166 FERC ¶ 61,199

UNITED STATES OF AMERICA

FEDERAL ENERGY REGULATORY COMMISSION

Before Commissioners: Neil Chatterjee, Chairman;

 Cheryl A. LaFleur, Richard Glick,

and Bernard L. McNamee.

Stagecoach Pipeline & Storage Company LLC Docket No. RP19-439-000

ORDER ON FERC FORM NO. 501-G, 

INSTITUTING INVESTIGATION AND SETTING MATTER FOR HEARING 

PROCEDURES PURSUANT TO SECTION 5 OF THE NATURAL GAS ACT

(Issued March 20, 2019)

On December 6, 2018, Stagecoach Pipeline & Storage Company LLC

(Stagecoach) filed its FERC Form No. 501-G in the above referenced docket. As 

discussed in more detail below, based upon our review of that filing and publicly 

available information on file with the Commission, it appears that Stagecoach may be 

substantially over-recovering its cost of service, causing Stagecoach’s existing rates to 

be unjust and unreasonable. Therefore, we are initiating an investigation, pursuant to 

section 5 of the Natural Gas Act (NGA),0 F

1 to determine whether the rates currently 

charged by Stagecoach are just and reasonable and setting the matter for hearing. We

direct Stagecoach to file a full cost and revenue study, modified as discussed below, 

within 75 days of the issuance of this order.

I. Background

Stagecoach states that it owns a storage field located in Tioga County, New York 

and Bradford County, Pennsylvania, and pipeline facilities connecting the storage field

and the interstate pipelines of Tennessee Gas Pipeline Company, L.L.C. (Tennessee), 

Transcontinental Gas Pipe Line Company, LLC (Transco) and Millennium Pipeline 

Company, L.L.C. (Millennium).1 F

2 Stagecoach further states that it offers market-based 

 1 15 U.S.C. § 717 (2012).

2 18 C.F.R. § 154.106 (2018) requires pipelines to permit the public to display and 

download their system maps from an internet Web site. While Stagecoach’s tariff 

provides a link to its map (Stagecoach Pipeline & Storage Company LLC, FERC NGA 
Docket No. RP19-439-000 - 2 -

rate storage services and cost-based rate transportation services. Stagecoach also states 

that it is a limited liability company.2F

3

On July 18, 2018, the Commission issued Order No. 849,3F

4 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 F

5 (2) the Commission’s Revised Policy Statement,5F6 and Opinion 

No. 511-C6F

7 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 F

8

 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,

 

Gas Tariff, FERC Gas Tariff, Section 3.0, Map of System, 0.0.0), the web page indicates 

that it is unable to display the map (http://www.gasnom.com/ip/Stagecoach/, retrieved 

March 6, 2019). 

3 General system information was gathered from FERC Form Nos. 2-A, 3Q, 549B, 

and 567.

4 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).

5 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).

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

Revised Policy Statement, 83 Fed. Reg. 12,362 (Mar. 21, 2018), 162 FERC ¶ 61,227, 

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

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

8 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.”
Docket No. RP19-439-000 - 3 -

must file a FERC Form No. 501-G informational filing.8F

9

 The FERC Form No. 501-G

was 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 rate of return on equity (ROE) before and after the reduction in corporate income 

taxes and the elimination of income tax allowances for MLP pipelines. Order No. 849 

also provided four 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: (1) a limited NGA section 49 F

10 rate reduction filing; (2) a commitment to 

file a general section 4 rate case or prepackaged settlement in the near future; (3) an 

explanation why no rate change is needed; and (4) no action (other than filing a report).

A. Stagecoach’s FERC Form No. 501-G Filing

Stagecoach states in its FERC Form No. 501-G that it is not a separate tax paying 

entity. Therefore, its FERC Form No. 501-G does not include an income tax allowance 

consistent with the United Airlines Issuances. Stagecoach notes that, as it has no debt of 

its own, it used the hypothetical capital structure provided in FERC Form No. 501-G. 

Stagecoach’s FERC Form No. 501-G reports a total estimated ROE of 20.5 percent after 

eliminating an income tax allowance.10 F

11 The form’s indicated cost-of-service reduction is 

3.6 percent.

Stagecoach chose Option 4 (no action), and made no additional comments with 

regard to its FERC Form No. 501-G. 

