the State home.
Therefore, we believe the 30-day
residency requirement is unnecessary in
ensuring standards of bed hold per diem
payments, and propose to remove this
requirement from 38 CFR 51.43(c).
Based on our experience in applying
§ 51.43(c) since 2009, we believe our
determination of whether to pay bed
hold per diem for veterans who are
absent overnight from State homes
should be based on whether the
veteran’s bed would otherwise be taken
by another resident. The best predictor
of whether a veteran’s bed is likely to
be taken by another resident during the
veteran’s absence is the State home’s
occupancy rate, not the length of time
the veteran has resided in the State
home. If a State home has sufficient
beds to offer new residents so that it
need not fill the veteran’s bed during
the veteran’s absence, then per diem
payments to hold the veteran’s bed are
not needed. If the State home does not
have a sufficient number of available
beds, then per diem payments should be
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]]>Agencies
[Federal Register Volume 77, Number 188 (Thursday, September 27, 2012)]
[Proposed Rules]
[Pages 59348-59354]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-23807]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 357
[Docket No. RM12-18-000]
Revisions to Page 700 of FERC Form No. 6
AGENCY: Federal Energy Regulatory Commission, DOE.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes
to modify Page 700 of FERC Form No. 6 (Form 6) to facilitate the
calculation of a pipeline's actual return on equity. The Commission
proposes to expand the information provided regarding rate base (line
5), rate of return (line 6), return on rate base (line 7), and income
tax allowance (line 8).
DATES: Comments are due November 26, 2012.
ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
Electronic Filing through: https://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format.
Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document
FOR FURTHER INFORMATION CONTACT:
James Sarikas (Technical Information), Office of Energy Market
Regulation, 888 First Street NE., Washington, DC 20426, (202) 502-6831,
James.Sarikas@ferc.gov.
Brian Holmes (Technical Information), Office of Enforcement, 888 First
Street NE., Washington, DC 20426, (202) 502-6008,
Brian.Holmes@ferc.gov.
Andrew Knudsen (Legal Information), Office of the General Counsel, 888
First Street NE., Washington, DC 20426, (202) 502-6527,
Andrew.Knudsen@ferc.gov.
SUPPLEMENTARY INFORMATION:
Table of Contents
Paragraph
Nos.
I. Background............................................... 2
II. Discussion.............................................. 6
A. Rate Base............................................ 9
B. Rate of Return....................................... 11
C. Composite Tax Return................................. 13
III. Information Collection Statement....................... 19
IV. Environmental Analysis.................................. 25
V. Regulatory Flexibility Act [Analysis or Certification]... 26
VI. Comment Procedures...................................... 27
VII. Document Availability.................................. 31
(Issued September 20, 2012)
1. The Federal Energy Regulatory Commission (Commission) proposes
to modify the reporting requirements on Page 700, Annual Cost of
Service Based Analysis Schedule, of FERC Form No. 6, Annual Report of
Oil Pipeline Companies (Form 6), to facilitate the calculation of a
pipeline's actual rate of return on equity based upon Page 700 data.
The modifications to Page 700 include requiring additional information
regarding rate base, rate of return, return on rate base, and income
taxes.\1\
---------------------------------------------------------------------------
\1\ Concurrent with the issuance of this NOPR, the Commission is
issuing a final rule in Docket No. RM11-21-000, Revision to Form No.
6.
---------------------------------------------------------------------------
[[Page 59349]]
I. Background
2. The Commission is responsible for regulating the rates, terms
and conditions that oil pipelines charge for transportation under the
Interstate Commerce Act (ICA).\2\ The ICA prohibits pipelines from
charging rates that are ``unjust and unreasonable'' and permits
shippers and the Commission to challenge both pre-existing and newly
filed rates.\3\
---------------------------------------------------------------------------
\2\ 49 U.S.C. 1, et seq.
\3\ 49 U.S.C. 13(1), 15(1), (7). Just and reasonable rate are
``rates yielding sufficient revenue to cover all proper costs,
including federal income taxes, plus a specified return on invested
capital.'' City of Charlottesville v. FERC, 774 F.2d 1205, 1207
(D.C. Cir. 1985).
