Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3141

1Section 8 of the Natural Gas Act (NGA), 15

U.S.C. 717g (1988), authorizes the Commission to

prescribe rules and regulations concerning

accounts, records and memoranda as necessary or

appropriate for purposes of administering the NGA.

The Commission may prescribe a system of

accounts for jurisdictional companies and, after

notice and opportunity for hearing, may determine

the accounts in which particular outlays and

receipts will be entered, charged, or credited.

2Section 10 of the NGA, 15 U.S.C. 717i (1988),

authorizes the Commission to prescribe rules and

regulations concerning annual and other periodic or

special reports, as necessary or appropriate for

purposes of administering the NGA. The

Commission may prescribe the manner and form in

which such reports are to be made, and require

from natural gas companies specific answers to all

questions on which the Commission may need

information. The reports must be made under oath

unless the Commission otherwise specifies.

3The Commission proposes to amend Account

117, Account 164.1, and other accounts that refer

to Account 117.

4The Commission proposes to amend Account

489 and Account 495.

5The Commission proposes to amend Account

806.

Example No. 6

Continuing from Example 5, a subsequent tracker filing retroactive to November 1, 1994:

Docket Filed Effective Pagination Superseded sheet

TM96–1–77–000 ................................................................ 4/30/95 11/1/94 3rd Rev Third Revised ............ Sub 2nd Rev Third.

2/1/95 3rd Sub Fourth Revised .......... 3rd Rev Third.

Example No. 7

Abbreviate ‘‘Fourth Revised Twenty-Third

Revised Sheet No. 4’’ as ‘‘4th Rev TwentyThird Revised Sheet No. 4.’’

Example No. 8

To cancel Rate Schedule X–26 which

consists of Original Sheet No. 10, First

Revised Sheet Nos. 11 through 36, Substitute

First Revised Sheet No. 37, and Second

Revised Sheet Nos. 38 and 39, file ‘‘First

Revised Sheet No. 10:’’

My Pipeline Company

FERC Gas Tariff

Original Volume No. 1

First Revised Sheet No. 10 Superseding

Sheet Nos. 10 Through 39

Notice of Cancellation

Rate Schedule X–26

Exchange Agreement with YOUR Pipeline

Company

Dated January 1, 1980

The following tariff sheets have been

superseded:

Original Sheet No. 10

First Revised Sheet Nos. 11 through 36

Substitute First Revised Sheet No. 37

Second Revised Sheet Nos. 38 and 39

Example No. 9

Your general terms and conditions end on

page 75 and you want to reserve sheets 76

through 99 for future use:

My Pipeline Company

FERC Gas Tariff

Original Volume No. 1

Sheet Nos. 76 through 99

Sheet Nos. 76 through 99 are reserved for

future use.

Exhibit C—Abbreviation Conventions List

Substitute: Sub

Alternate: Alt

Revised: /

First, Second, etc.: 1st, 2nd, etc.

Sheet No.: (omit these words)

[FR Doc. 95–654 Filed 1–12–95; 8:45 am]

BILLING CODE 6717–01–P

18 CFR Parts 158, 201, 250, 260, and

284

[Docket No. RM95–4–000]

Revisions to Uniform System of

Accounts, Forms, Statements, and

Reporting Requirements for Natural

Gas Companies; Notice of Proposed

Rulemaking

December 16, 1994.

AGENCY: Federal Energy Regulatory

Commission.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Federal Energy

Regulatory Commission is proposing to

amend its Uniform System of Accounts,

its forms, and its reports and statements

for natural gas companies. The proposed

revisions reflect the current regulatory

environment of unbundled pipeline

sales for resale at market-based prices

and open-access transportation of

natural gas. The Commission seeks to

simplify and streamline its requirements

to reduce the burden of respondents.

DATES: Comments are due no later than

April 13, 1995.

ADDRESSES: An original and 14 copies of

written comments must be filed. All

filings should refer to Docket No.

RM95–4–000 and should be addressed

to Office of the Secretary, Federal

Energy Regulatory Commission, 825

North Capitol Street, NE., Washington,

DC 20426.