B. Notice, Interventions and Comments

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

439-000 was issued on December 7, 2018. Interventions and protests were due as 

 9 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.”

10 15 U.S.C. § 717c (2012).

11 Stagecoach’s FERC Form No. 501-G at 3 § l. 26(d). The total estimated ROE 

is the ROE as calculated in Stagecoach’s FERC Form No. 501-G, Page 3, Line 26, 

Column (D).
Docket No. RP19-439-000 - 4 -

provided in section 154.210 of the Commission’s regulations.11 F

12 Pursuant to Rule 214,12 F13

all timely filed motions to intervene and any unopposed motions to intervene filed out-oftime 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 party protested or made adverse comments to Stagecoach’s filing. 

II. Discussion

We have reviewed Stagecoach’s FERC Form No. 501-G and publicly available 

information on file with the Commission. Based upon our review of this cost and 

revenue information, we estimate Stagecoach’s ROE to be 20.5 percent, as reflected in 

Stagecoach’s 2017 FERC Form No. 2-A, tax profile and capital structure data, as 

adjusted for the United Airlines Issuances. In light of these figures, we are concerned 

that Stagecoach’s level of earnings may substantially exceed its actual cost of service, 

including a reasonable return on equity. 

Stagecoach offers services under two fundamentally different rate designs:

(1) market-based rates for storage services1 3F

14 and (2) cost-based rates for transportation

services. When Stagecoach received permission to implement market-based rates for 

storage services, the Commission also stated that there was no need for Stagecoach to

have cost-based financial statements prepared in accordance with the Commission’s 

Uniform System of Accounts (USofA), conditioned upon Stagecoach maintaining 

accounts and financial information of its Stagecoach Storage Field Project consistent 

with generally accepted accounting principles.14F

15 Subsequent to the initiation of storage 

 12 18 C.F.R. § 154.210 (2018). See also Order No. 849, 164 FERC 61,031, at 

P 96 (2018).

13 18 C.F.R. § 385.214 (2018).

14 Central New York Oil and Gas Co., LLC, 94 FERC ¶ 61,194, at 61,705-07 

(2001) (2001 Order) (authorization to provide firm and interruptible storage services at 

market-based rates); Central New York Oil & Gas Co., LLC, 116 FERC ¶ 61,277, at P 35 

(2006) (2006 Order) (authorization to provide interruptible wheeling services at marketbased rates)). Central New York Oil And Gas Company, LLC changed its name to 

Stagecoach Pipeline & Storage Company LLC effective October 29, 2015. Stagecoach 

Pipeline & Storage Pipeline Co. LLC, Docket No. RP16-102-000 (Nov. 20, 2015)

(delegated order).

15 2001 Order at 61,707. The 2006 Order at P 39 slightly modified this waiver, 

requiring Stagecoach to file pages 520 and 520a of Form No. 2-A to report gas volume 

information such that the Commission could impose an Annual Charge Adjustment. 
Docket No. RP19-439-000 - 5 -

service, Stagecoach received permission to construct and operate a pipeline that 

interconnects Tennessee, Millennium, Transco and the Stagecoach Storage Field, and to 

provide cost-based rate transportation services through these pipeline facilities.15F

16 The 

Commission noted the existing waiver of the USofA regulations as it applied to its 

market-based rate storage services, and required Stagecoach to comply with the USofA

and FERC Form No. 2 or FERC Form No. 2-A reporting requirements applicable to its 

cost-based rates.16 F

17

Most of the financial data that populates Stagecoach’s FERC Form No. 501-G is 

from Stagecoach’s 2017 FERC Form No. 2-A. Stagecoach states in its 2017 FERC Form 

No. 2-A:

The Respondent has included the cost of service based 

revenues (firm wheeling services, firm transportation services 

and interruptible transportation services) related to the NorthSouth and Marc I Projects only; storage related revenues are 

not included in the results of operations in these financial 

statements. Additionally various expenses associated with 

transportation and storage services cannot be bifurcated or 

separately classified, and as such the Respondent has also 

included all Stagecoach Pipeline expenses in the financial 

statements (with the exceptions noted below).

Exceptions to the presentation described in the previous 

paragraph are that of depreciation expense, overhead 

allocation, and certain direct market based storage expenses. 