---------------------------------------------------------------------------
3. To assist the Commission in the administration of its
jurisdictional responsibilities, the ICA authorizes the Commission to
prescribe annual or other periodic reports.\4\ Through Form 6, the
Commission collects annual financial information from crude and refined
product pipelines \5\ subject to the Commission's jurisdiction, as
prescribed in section 357.2 of the Commission's regulations.\6\ Form 6
``is intended to be both a financial and ratemaking document.'' \7\
---------------------------------------------------------------------------
\4\ 49 App. U.S.C. 1-85 (2000).
\5\ Hereafter, the term ``oil pipeline'' shall include both
crude and refined product pipelines.
\6\ 18 CFR 357.2 (2012).
\7\ Revisions to and Electronic Filing of the FERC Form No. 6
and Related Uniform Systems of Accounts, Order No. 620, FERC Stats.
& Regs., Regulation Preambles July 1996-December 2000 ] 31,115, at
p. 31,954 (2000) (citing Cost of Service Requirements and Filing
Requirements for Oil Pipelines, Order No. 571, FERC Stats. & Regs.,
Regulation Preambles Jan. 1991-June 1996 ] 31,006, at p. 31,169
(1995) and Form 6, p. I, Roman Numeral 1; on reh'g, Order No. 620-A,
94 FERC 61,130 (2001); order on reh'g, Order No. 620-A, 94 FERC ]
61,130 (2001)).
---------------------------------------------------------------------------
4. Page 700 of Form 6 provides a simplified presentation of an oil
pipeline's jurisdictional cost-of-service. Page 700 serves as a
preliminary screening tool to evaluate pipeline rates.\8\ However,
``Page 700 information alone is not intended to show what a just and
reasonable rate should be.'' \9\ Currently, pipelines are required to
provide the following on Page 700: Operating and Maintenance Expenses
(line 1), Depreciation Expense (line 2), AFUDC Depreciation (line 3),
Amortization of Deferred Earnings (line 4), Rate Base (line 5), Rate of
Return (line 6), Return on Rate Base (line 7), Income Tax Allowance
(line 8), Total Cost of Service (line 9), Total Interstate Operating
Revenues (line 10), Throughput in Barrels (line 11), and Throughput in
Barrel-Miles (line 12).
---------------------------------------------------------------------------
\8\ All jurisdictional pipelines are required to file page 700,
including pipelines exempt from filing the full Form 6. 18 CFR
357.2(a)(2) and (a)(3) (2012).
\9\ Order No. 571-A, 69 FERC ] 61,411, at p. 31,254 (1994).
---------------------------------------------------------------------------
II. Discussion
5. The Commission proposes to modify Page 700 to more easily enable
the calculation of a pipeline's actual rate of return on equity
consistent with the ratemaking principles embodied in Opinion 154-B, et
al. The actual rate of return on equity reflects the relationship
between a pipeline's revenues and its cost of service. As a result, the
actual rate of return on equity is particularly useful information when
using Page 700 to evaluate whether a pipeline's rates are just and
reasonable consistent with the Commission's mandate under the ICA.
6. To provide the data necessary to calculate the actual return on
equity, Page 700 must be modified to include additional information
related to rate base, rate of return, return on rate base, and income
tax rates.
A. Rate Base
7. The Commission seeks to enhance the information provided on Page
700 related to rate base, rate of return, and return on rate base. The
components of an oil pipeline's rate base are governed by the Trended
Original Cost Methodology adopted by the Commission in Opinion No. 154-
B. \10\ Under this methodology, a pipeline's Rate Base consists of (1)
The Original Cost Rate Base, (2) any unamortized amounts from the oil
pipeline's Starting Rate Base Write-Up (SRB),\11\ and (3) Accumulated
Net Deferred Earnings.\12\
---------------------------------------------------------------------------
\10\ See Williams Pipeline Co., Opinion No. 154-B, 31 FERC ]
61,377 (1985), order on reh'g, Opinion No. 154-C, 33 FERC ] 61,327
(1985). Instruction No. 2 of Page 700 of the FERC Form No. 6
requiring the values ``be computed consistent with the Commission's
Opinion No. 154-B et al. methodology * * *.''
\11\ The Starting Rate Base Write-Up is a transitional rate base
element employed to bridge the transition from a valuation
ratemaking methodology to the Trended Original Cost methodology as
adopted in Opinion 154-B. The SRB was to be amortized over the
estimated life of the pipeline at the time the SRB was established.