FOR FURTHER INFORMATION CONTACT:

Jeffrey A. Braunstein, Office of the

General Counsel, Federal Energy

Regulatory Commission, 825 North

Capitol Street, NE., Washington, DC

20426, (202) 208–2114.

SUPPLEMENTARY INFORMATION: In

addition to publishing the full text of

this document, excluding Appendices A

(FERC Form No. 2), B (FERC Form No.

2–A), and C (FERC Form No. 11), in the

Federal Register, the Commission also

provides all interested persons an

opportunity to inspect or copy the

contents of this document during

normal business hours in Room 3104,

941 North Capitol Street, NE.,

Washington, DC 20426.

The Commission Issuance Posting

System (CIPS), an electronic bulletin

board service, provides access to the

texts of formal documents issued by the

Commission. CIPS is available at no

charge to the user and may be accessed

using a personal computer with a

modem by dialing (202) 208–1397. To

access CIPS, set your communications

software to 19200, 14400, 12000, 9600,

7200, 4800, 2400, 1200 or 300 bps, full

duplex, no parity, 8 data bits and 1 stop

bit. The full text of this document will

be available on CIPS for 60 days from

the date of issuance in ASCII and

WordPerfect 5.1 format. After 60 days

the document will be archived, but still

accessible. The complete text on

diskette in Wordperfect format may also

be purchased from the Commission’s

copy contractor, La Dorn Systems

Corporation, also located in Room 3104,

941 North Capitol Street, NE.,

Washington, DC 20426.

I. Introduction

The Federal Energy Regulatory

Commission (Commission) proposes to

amend its Uniform System of

Accounts,1 its forms, and its reports and

statements for natural gas companies.2

This Notice of Proposed Rulemaking

(NOPR) is a companion to the

Commission’s Notice of Proposed

Rulemaking ‘‘Filing Requirements for

Interstate Natural Gas Company Rate

Schedules and Tariffs’’, which proposes

to amend Part 154 of the Commission’s

regulations and is issued

contemporaneously with this NOPR. In

brief, the Commission proposes, in this

NOPR, changes to the Uniform System

of Accounts’ treatment of gas stored

underground,3 revenues,4 gas supply

expenses,5 and to eliminate all accounts

for Nonmajor respondents and to

redesignate accounts used only by Major

respondents for use by all respondents.

The Commission also proposes to

change or eliminate various forms,

reports, and statements. This includes

changes to, and deletions from, FERC

Form No. 2 (Form No. 2), Annual report
3142 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

6Form No. 2 consists of approximately 162 nonconsecutively numbered pages and a four-page

index. See 18 CFR 260.1. The current version bears

OMB approval No. 1902–0028. Form No. 2–A

consists of approximately 22 consecutively

numbered pages, 1–22, and 32 non-consecutively

numbered substitute pages from the Form No. 2 that

may be used in lieu of the comparable pages in the

first section. See 18 CFR 260.2. The current version

bears OMB approval No. 1902–0030.

7Appendix A consists of the proposed revised

Form No. 2. Appendix A is not being published in

the Federal Register, but is available from the

Commission’s Public Reference Room.

8Appendix B consists of the proposed revised

Form No. 2–A. Appendix B is not being published

in the Federal Register, but is available from the

Commission’s Public Reference Room.

for Major natural gas companies, and

Form No. 2–A (Form No. 2–A), Annual

report for Nonmajor natural gas

companies.6

The Commission is proposing the

changes in order to create forms,

reports, and statements that reflect the

current regulatory environment of

unbundled pipeline sales for resale at

market-based prices and open-access

transportation of natural gas. In doing

that, the Commission seeks to simplify

and streamline its requirements to

reduce the burden on respondents.

Hence, the Commission is proposing to

eliminate reporting requirements (as

well as a few non-reporting

requirements) that are outdated or

nonessential in light of current

regulation, or are duplicative of other

reporting requirements. At the same

time, the proposed revisions, especially

of Form No. 2, will provide financial,

rate, and statistical information on

transactions that is more useful than

what is currently available to regulatory

agencies and other users of the financial

statements and reports of natural gas

companies. The Commission believes

the proposed changes to Form No. 2 are

needed because companies are giving

different accounting treatment to similar

transactions, and the characteristics of

certain balance sheet and income

statement items for the restructured

industry are different from what they

were when the current accounting

regulations were adopted.