Depreciation is calculated separately and specifically based 

on the property, plant, and equipment represented in the 

balance sheet and within the requirements set forth by FERC. 

Corporate allocation expenses were calculated separately and 

expenses that are specifically unique to providing market 

based storage services have also been excluded from the 

expenses for the periods presented. 17F

18

Stagecoach does not identify which accounts were not functionalized between 

storage and transmission. The import of Stagecoach’s statement is that certain expense 

accounts contain both storage and transmission costs, but all those costs are reported as 

 16 Central New York Oil and Gas Co., LLC, 137 FERC ¶ 61,121 (2011).

17 Id. P 29.

18 Stagecoach’s 2017 FERC Form No. 2-A at p. 122.4 (emphasis added).
Docket No. RP19-439-000 - 6 -

transmission function costs. As this pertains to the FERC Form No. 2-A data used to 

populate Stagecoach’s FERC Form No. 501-G, it appears that the reported expenses are 

overstated as some of the reported transmission expenses are actually storage expenses. 

Thus, our review indicates that the calculated ROE of 20.5 percent may be understated. 

Further, Stagecoach’s FERC Form No. 2-A statement raises concerns that Stagecoach’s 

accounting may lead to cost-based rate customers subsidizing market-based rate 

services.18 F

19 

Page 313 of Stagecoach’s 2017 FERC Form No. 2-A shows significant amounts of 

negotiated rate billing units. However, its fourth quarter 2017 FERC Form No. 549B 

(Index of Customers) does not identify any negotiated rate customers. Further, 

Stagecoach’s 2018 second quarter Index of Customers and its tariff identify only a few

negotiated rate contracts. It is not clear from Stagecoach’s filings why there is such a 

difference between the reported data.

We find, based upon our preliminary analysis of the information provided by 

Stagecoach in its one-time report and publicly available information on file with the 

Commission, that Stagecoach’s currently effective tariff rates may be unjust and 

unreasonable. Our analysis of this information indicates that Stagecoach’s currently 

effective tariff rates may allow Stagecoach to recover revenue substantially in excess of 

its estimated cost of service. Accordingly, we are initiating an investigation to examine 

the justness and reasonableness of Stagecoach’s rates pursuant to section 5 of the NGA 

and setting the matter for hearing.1 9F

20

 19 See Northern Natural Gas Co., 117 FERC ¶ 61,191, at P 21 (2006), reh’g 

denied, 119 FERC ¶ 61,072, at P 20 (2007) (Commission finds that Northern’s 

maintaining separate records will help enable the Commission to ensure in a future rate 

case that existing cost-based rate customers will not subsidize the costs of the expansion

recoverable through market-based rates).

20 In this order, we make no finding as to what would constitute a just and 

reasonable capital structure or ROE for the company. Those are among the issues set for 

hearing by this order and should be decided consistent with the Commission’s capital 

structure policies and ROE policies. See, e.g., Transcontinental Gas Pipe Line Corp., 

Opinion No. 414-A, 84 FERC ¶ 61,084, at 61,413-15, reh’g denied, Opinion No. 414-B, 

85 FERC ¶ 61,323 (1998), petition for review denied sub nom. N.C. Utils. Comm’n v. 

FERC, D.C. Cir. Case No. 99-1037 (Feb. 7 2000) (per curiam), and Composition of Proxy 

Groups for Determining Gas and Oil Pipeline Return on Equity, 123 FERC ¶ 61,048 

(2008).
Docket No. RP19-439-000 - 7 -

As the Commission has done in other cases initiating NGA section 5 

investigations of a pipeline’s rates, 20F

21 we direct Stagecoach to file a cost and revenue 

study based on cost and revenue information for the latest 12-month period available.21 F

22 

The filing shall be made within 75 days of the date this order issues and must include all 

the schedules required for submission of an NGA section 4 rate proceeding as set forth in 

section 154.312 of the Commission’s regulations.22 F

23 Because we are seeking actual cost 

and revenue information, the information submitted by Stagecoach must exclude any 

adjustments or projections that may be attributable to a test period referenced in the 

 21 See Southwest Gas Storage Co., 166 FERC ¶ 61,117 (2019); Panhandle Eastern 

Pipe Line Co., LP, 166 FERC ¶ 61,032 (2019); Northern Natural Gas Co., 166 FERC 

¶ 61,033 (2019); Bear Creek Storage Company, L.L.C., 166 FERC ¶ 61,034 (2019);