\12\ The trended original cost methodology divides the nominal
return on equity component of the cost of service into real return
and an inflationary return. The real return is collected in the
current year. The Net Deferred Earnings consists of the inflation
component, which is deferred to be recovered in annual installments
over the remaining life of the pipeline. See Opinion No. 154-B, 31
FERC ] 61,377 (1985), order on reh'g, Opinion No. 154-C, 33 FERC ]
61,327 (1985). See, e.g., BP West Coast Prods., LLC v. FERC, 374
F.3d 1263, 1282-83 (D.C. Cir. 2004).
---------------------------------------------------------------------------
8. Consistent with Opinion No. 154-B, the Commission proposes to
enhance the Rate Base information provided on line 5 of Page 700 by
adding (1) Rate Base-Original Cost (proposed line 5a), (2) Rate Base-
Unamortized Starting Rate Base Write-Up (proposed line 5b), (3) Rate
Base-Accumulated Net Deferred Earnings (proposed line 5c). The sum of
proposed lines 5a, 5b and 5c comprise the pipeline's Trended Original
Cost Rate Base, which is currently reported on line 5 of Page 700 and
which the Commission proposes to move to line 5d entitled Total Rate
Base-Trended Original Cost-(5a + 5b + 5c).
B. Rate of Return
9. The Commission proposes to require oil pipelines to report the
cost of equity and cost of debt components that constitute the overall
Weighted Cost of Capital currently reported as ``Rate of Return'' on
line 6, Page 700. Specifically, the Commission proposes to include
additional information related to debt and equity capital structure
ratios, i.e. (1) Rate of Return-Adjusted Capital Structure Ratio for
Long Term Debt (proposed line 6a), (2) Rate of Return-Adjusted Capital
Structure Ratio for Proprietary Capital (proposed line 6b).\13\ The
Commission further proposes to add information related to the cost of
debt and the cost of equity, specifically: (1) Rate of Return-Cost of
Long Term Debt Capital (proposed line 6c), (2) Rate of Return-Real Cost
of Proprietary Capital \14\ (proposed line 6d). This additional
information forms the basis for the Rate of Return-Weighted Average
Cost of Capital (the total of 6a * 6c + 6b * 6d), which is now reported
as ``Rate of Return'' on line 6 on Page 700 and which the Commission
proposes to move to line 6e.
---------------------------------------------------------------------------
\13\ The Adjusted Capital Structure Ratio adjusts upward the
level of equity in capital structure to account for the treatment of
Accumulated Deferred Earnings under the Opinion 154-B Methodology.
Under the 154-B Methodology, a pipeline's return on the Original
Cost and the SRB Write-Up is based on a weighted average of the cost
of debt and the return on equity. However, a pipeline's rate of
return on Accumulated Net Deferred Earnings is the equivalent to the
rate of return on equity (proposed line 6d) and does not include a
cost of debt component. The upward adjustment to equity ratio allows
the pipeline to apply its weighted average cost of capital
consisting of debt and equity to one rate base. ARCO Pipe Line Co.,
53 FERC ] 61,398 at 62,388-89.
\14\ The real cost of capital excludes the inflationary
component of the nominal return that is placed in Net Deferred
Earnings pursuant to the trended original cost methodology.
---------------------------------------------------------------------------
C. Return on Rate Base
10. The Commission proposes to require oil pipelines to report
additional information related to the Return on Rate Base in line 7.
The Return on Rate Base currently reported on line 7 combines the
pipeline's return on equity and the portion of the pipeline's return
allocated to paying its cost of debt. The
[[Page 59350]]
Commission proposes to require the pipeline to include on Page 700 the
Return on Rate Base-Debt Component (proposed line 7a) \15\ and the
Return on Rate Base-Equity Component (proposed line 7b).\16\ The
Commission proposes to report on proposed on line 7c the Total Return
on Rate Base-(7a + 7b), which is the same information currently
reported on line 7.
---------------------------------------------------------------------------
\15\ Return on Rate Base-Debt Component will be the equivalent
of the weighted average cost of debt (product of proposed lines 6a
and 6c) multiplied by the Trended Original Cost Rate Base (proposed
line 5d).
\16\ Return on Rate Base-Equity Component will be the equivalent
of the weighted average cost of equity (product of proposed lines 6b
and 6d) multiplied by the Trended Original Cost Rate Base (proposed
line 5d).