In Part III, A of this NOPR, the

Commission will discuss the proposed

changes to the Uniform System of

Accounts with respect to storage gas. In

Part III, B the Commission will address

the other proposed revisions to the

Uniform System of Accounts. In Part IV,

the Commission will discuss the

changes to Part 250 of the Commission’s

regulations, ‘‘Approved Forms, Natural

Gas Act.’’ In Part V, the Commission

will discuss the proposed changes to

Part 260 of the Commission’s

regulations, ‘‘Statements and Reports

(Schedules).’’ That discussion will

include the proposed changes to Forms

No. 2 7 and No. 2–A.8 In Part VI, the

Commission will discuss the proposed

changes to Part 284 of the Commission’s

regulations, ‘‘Certain Sales and

Transportation of Natural Gas Under the

Natural Gas Policy Act of 1978 and

Related Authorities.’’

The Commission recognizes that the

changes to these regulations and forms

and to the regulations in the companion

notice of proposed rulemaking titled,

‘‘Filing Requirements for Interstate

Natural Gas Company Rate Schedules

and Tariffs,’’ will necessitate

modifications to the electronic formats

for the affected filings and forms. To

ensure the widest possible input, the

Commission is directing its staff here,

and in the companion NOPR, to

convene a single technical conference to

obtain the participation of the industry

and other users of the filed information

in designing the electronic filing

requirements. By the time the

Commission issues final rules in these

companion rulemakings, the

Commission expects staff, with the

participation of interested parties, to

have developed the changes needed to

make the electronic filings that would

be required under the regulations

proposed in both of the rulemaking

proceedings. The Commission intends

to move toward a PC-based electronic

filing system and away from

mainframes. The Commission intends to

use user friendly form-fill, word

processing, and spreadsheet application

software as much as possible.

The changes to the Uniform of System

of Accounts and Form Nos. 2 and 2–A

in this NOPR are proposed to be

effective January 1, 1995. The remainder

of the proposed rule is proposed to be

effective 30 days after publication in the

Federal Register.

II. Public Reporting Burden

The proposed rule, if adopted, would

establish new reporting requirements,

modify existing reporting requirements

and eliminate those requirements that

are now obsolete. The Commission

seeks to simplify and streamline its

requirements to reduce the burden on

pipelines. The current public reporting

burden for these information collections

is estimated to average the following

number of hours per response: FERC

Form No. 2—2,475 hours for the 46 gas

companies that complete a filing; FERC

Form No. 2–A—30 hours for the 87 gas

companies that complete a filing; FERC

Form No. 11—5.7 hours for the 50 gas

companies that complete a filing; FERC

Form No. 549—2.7 hours for the 294

companies that complete a filing; FERC

Form No. 549B—6,770 hours for the 78

gas companies that complete a filing;

FERC Form No. 576—3 hours for the 8

gas companies that complete filing;

FERC Form No. 8—3.6 hours for the 30

gas companies that complete a filing;

and FPC–14 (redesignated herein as

FERC Form No. 14)—3.1 hours for the

46 gas companies that complete a filing.

These estimates include the time for

reviewing instructions, searching

existing data sources, gathering and

maintaining the data needed, and

completing and reviewing the collection

of information.

With respect to the gas companies

filing the FERC Form No. 2, the

Commission believes that there will be

an average burden decrease due to the

elimination of several schedules and

significant increases in the thresholds

for the reporting of information on other

schedules. There will be some

additional information required, but

there should be a minimal burden

increase as a result, because much of the

information is already collected by the

industry in other contexts.

Also, those natural gas companies

filing the FERC Form No. 2–A, and

previously designated as ‘‘Nonmajor’’

who do not presently use the accounts

formerly reserved for Major natural gas

companies, may experience a one-time

increase in burden associated with the

conversion of their books and records. It

is anticipated that this one-time burden

will not be significant.

The Commission estimates the public

reporting burden for other filing

requirements under the proposed rule

will reduce the existing reporting

burden. With respect to FERC Form No.