East Tennessee Natural Gas, LLC, 165 FERC ¶ 61,198 (2018); Midwestern Gas 

Transmission Co., 162 FERC ¶ 61,219 (2018); Dominion Energy Overthrust Pipeline, 

LLC, 162 FERC ¶ 61,218 (2018); Natural Gas Pipeline Co. of America LLC, 158 FERC 

¶ 61,044 (2017); Wyoming Interstate Co., L.L.C., 158 FERC ¶ 61,040 (2017); 

Tuscarora Gas Transmission Co., 154 FERC ¶ 61,030, order denying reh’g and granting 

clarification, 154 FERC ¶ 61,273 (2016); Iroquois Gas Transmission System, L.P., 

154 FERC ¶ 61,028 (2016); Empire Pipeline, Inc., 154 FERC ¶ 61,029 (2016), order 

denying reh’g, 154 FERC ¶ 61,274; Columbia Gulf Transmission, LLC, 154 FERC 

¶ 61,027 (2016), order denying reh’g, 154 FERC ¶ 61,275 (Columbia Gulf); Wyoming

Interstate Co., L.L.C., 141 FERC ¶ 61,117 (2012) (WIC); Viking Gas Transmission Co.,

141 FERC ¶ 61,118 (2012) (Viking); Bear Creek Storage Co. L.L.C., 137 FERC ¶ 61,134 

(2011), order denying reh’g, 138 FERC ¶ 61,019 (2012); MIGC LLC, 137 FERC ¶ 61,135

(2011), order denying reh’g, 138 FERC ¶ 61,011 (2012); ANR Storage Co., 137 FERC 

¶ 61,136 (2011); Ozark Gas Transmission, LLC, 133 FERC ¶ 61,158 (2010), reh’g granted 

in part and denied in part, 134 FERC ¶ 61,062, reh’g granted in part and denied in part, 

134 FERC ¶ 61,193 (2011) (Ozark); Kinder Morgan Interstate Gas Transmission LLC, 

133 FERC ¶ 61,157 (2010), reh’g granted in part and denied in part, 134 FERC ¶ 61,061 

(2011) (Kinder Morgan); Natural Gas Pipeline Co. of America LLC, 129 FERC ¶ 61,158 

(2009), reh’g denied, 130 FERC ¶ 61,133 (2010) (Natural). As the Commission explained 

in the Natural rehearing order, “[s]ections 10(a) and 14(a) of the NGA authorize the 

Commission to require [the pipeline] to submit the information required by the [order 

instituting investigation] in order to carry out its responsibility under NGA section 5 to 

ensure that the pipeline’s rates are just and reasonable.” See Natural, 130 FERC ¶ 61,133 

at P 16.

22 This cost and revenue study must include all of Stagecoach’s functions, 

including storage.

23 18 C.F.R. § 154.312 (2018). 
Docket No. RP19-439-000 - 8 -

schedules and statements set forth in section 154.312 of the regulations.23F

24 Thus, 

Stagecoach should not file the nine months of post-base-period adjustment data required 

by section 154.303(a).24 F

25 The cost and revenue study required herein will provide a 

baseline of actual annual costs and revenues, which can then be used as a starting point 

for further analysis of Stagecoach’s costs and revenues.2 5F

26 Additionally, because 

Stagecoach does not have an NGA section 4 burden in this section 5 proceeding and will 

be filing testimony in response to other parties, Stagecoach does not need to file the 

Statement P required by section 154.312(v) of the Commission’s regulations at this 

juncture.26 F

27 

However, as the Commission has done in other recent NGA section 5 proceedings, 

in addition to the cost and revenue study required above, Stagecoach may file a separate 

cost and revenue study that reflects adjustments for changes that Stagecoach projects will 

occur during an abbreviated six-month adjustment period following the 12-month base 

period used for the cost and revenue study. 27F

28 Given the expedited hearing schedule

 24 Stagecoach is required to identify which expenses and accounts it believes 

contain storage and transmission function costs that cannot be bifurcated or separately 

classified as it noted in its FERC Form No. 2-A, and reconcile this identification with the 

cost and revenue study. 

25 However, the company may, if fully supported, reflect changes to costs and 

revenues for a known and measurable change that took place during the 12-month period. 