---------------------------------------------------------------------------
D. Composite Tax Rate
11. The Commission proposes to modify the Page 700 to include the
Composite Tax Rate used to determine the ``Income Tax Allowance.'' \17\
Line 8 of the Page 700 currently requires each pipeline to report the
total dollar amount attributable to the ``Income Tax Allowance'' in its
cost-of-service. The Commission proposes to add a new line 8a which
will require a pipeline to report its ``Composite Tax Rate
Percentage.''
---------------------------------------------------------------------------
\17\ The Commission's income tax policy permits ``an income tax
allowance for all entities or individuals owning public utility
assets, provided that entity or individual has an actual or
potential income tax liability to be paid on that income from those
assets.'' Inquiry Regarding Income Tax Allowances, 111 FERC ] 61,139
(2005).
---------------------------------------------------------------------------
12. The Commission defines the Composite Tax Rate Percentage as the
sum, adjusted consistent with Commission policy, of (a) the applicable
state income tax rate and (b) a federal income tax rate. As filed on
Page 700, the Composite Tax Rate Percentage should reflect the income
tax rate used pursuant to Commission's policies to determine the Income
Tax Allowance reported on line 8.\18\
---------------------------------------------------------------------------
\18\ For instance, the business structure for a large number of
oil pipelines is a Master Limited Partnership (MLP). The income tax
allowance for an MLP pipeline is based upon the tax liability of the
owners.
---------------------------------------------------------------------------
13. The Composite Tax Rate Percentage will create a better
understanding of the differential between a pipeline's Total Interstate
Operating Revenues (line 10) and the pipeline's Total Cost of Service
(line 9). Specifically, the Composite Tax Rate Percentage may be used
to determine the portion of this differential that is attributable to
income taxes under Commission policy, and the portion that may be
treated as part of a pipeline's actual return on equity.
E. Calculation of Actual Rate of Return on Equity
14. These modifications to Page 700 will provide information that
may be used to calculate a pipeline's actual rate of return on equity.
The actual rate of return on equity is determined by dividing (a) the
actual return on equity by (b) the equity portion of Trended Original
Cost Rate Base reported on line 5d. The actual return on equity is the
sum of three components that can be derived using the proposed
modifications to Page 700: (a) The return on equity embedded in a
pipeline's Page 700 Total Cost of Service (proposed line 7b); (b) the
difference, adjusted for taxes, between a pipeline's Total Interstate
Operating Revenues (proposed Line 10) and a pipeline's Total Cost of
Service (proposed Line 9); \19\ and (c) the current year's contribution
to Net Deferred Earnings, which is calculated by multiplying the equity
portion of the Trended Original Cost Rate Base (line 5d) by the current
year's Department of Labor's consumer price index for all urban areas
(CPI-U).\20\
---------------------------------------------------------------------------
\19\ The difference between the pipeline's Total Interstate
Operating Revenues (Line 10) and Total Cost of Service (proposed
Line 9) provides the pipeline's earnings above its Total Cost of
Service. As described above, the Composite Tax Rate Percentage may
be used to determine the portion of this differential that is
attributable to income taxes under Commission policy and the portion
that may be treated as part of a pipeline's actual return on equity.
\20\ As noted in footnote 16, the trended original cost
methodology divides the nominal return on equity component of the
cost of service into real return and an inflationary return.
---------------------------------------------------------------------------
15. Once the actual return on equity has been derived, it may be
divided by the equity portion of Trended Original Cost Rate Base. The
equity portion of the Trended Original Cost Rate base consists of the
Trended Original Cost Rate Base (proposed line 5d) multiplied by the
equity component of capital structure (proposed line 6b).
16. These proposed modifications to Page 700 will increase the
usefulness of Page 700. Prior to this proposal, any attempt to estimate
an oil pipeline's actual return on equity required assumptions
regarding several cost of service components, including capital
structure (proposed lines 6a and 6b), the composite income tax rate
(proposed line 8a), and the return on equity embedded in a pipeline's
Page 700 cost of service (proposed line 7b). The Commission believes
this additional information will make Page 700 a more useful tool for
evaluating a pipeline's rates; however, it welcomes comments as to
whether the proposed changes herein are sufficient for the goals we
have described above.
F. Conclusion
17. As discussed herein, the proposed modifications will facilitate
the calculation of the actual rate of return on equity based upon Page
700 data. The actual rate of return on equity is particularly useful
information when using Page 700 to evaluate a pipeline's rates. The
additional information proposed to be reported will impose almost no
additional burden on oil pipelines because pipelines already must
develop cost of service supporting calculations to determine the Income
Tax Allowance, Rate Base, Rate of Return, and Return on Rate Base
reported on Page 700. Given these existing requirements, the Commission
does not anticipate that these proposed additions to Page 700 of Form 6
will impose a significant burden on oil pipelines.