11, the semi-annual Form No. 11 will

contain monthly details of data required

annually on an aggregate basis in FERC

Form No. 2. The semi-annual filing of

FERC Form No. 11 on April 30 and

October 31 of each year, rather than

monthly, will reduce the number of

reports from 600 to 100. In addition,

data are primarily required by rate

schedule or Uniform System of

Accounts entries. These consistencies in

reporting will simplify the filing

burden. The revised reporting schedule

will reduce the existing reporting

burden by a total of 2,500 hours, or

approximately 50 hours per respondent

each year.

The proposed elimination of initial,

subsequent, termination, and annual

reports, FERC Form No. 549, for

interstate pipelines, and the retention of

only the annual reports for intrastate

pipelinesm, will reduce the reporting

burden by a total of 13,295 hours. The

Commission estimates that the annual

report for the 75 remaining respondents
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3143

will require an average of ten hours to

complete.

The proposed Index of Customers

requirement will add approximately

11,700 hours to the total burden under

FERC Form No. 549B. However, the

Commission proposes to delete the

paper filing requirement and require

that the index be available through a

pipelines electronic bulletin board. The

average burden of approximately 25

hours per respondent consists of 135

hours for pipelines to establish the

initial index, and three hours per filing

to compile an average of six monthly

updates.

Allowing reporting of service

interruptions in FERC Form No. 576 by

any electronic means, including

facsimile or telegraph, as proposed, will

expedite the notice process, and reduce

the burden to one hour per response.

This report is required only in the event

of an interruption to normal service

lasting three hours or longer.

The Commission is not proposing any

substantive changes to FERC Form Nos.

8 and 14, but requests comment on

whether data from other sources makes

these forms unnecessary.

On balance, therefore, the

Commission believes the overall burden

on the industry will be lessened over

time by the proposed changes. To

consider the impact of the persons

affected by this rulemaking, the

Commission would like specific

comments on the impact of this rule on

individual natural gas companies. Both

estimates of current burden and impact

should be in work hours and dollar

costs in sufficient detail to demonstrate

methodology and assumptions.

Comments regarding these burden

estimates or any other aspect of this

collection of information, including

suggestions for reducing this burden,

can be sent to the Federal Energy

Regulatory Commission, 941 North

Capitol Street, NE., Washington, DC

20426 [Attention: Michael Miller,

Information Services Division, (202)

208–1415]; and to the Office of

Information and Regulatory Affairs of

OMB (Attention: Desk Officer for

Federal Energy Regulatory

Commission), FAX: (202) 395–5167.

III. Revisions to Uniform System of

Accounts

A. Storage Accounting

Before the recent industry

restructuring, natural gas companies

primarily provided a merchant service.

A typical pipeline company would

purchase gas from producers or other

suppliers, transport the gas from the

supply area to storage fields or sales

delivery points, and sell its gas on a

bundled basis. Now, pipeline

companies are primarily transporters of

gas. The physical operation of a pipeline

used for open-access transportation,

however, is much the same as when it

was used for bundled merchant service.

A transportation pipeline continues to

need gas for compressor fuel, gas losses,

line pack, and base storage gas. In

addition, in order for the system to

operate efficiently, it must have

sufficient gas volumes and/or storage

capacity available to provide for

transportation imbalances and no-notice

transportation. Although these resource

needs are not new ones, in the

Commission’s view, the mandate to

unbundle and the changed primary role

of pipelines from merchants to

transporters require recognition,

measurement, and reporting of these

resources differently than presently

required.

One might argue that the present

accounting requirements contained in

the Uniform System of Accounts are

adequate and appropriate for accounting

for gas costs of a transportation pipeline.

Under this view, it could be argued that

the loss of the sales function does not

change the economic character of the

transportation function. Physically, the

pipeline must operate essentially as it

always has in performing a

transportation function, and that the

loss of the sales function does not

change the economic character of the

transactions that must be accounted for.

Our analysis, however, indicates

otherwise. We find that the financial

and regulatory accounting needs for a

transporter are sufficiently different

from those of a merchant to warrant

changes to our Uniform System of

Accounts.

