165 FERC ¶ 61,253

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;

 Cheryl A. LaFleur, Richard Glick,

and Bernard L. McNamee.

Southeast Supply Header, LLC Docket Nos. RP19-266-000

RP19-267-000

ORDER ON RATE REDUCTION FILING AND FERC FORM NO. 501-G

(Issued December 20, 2018)

On November 8, 2018, in Docket No. RP19-267-000, Southeast Supply Header, 

LLC (SESH) filed revised tariff records1 pursuant to section 4 of the Natural Gas Act 

(NGA) to implement a rate reduction consistent with section 154.404 of the 

Commission’s regulations.2

 The Commission accepts SESH’s revised tariff records 

effective January 1, 2019, as proposed.

 1 Southeast Supply Header, LLC, FERC NGA Gas Tariff, SESH Database 1, 1., 

Statement of Transportation Rates, 1.0.0; and 2., Statement of Capacity Release Rates, 

1.0.0.

2 18 C.F.R. § 154.404(a) (2018), which provides:

Purpose. The limited rate filing permitted by this section is 

intended to permit:

(1) a natural gas company subject to the federal corporate 

income tax to reduce its maximum rates to reflect the 

decrease in the federal corporate income tax rate pursuant to 

the Tax Cuts and Jobs Act of 2017, and

(2) a natural gas company organized as a pass-through entity 

either (i) to eliminate any income tax allowance and 

accumulated deferred income taxes reflected in its current 

rates or (ii) to reduce its maximum rates to reflect the 

decrease in the federal income tax rates applicable to partners 

pursuant to the Tax Cuts and Jobs Act of 2017.
Docket Nos. RP19-266-000 and RP19-267-000 - 2 -

I. Background and Proposal 

On July 18, 2018, the Commission issued Order No. 849,

3 a final rule adopting 

procedures for determining which jurisdictional natural gas pipelines may be collecting 

unjust and unreasonable rates in light of (1) the income tax reductions provided by the 

Tax Cuts and Jobs Act

4 and (2) the Commission’s Revised Policy Statement5 and 

Opinion No. 511-C6 establishing a policy that master limited partnerships (MLPs) may 

not recover an income tax allowance in response to the decision of the United States 

Court of Appeals for the District of Columbia Circuit (D.C. Circuit) in United Airlines.

7

 

Order No. 849 required, pursuant to sections 10 and 14(a) of the NGA, that all interstate 

natural gas companies, with cost-based stated rates, that filed a 2017 FERC Form No. 2 

or 2-A, must file a FERC Form No. 501-G informational filing.8

 The FERC Form 

No. 501-G is designed to collect financial information to evaluate the impact of the Tax 

Cuts and Jobs Act and United Airlines Issuances on interstate natural gas pipelines’ 

revenue requirements. Using the data in the pipelines’ 2017 FERC Form Nos. 2 and 2-A, 

the form estimates (1) the percentage reduction in the pipeline’s cost of service resulting 

from the Tax Cuts and Jobs Act and the Revised Policy Statement, and (2) the pipeline’s 

current ROEs before and after the reduction in corporate income taxes and the 

elimination of income tax allowances for MLP pipelines. 

 3 Interstate and Intrastate Natural Gas Pipelines; Rate Changes Relating to 

Federal Income Tax Rate, Order No. 849, 83 Fed. Reg. 36,672 (July 30, 2018), FERC 

Stats. & Regs. ¶ 31,404 (2018) (cross-referenced at 164 FERC ¶ 61,031) (Order 

No. 849).

4 An Act to provide for reconciliation pursuant to titles II and V of the concurrent 

resolution on the budget for fiscal year 2018, Pub. L. No. 115-97, 131 Stat. 2054 (2017) 

(Tax Cuts and Jobs Act).

5 Inquiry Regarding the Commission’s Policy for Recovery of Income Tax Costs, 

Revised Policy Statement, 83 FR 12,362 (Mar. 21, 2018), FERC Stats & Regs. ¶ 35,060 

(2018), order on reh’g, 164 FERC ¶ 61,030 (2018). 

6 SFPP, L.P., Opinion No. 511-C, 162 FERC ¶ 61,228, at P 9 (2018).

7 United Airlines, Inc. v. FERC, 827 F.3d 122 (D.C. Cir. 2016). For purposes of 

this order, the Revised Policy Statement, United Airlines, and Opinion No. 511-C will 

collectively be referred to as “United Airlines Issuances.”

8 The One-time Report on Rate Effect of the Tax Cuts and Jobs Act is referred to 

interchangeably as “One-time Report” or “FERC Form No. 501-G.”
Docket Nos. RP19-266-000 and RP19-267-000 - 3 -

Order No. 849 also provided several options each interstate natural gas pipeline 

may choose from to address the changes to the pipeline’s revenue requirement as a result 

of the income tax reductions, including a limited NGA section 4 rate reduction filing. 