For example, if a general pay raise became effective during the fifth month of the 

12-month period, an adjustment to the cost of service could be made to annualize the 

impact of this cost change.

26 Ozark, 134 FERC ¶ 61,062 at P 26.

27 See Pub. Serv. Comm’n of N.Y. v. Nat’l Fuel Gas Supply Corp., 115 FERC 

¶ 61,368, at P 6 (2006). In addition, while section 154.312(f) requires the pipeline to 

show in Statement F-1 “the percentage rate of return claimed and the general reasons 

therefore,” we will permit Stagecoach simply to use an illustrative return on equity in that 

statement, without taking any position as to whether that return is just and reasonable. 

See, e.g., Columbia Gulf, 154 FERC ¶ 61,275 at P 9 n.19.

28 See, e.g., Ozark, 134 FERC ¶ 61,062, reh’g granted in part and denied in part, 

134 FERC ¶ 61,193.
Docket No. RP19-439-000 - 9 -

established herein, the adjustment period must be limited to six months in order to permit 

the parties to perform discovery and prepare testimony for the hearing based on actual 

data for both the base period and the adjustment periods. 28F

29

Finally, due to the potential for continued over-recovery of revenues, we are

establishing a date for an initial decision from an administrative law judge.29 F

30 Such a 

date will expedite the proceeding. We find that conducting the hearing in this case 

pursuant to the Track II hearing timeline is reasonable. However, to provide more time 

for the parties to conduct discovery concerning the cost and revenue study, we order that 

the deadlines in the Track II timeline run from the date Stagecoach’s cost and revenue 

study is due, rather than the date of the order designating the presiding judge. Therefore, 

the initial decision must issue within 47 weeks of the date the cost and revenue study is 

due.

The Commission orders:

(A) Pursuant to the authority contained in and subject to the jurisdiction 

conferred upon the Federal Energy Regulatory Commission by section 402(a) of the 

Department of Energy Organization Act and by the Natural Gas Act, particularly 

section 5 thereof, and pursuant to the Commission’s Rules of Practice and Procedure

and the regulations under the Natural Gas Act, a public hearing shall be held concerning 

whether Stagecoach’s rates are unjust, unreasonable, or otherwise unlawful. 

(B) A Presiding Administrative Law Judge, to be designated by the Chief 

Administrative Law Judge for that purpose pursuant to 18 C.F.R. § 375.304, shall, 

within thirty (30) days of the date of this order, convene a prehearing conference in 

these proceedings in a hearing or conference room of the Federal Energy Regulatory 

Commission, 888 First Street, NE, Washington, DC 20426. The prehearing conference 

shall be held for the purpose of clarification of the positions of the participants and 

consideration by the presiding judge of any procedural issues and discovery dates 

necessary for the ensuing hearing. The Presiding Administrative Law Judge is authorized 

to conduct further proceedings in accordance with this order and the Commission’s Rules 

of Practice and Procedure.

 29 See WIC, 141 FERC ¶ 61,117 at P 10; Viking, 141 FERC ¶ 61,118 at P 10. For 

a detailed explanation of why the adjustment period in the section 5 proceeding differs 

from the adjustment period in a section 4 proceeding, see Ozark, 134 FERC ¶ 61,062 

at PP 17-36, reh’g granted in part and denied in part, 134 FERC ¶ 61,193 at PP 21-27. 

See also Kinder Morgan, 134 FERC ¶ 61,061 at PP 36-51.

30 To aid the parties in settlement efforts, parties may request a settlement judge at 

any time.
Docket No. RP19-439-000 - 10 -

(C) The hearing shall be conducted pursuant to the Track II hearing timeline 

starting the date the cost and revenue study is due and that an initial decision be issued in 

this proceeding within 47 weeks of that date, as discussed in the body of this order.

(D) Stagecoach shall file a cost and revenue study within 75 days of this order. 

The filing should include only actual data for the latest 12-month period available as of 

the date of this order, and may include adjustments for known and measurable changes 

during that period. The filing should include all of the schedules required for the 

submission of a section 4 rate proceeding as set forth in section 154.312 of the 

Commission’s regulations (18 C.F.R. § 154.312), as modified above. 

By the Commission.

( S E A L )

Nathaniel J. Davis, Sr.,

Deputy Secretary.