To meet regulatory needs, the

Commission’s regulations should

provide recognition and measurement

criteria for accounting elements (e.g.

revenues, expenses, assets, liabilities,

equity capital) that not only represent

their economic characteristics but also

provide useful financial information

relating to services provided. Further,

the regulations should provide for

uniform accounting. It is indisputable

that regulation is improved when

similar economic events are accounted

for consistently between periods, and

uniformly between companies. In the

Commission’s view, uniformity in

accounting is essential for developing

just and reasonable rates, for

compliance review purposes, and for

the preparation of meaningful intra- and

inter-company statistics.

The Commission believes that the

financial statement treatment most

consistent with the economic character

of the accounting transactions, and the

treatment that produces the most useful

regulatory information, can be obtained

if we require that: (1) Volumes

maintained for system balancing

purposes, including those needed for

no-notice transportation service, be

accounted for as fixed assets rather than

as inventory held for sale, which is the

current practice; and (2) gas furnished

by transportation customers for

compressor fuel, line losses, or other

operational purposes be viewed as

additional compensation for services,

and an appropriate amount of expense

be recognized concurrent with the use

of such volumes by the pipeline. With

respect to the second item, the current

practice is, in general, not to recognize

either the gas consideration received as

revenues or to recognize an expense

when the gas is consumed in system

operations.

1. System Gas

The Commission’s existing

accounting regulations for gas

transactions (purchases, storage,

exchanges, sales, system use, etc.) were

developed when a typical natural gas

pipeline company offered bundled sales

service. Gas used in providing

unbundled transportation service has

characteristics that are different from

gas used in providing bundled sales

service. A transportation pipeline is a

dynamic system where there are

constant imbalances between what has

been delivered to the system by

customers or gas suppliers, on one

hand, and what has been delivered to

customers or used to operate the

pipeline, on the other. Although a

transportation pipeline has an

obligation to transport and deliver gas

provided to it by a shipper, gas is a

fungible commodity. There is no

specific identification of the molecules

of gas that a transportation customer

(shipper) delivers into the system with

the volumes that it receives at the

delivery point. The pipeline’s obligation

to the customer is satisfied when the

customer either receives at the

appropriate delivery point sufficient

volumes, from whatever source, to meet

the quantity, quality, and heat content

called for by the tariff’s terms and

conditions or it is otherwise settled

through cash-out provisions or

balancing arrangements entered into

between two or more customers.

In order to meet its obligation to

shippers, the pipeline must have

available sufficient volumes to meet the

operational dynamics of its system (after

consideration of imbalance agreements

between customers). For purposes of
3144 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

9 Gas Plant Instruction 3(20).

10 Gas Plant instruction 3(21).

11The gas needed to maintain pressure

requirements refers to those volumes needed to

maintain the system at its design operating

capacity. It includes the volumes of gas held in

natural gas storage facilities in order to maintain

pressure and deliverability requirements. These

storage volumes are often referred to as base or

cushion gas.

12System balancing, as used here, refers to those

situations where the pipeline provided gas from its

own source of supply in order to meet deficiencies

caused by a shipper tendering less volumes to the

pipeline at the receipt point than it took from the

systems at the delivery point. The term can also be

used to refer to situations where the shipper tenders

more volumes than it takes from the system.

this discussion these volumes will be

referred to collectively as system gas. In

our view, the character of the

accounting for system gas needs falls

into three categories: (1) A fixed asset

for those volumes needed to provide for

pressure maintenance, (2) a fixed asset

for those volumes needed to meet

imbalances, including no-notice

transportation, and (3) operating

expenses for volumes used for

compression, line losses, and other

operational uses.

The first fixed asset category includes

line pack gas,9 LNG ‘‘heel’’,10 and gas

held in underground or other natural

gas storage facilities for purposes of

pressure maintenance.11 The cost to the

pipeline of these volumes, taken

collectively, represents its fixed

investment in the gas necessary to

operate the pipeline transportation

system. Under the current Uniform

System of Accounts, the investment cost

of these volumes is recorded as gas

plant in service except for recoverable

base storage gas which is recorded in

Account 117, Gas Stored UndergroundNoncurrent.