G. Effective Date
18. The Commission proposes that the changes to Form 6 are to be
effective for reporting in the 2013 Form 6. The 2013 Form 6 must be
filed on or before April 18, 2014.\21\ The new schedule appearing on
Page 700 therefore would not be required for Form 6 filings until April
18, 2014, for the reporting year ending December 31, 2013.
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\21\ 18 CFR 357.1.
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III. Information Collection Statement
19. The Office of Management and Budget (OMB) regulations require
approval of certain information collection requirements imposed by
agency rules.\22\ Upon approval of a collection(s) of information, OMB
will assign an OMB control number and an expiration date. Respondents
subject to the filing requirements of an agency rule will not be
penalized for failing to respond to these collections of information
unless the collections of information display a valid OMB control
number. The Paperwork Reduction Act (PRA) \23\ requires each federal
agency to seek and obtain OMB approval before undertaking a collection
of information directed to ten or more persons or contained in a rule
of general applicability.\24\
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\22\ 5 CFR 1320.
\23\ 44 U.S.C. 3501-3520.
\24\ OMB's regulations at 5 CFR 1320.3(c)(4)(i) require that
``Any recordkeeping, reporting, or disclosure requirement contained
in a rule of general applicability is deemed to involve ten or more
persons.''
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20. The Commission is submitting these reporting requirements to
OMB for its review and approval under section
[[Page 59351]]
3507(d) of the PRA. Comments are solicited on the Commission's need for
this information, whether the information will have practical utility,
the accuracy of provided burden estimates, ways to enhance the quality,
utility, and clarity of the information to be collected, and any
suggested methods for minimizing the respondent's burden, including the
use of automated information techniques.
21. The Commission's estimate of the additional Public Reporting
Burden and cost related to the proposed rule in Docket RM12-18-000
follow.
22. For the recurring effort involved in filing the data on
proposed lines 5a-5c, 6a-6e, 7a-7c, and 8a of Page 700 for 2013 and
future years, we estimate that the change in burden is 0.5 hours per
year per respondent.
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\25\ Based on an estimated average cost per employee for 2012
(including salary plus benefits) of $143,540, the estimated average
hourly cost per employee is $69.01. The average work year is 2,080
hours.
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Estimated Estimated
Annual number additional Total estimated additional cost Total estimated
RM12-18-000, FERC Form 6 of fliers burden per additional per filer ($) additional cost
filer (Hr) burden (Hr) \25\ ($)
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Filing new proposed lines on page 700.............................. 166 0.5 88 $34.51 $3,036.88
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23. Information Collection Cost and Burden: The Commission seeks
comments on the costs and burden to comply with these requirements.
Title: FERC Form 6, Annual Report of Oil Pipeline Companies.
Action: Proposed Revisions to the FERC Form 6.
OMB Control No: 1902-0022.
Respondents: Oil pipelines.
Frequency of Responses: Annual.
Necessity of the Information: This action ensures the availability
of data consistent with the Commission's obligation to regulate
interstate oil and petroleum product pipeline rates and the intent of
Page 700, to enable the Commission and shippers to monitor and analyze
interstate pipeline costs.
Internal review: The Commission has reviewed the proposed changes
and has determined that the changes are necessary. These requirements
conform to the Commission's need for efficient and sufficient
information collection, communication, and management with regard to
the oil pipeline sector of the energy industry. The Commission has, by
means of internal review, assured itself that there is specific,
objective support for the burden estimates associated with the
information collection requirements.
24. 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, email: DataClearance@ferc.gov, Phone: (202)
502-8663, fax: (202) 273-0873]. Comments on the requirements of this
rule may also be sent to the Office of Information and Regulatory
Affairs, Office of Management and Budget, Washington, DC 20503
[Attention: Desk Officer for the Federal Energy Regulatory Commission].
For security reasons, comments should be sent by email to OMB at oira_submission@omb.eop.gov. Please reference OMB Control No. 1902-0022,
FERC-6 and the docket number of this proposed rulemaking in your
submission.