Order No. 849 adopted section 154.404 of the Commission’s regulations, authorizing 

natural gas pipelines to submit limited NGA section 4 filings to reduce their rates to 

reflect the Tax Cuts and Jobs Act and the United Airlines Issuances, without making any 

other rate changes. Section 154.404 permits pass-through pipelines, including MLPs, to 

either eliminate their tax allowances or reduce their rates to reflect the reduced income 

tax expenses provided by the Tax Cuts and Jobs Act. In order to provide an additional 

incentive for pipelines to make a limited NGA section 4 rate reduction filing, Order 

No. 849 included a guarantee that the Commission will not, for a three-year moratorium 

period, initiate an NGA section 5 rate investigation of a pipeline that makes such a filing, 

if that filing reduces the pipeline’s ROE to 12 percent or less.9

On November 8, 2018, SESH filed FERC Form No. 501-G in Docket No. RP19-

266-000 consistent with the reporting requirements of Order No. 849. SESH states that 

its two owners are currently MLPs. Therefore, in its FERC Form No. 501-G, SESH 

states that it is not a tax paying entity. Accordingly, the FERC Form No. 501-G 

eliminates its tax allowance and accumulated deferred income taxes (ADIT) from its 

cost-of-service. SESH’s FERC Form No. 501-G shows that SESH’s indicated cost-ofservice reduction is 3.1 percent or approximately $3.8 million, and that its Total 

Estimated ROE would be 8.8 percent, after an adjustment to reflect the United Airlines 

Issuances. SESH stated in that filing it would submit a limited NGA section 4 filing to 

reduce its maximum tariff rates consistent with Option 1 in Order No. 849. 

On November 8, 2018, in Docket No. RP19-267-000, SESH filed a limited NGA 

section 4 rate reduction pursuant to section 154.404 of the Commission’s regulations. 

SESH proposes to reduce its currently effective rates by the 3.1 percent cost-of-service 

reduction shown in its FERC Form No. 501-G, to be effective January 1, 2019. 

Therefore, SESH states, consistent with Commission policy, this limited NGA section 4 

rate reduction filing eliminates its income tax allowance and associated ADIT from 

SESH’s rates and general ledger.10 

II. Notice of Filing, Interventions, and Protests

Public notice of SESH’s FERC Form No. 501-G filing in Docket No. RP19-266-

000 and of SESH’s limited NGA section 4 filing in Docket No. RP19-267-000 was 

issued on November 9, 2018. Interventions and protests were due as provided in 

 9 Order No. 849, FERC Stats. & Regs. ¶ 31,404 at PP 199-200.

10 Docket No. RP19-267-000 Transmittal at 2, n.8.
Docket Nos. RP19-266-000 and RP19-267-000 - 4 -

section 154.210 of the Commission’s regulations.11 Pursuant to Rule 214,12 all timely 

filed motions to intervene and any unopposed motions to intervene filed out-of-time 

before the issuance date of this order are granted. Granting late intervention at this stage 

of the proceeding will not disrupt this proceeding or place additional burdens on existing 

parties. No protests or adverse comments were filed. 

III. Discussion

A. Rate Reduction

The Commission finds that SESH’s proposal to reduce its rates by 3.1 percent as 

calculated in the FERC Form No. 501-G is consistent with section 154.404 of the 

Commission’s regulations and provides a net benefit to SESH’s customers. Accordingly, 

the Commission accepts SESH’s referenced tariff records to be effective January 1, 2019, 

as requested.

B. NGA Section 5 Investigation Moratorium

Order No. 849 provides that: 

A pipeline would qualify for the NGA section 5 investigation 

moratorium if (1) the Commission accepts its limited NGA 

section 4 filing and (2) its Total Estimated ROE after the 

filing, as calculated on page 3, line 26, column (E) of its 

FERC Form No. 501-G, is 12 percent or less.13 

SESH states that its Total Estimated ROE from its FERC Form No. 501-G is 8.8 percent, 

which is less than 12 percent. Accordingly, the Commission finds that SESH will not be 

subject to an NGA section 5 investigation for three years from the date the proposed rate 

reduction becomes effective, that is, from January 1, 2019 through January 1, 2022. As 

Order No. 849 stated, the primary purpose of the FERC Form No. 501-G is to provide 

information relevant to determining whether the Commission should exercise its 

discretion to initiate an NGA section 5 rate investigation of the subject pipeline. Because 

SESH has complied with the reporting requirement and qualifies for the NGA section 5 

moratorium, the Commission closes Docket No. RP19-266-000. 

 11 18 C.F.R. § 154.210 (2018).

12 18 C.F.R. § 385.214 (2018).

13 Order No. 849, FERC Stats. & Regs. ¶ 31,404 at P 199.
Docket Nos. RP19-266-000 and RP19-267-000 - 5 -

The Commission orders:

(A) SESH’s tariff records noted above are accepted to be effective January 1, 

2019.

(B) SESH is provided an NGA section 5 investigation moratorium through 

January 1, 2022. 

By the Commission. Commissioner McIntyre is not voting on this order.

 Commissioner McNamee is voting present.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.