Aside from these volumes, however,

pipelines as merchants have also

traditionally maintained ‘‘investments’’

in additional volumes of gas that were

needed for system balancing 12 or to

provide gas sales service at the city gate

on demand during peak periods. These

additional volumes were included in

the pipeline’s system as additions to

line pack and/or underground storage.

When the additional volumes were

added to line pack, many pipelines

charged the cost of the gas to expense

at that time, even though the gas was

not physically delivered to a customer

until a later period. When the additional

volumes were injected into

underground storage, the cost of the gas

was charged to either Account 164.1 or

Account 117. As the volumes were

withdrawn from inventory for load

balancing or sales service, the related

cost was charged to expense. The cost

of gas withdrawn from storage would be

determined in accordance with a

generally accepted inventory method,

consistently applied. The accounting

costs were then recovered from sales

customers through purchased gas

adjustments (PGAs).

In the post-Order No. 636 period,

there is a need to measure and recognize

the additional volumes of gas needed for

load balancing and no-notice

transportation service, as well as the

recoverable base gas volumes,

differently from how they have been

measured and recognized in the past.

This is because such investments are

necessary to perform a transmission

function whether there continue to be

sales services or not. Further, with the

implementation of unbundled services,

pipelines generally discontinued their

PGAs. Most pipelines that continue to

provide sales service do so at marketbased prices. It is obviously important

to identify and aggregate the costs of

transportation service separately from

the costs of providing sales service, in

order to avoid inappropriate allocations

of costs between the two.

Under Order No. 636, pipelines were

required to relinquish most of the

capacity of their transmission system,

including storage, to their customers.

The Commission permits pipeline

companies to retain for their own use

only a designated volume of storage

capacity on their systems for use in load

balancing and no-notice transportation

service. These volumes, in general, are

intended to represent the maximum

volume needed to maintain reliability

and continuity of transportation service

during peak periods. It would be

inappropriate to classify these volumes

as gas held for resale in the ordinary

course of business, i.e. inventory;

instead, they represent permanent

investments that a pipeline must make

for providing transportation service. The

Commission believes that the use of this

gas provides further support for no

longer viewing the costs incurred to

provide this transportation function as

inventory (or expended when acquired

in the case of some line pack). To

account for this gas in such a manner,

which would be more appropriate for an

enterprise engaged in a merchant type of

business activity, is no longer the best

financial statement representation.

Even if a pipeline receives payment

for system gas delivered to meet an

imbalance or no-notice transportation

requirement, the Commission does not

believe that it should account for the

transaction as if a sale has occurred.

Simultaneously with the gas delivery,

the transportation pipeline has an

obligation, in order to maintain the

integrity of the transportation system, to

replenish the designated volumes that

make up system supply. The obligation

to replace these volumes would more

appropriately be accounted for as if

‘‘owed to system gas’’ rather than as a

sale. There is no expectation by the

pipeline of realizing a profit from this

type of gas transaction. It is merely a

loan that is to be repaid by the shipper

through either providing gas in kind or

through cash-out provisions.

The primary difference between the

fixed asset accounting model and the

inventory model for system gas is in the

carrying value of the asset. Under the

inventory model, the carrying value of

the asset will change over time as

withdrawals of system gas are made and

replacements are brought back into the

system. The inventory model would

permit various methods of pricing these

withdrawals. For instance, an entity

could assign a cost to these withdrawals

using LIFO, FIFO, or a weighted average

inventory method, or specific

identification, provided that the method

is consistently applied. Replacements

would be priced at their acquisition

cost. Under the fixed asset model, as we

view it, the carrying value for system

gas would not change except for

recognition of changes in designated

volumes. Instead, the carrying value

would be locked-in the same way that

plant investments are to historical cost.

Further, the fixed asset model would

permit only one method for assigning

cost to the temporary ‘‘owed to system

gas’’ account—current market price.

Gain or loss recognition, if any, would

be limited to any differences between

the actual replacement cost of system

gas and reimbursements from customers

on a cash-out basis where the

differences are not required to be passed

along to customers.

The Commission believes that the

fixed asset model is superior for several

reasons.