IV. Environmental Analysis
25. 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.\26\ The
actions taken here fall within categorical exclusions in the
Commission's regulations for information gathering, analysis, and
dissemination.\27\ Therefore, an environmental assessment is
unnecessary and has not been prepared in this rulemaking.
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\26\ Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs. ] 30,783 (1987).
\27\ 18 CFR 380.4(a)(5).
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V. Regulatory Flexibility Act
26. The Regulatory Flexibility Act of 1980 (RFA) generally requires
agencies to prepare certain statements, descriptions, and analyses of
proposed rules that will have a significant economic impact on a
substantial number of small business entities.\28\ Agencies are not
required to make such an analysis if a rule would not have such an
effect.
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\28\ 5 U.S.C. 601-12.
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27. The Commission does not believe that this proposed rule will
have an adverse impact on small entities, nor will it impose upon them
any significant costs of compliance. The Commission identified 29 small
entities as respondents to the requirements in the proposed rule.\29\
As explained above, the Commission estimates that the change to Page
700 will increase the paperwork burden of preparing Page 700 by
approximately $34.51 per respondent. The Commission does not estimate
that there are any other regulatory burdens associated with this
proposed rule. Therefore the Commission certifies that the proposed
rule will not have a significant impact on a substantial number of
small entities. Accordingly, no regulatory flexibility analysis is
required.
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\29\ 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 Classification System defines a small oil pipeline
company as one with less than 1,500 employees. See 13 CFR parts 121,
201.
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VI. Comment Procedures
28. The Commission invites interested persons to submit comments on
the matters and issues proposed in this notice to be adopted, including
any related matters or alternative proposals that commenters may wish
to discuss. Comments are due 60 days from publication in the Federal
Register. Comments must refer to Docket No. RM12-18-000, and must
include the commenter's name, the organization they represent, if
applicable, and their address in their comments.
29. The Commission encourages comments to be filed electronically
via the eFiling link on the Commission's web site at https://www.ferc.gov. The Commission accepts most standard word processing
formats. Documents created electronically using word processing
software should be filed in native applications or print-to-PDF format
and not in a scanned format. Commenters filing electronically do not
need to make a paper filing.
[[Page 59352]]
30. Commenters that are not able to file comments electronically
must send an original of their comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
31. All comments will be placed in the Commission's public files
and may be viewed, printed, or downloaded remotely as described in the
Document Availability section below. Commenters on this proposal are
not required to serve copies of their comments on other commenters.
VII. Document Availability
32. 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 the Commission's Home Page (https://www.ferc.gov) and
in the Commission'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.
33. From the Commission'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.
34. User assistance is available for eLibrary and the Commission's
Web site during normal business hours from the Commission's Online
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at
public.referenceroom@ferc.gov.
By direction of the Commission.
Kimberly D. Bose,
Secretary.
Appendix A--Summary of Proposed Changes to FERC Form 6, Page 700
Line 5a is added to read as follows:
Rate Base-Original Cost
Line 5b is added to read as follows:
Rate Base-Unamortized Starting Rate Base Write-Up
Line 5c is added to read as follows:
Rate Base-Accumulated Net Deferred Earnings
Line 5d is added to read as follows:
Total Rate Base-Trended Original Cost-(5a + 5b + 5c)
Line 6a is added to read as follows:
Rate of Return-Adjusted Capital Structure Ratio for Long Term Debt
Line 6b is added to read as follows:
Rate of Return-Adjusted Capital Structure Ratio for Proprietary
Capital
Line 6c is added to read as follows:
Rate of Return-Cost of Long Term Debt Capital
Line 6d is added to read as follows:
Rate of Return-Real Cost of Proprietary Capital
Line 6e is added to read as follows:
Rate of Return-Weighted Average Cost of Capital-(6a x 6c + 6b x 6d)
Line 7a is added to read as follows:
Return on Rate Base-Debt Component
Line 7b is added to read as follows:
Return on Rate Base-Equity Component
Line 7c is added to read as follows:
Total Return on Rate Base-(7a + 7b)
Line 8a is added to read as follows:
Composite Tax Rate % (37.50%-37.50)
Note: Appendix B will not be published in the Code of Federal
Regulations
BILLING CODE 6717-01-P
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[GRAPHIC] [TIFF OMITTED] TP27SE12.003
[[Page 59354]]
[FR Doc. 2012-23807 Filed 9-26-12; 8:45 am]
BILLING CODE 6717-01-C