First, it more accurately reflects the

economics of transportation

transactions. If the withdrawal/

replacement transaction is satisfied by

gas in kind, it is obvious that there

should be no economic gain or loss

realized. Since the cash-out provisions

are intended to be substitutes for gas

deliveries, it should likewise be obvious

that no economic gain or loss occurred

from the basic transaction. However, the

inventory method would result in a gain

or loss being recognized to the extent

that the accounting cost of gas

withdrawn from storage (historical cost)

differs from the cash-out price

(generally current spot market prices).

On the other hand, the fixed asset model

would not show a gain or loss from the

withdrawal/replacement activity. Both
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3145

models, however, will correctly show

that a gain or loss has been realized by

the pipeline on the difference between

the cash-out price and the actual cost of

replacement gas (if such gain or loss is

not passed along to customers).

Second, the fixed asset model better

matches cost (expenses) with services.

To the extent that accounting gains and

losses on system gas transactions are

required to be passed along to

transportation customers, the fixed cost

model would achieve a closer matching

of current gas cost with current service

than would the inventory model. For

instance, if a company uses a FIFO

inventory pricing method, the effect of

gas costs incurred in prior years will

enter into the determination of the

revenue requirements for current

service. This distortion does not occur

under the fixed asset model.

Third, the fixed asset model for

assigning costs to unbundled services

permits a clearer separation of costs

deemed to be transmission from costs

related to other functions.

And fourth, the fixed asset model,

once adopted, should make the

Commission’s ratemaking and

compliance activities an easier task

since the investment included in rate

base would be fixed. Any cash flow

requirements/benefits related to the

proposed ‘‘Gas owed to system gas’’

account and the companion account

receivable could be included in cash

working capital consideration.

2. Revenues and Expenses Associated

With Compressor Fuel

Some transportation tariffs provide for

the shippers to furnish gas for

compressor fuel and other pipeline

system use. In other instances, the

pipeline is required to purchase gas for

such purposes from a third party. It is

the Commission’s understanding that, at

least in the majority of instances, no

accounting recognition is currently

being given to the compensation in the

form of gas that is received for the

transportation service when the pipeline

reports transportation revenues.

However, in any instances where it is

the pipeline’s responsibility to purchase

the gas, gas cost reimbursements would

be included in reported revenues.

Similarly, the pipeline that does not

report the furnished gas as

compensation would not show an

expense for fuel burned, whereas the

pipeline that purchases the gas would.

This diversity in accounting treatment

is not warranted. The Commission

believes that all consideration received

for services should be reported as

revenues, whether paid in cash or

otherwise. If the consideration is other

than cash, then the non-cash

consideration should be measured on a

cash basis. In the case of gas furnished

by a customer for compressor fuel, the

Commission believes that an

appropriate measure of the revenues

received by the transportation pipeline

is the cost that would have been

incurred had the pipeline been required

to purchase the gas itself. The same

assigned value should be used when

costing the gas actually used for

compressor fuel. It is only through such

accounting that uniformity can be

achieved and valid financial

comparisons made. The Commission

invites comments from the industry

about whether a price index should be

used to account for the value of gas

furnished by customers; if so, what

would be the appropriate price index,

and how should that price index be

applied?

The Commission is not proposing

changes to its Uniform System of

Accounts for these items since it

believes that the current system already

adequately provides for such

recognition. However, it should be made

clear that the expense account to be

charged with the gas provided by

shippers is the same purchased gas

account that would have been charged

if the gas was separately purchased in

a cash transaction. Further, the records

supporting the purchased gas accounts

for retained gas must be so maintained

that there will be readily available for

each shipper and point of receipt, the

quantity of gas tendered and the values

assigned.

3. The Proposed Rule

The Commission is proposing to

revise its accounting regulations to

provide for uniform accounting for all

pipeline investment in the volumes of

gas needed to operate the transportation

system. The Commission is not

proposing changes to the accounting

requirements for initial line pack, LNG

heel, and non-recoverable base gas. The

cost of this gas will continue to be

recorded in the utility plant accounts.

The proposed rule will require,

however, that Account 117, Gas Stored

Underground-Noncurrent, be replaced

by new accounts Account 117.1, Gas

stored-Base Gas, Account 117.2, System

balancing gas, Account 117.3, Gas

stored in reservoirs and pipelinesnoncurrent, and Account 117.4, Gas

owed to system gas.

Account 117.1 is to include the cost

of recoverable gas volumes that are

necessary, in addition to those volumes

for which costs are properly includable

in Account 352.3, Nonrecoverable

Natural Gas, to maintain pressure and

deliverability requirements for the

storage facility. Account 117.2 is to be

used to record a pipeline’s investment

in any additional system gas volumes,

including line pack not capitalized in

Account 101, Gas Plant in Service,

designated as maximum system gas

needed for load balancing, no-notice

transportation, and other operational

purposes. Account 117.3 is to include

the cost of noncurrent company-owned

stored gas not includable in Accounts

117.1 or 117.2. Account 117.4 is to

include encroachments upon system gas

which result from transportation

imbalances, no-notice transportation,

and other operational needs.

The initial investment cost to be

recorded in Account 117.1 and 117.2 is

to be determined from the book balances

on the date of adoption of the new

accounts. If there is no Commission

approved method to the contrary,

volumes in Account 117.1 are to be

priced consistent with the inventory

method previously in use. Volumes

includable in Account 117.2 are to be

priced at the inventory price that would

be applicable to the last volumes that

would be withdrawn from storage before

encroachment upon base gas. If there are

insufficient volumes in gas storage to

fully provide for the volumes designated

as system gas as of the adoption date,

the deficient volumes are to be priced at

the current market price with an equal

amount being credited to Account

117.4. Future encroachments upon

system gas are to be credited to Account

117.4 at the then current market price of

gas with a corresponding charge to

Account 808.1, Gas Withdrawn From

Storage-Debit. Account 806, Exchange

Gas, would be credited and Account

174, Miscellaneous Current and

Accrued Assets, would be debited

simultaneously with the entries to

system gas.

If a customer responsible for an owedto-system gas balance meets his

responsibility for repayment by

delivering gas in kind, Account 806

would be debited and Account 174

credited at the market price originally

used to establish the Account 174

balance. The next volumes injected into

system gas would likewise be priced at

this same price by crediting 808.2 Gas

Delivered to Storage-Credit and debiting

Account 117.4. If the owed to system

gas balance (Account 117.4) is due to

more than one transaction, the above

accounting would follow a queue with

the earliest transaction first. Such

accounting would be followed until the

credit balance in Account 117.4 was

eliminated.

If the customer responsible for an

owed-to-system gas balance meets his
3146 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

responsibility for repayment through a

cash-out provision, similar accounting

would be followed. However, a gain or

loss may be realized under either

settlement method selected. The gain or

loss could result from either the book

amount for the account receivable

(Account 174, Miscellaneous Current

and Accrued Assets) being different

than the cash-out settlement or the price

paid for the replacement volumes being

different than the price used to establish

the owed to system gas account or both.

If the pipeline’s tariff provides that

gains and losses on such transactions

are to be passed along to customers in

future periods, the gain or loss should

be included in either Account 182.3,

Other Regulatory Assets or Account 254,

Other Regulatory Liabilities, with contra

entries to Account 407.3, Regulatory

Debits, or Account 407.4, Regulatory

Credits, as appropriate. If the gain or

loss on settlement of the imbalance

receivable or payable is not to be passed

along to customers, Account 495, Other

Gas Revenues, or Account 813, Other

Gas Supply Expenses, as appropriate,

should be used to record the gain or

loss.

B. Other Revisions to Uniform System of

Accounts

1. Revenues

At present, a pipeline includes in

Account 489, Revenues from

transportation of gas of others,

‘‘revenues from transporting gas for

other companies through the

production, transmission, and

distribution lines, or compression

stations of the utility.’’ Service charges

for the storage of gas of others is

included in Account 495, Other gas

revenues, (See Item No. 5 of Account

495). The Commission proposes to

delete Account 489 (Revenues from

transportation of gas of others) in its

entirety and Item No. 5 of Account 495

(Service charges for storing gas for

others) and replace them with four new

accounts. Those are: Account 489.1 in

which the pipeline would include

revenues from transportation of gas

through gathering facilities; Account

489.2 in which the pipeline would

include revenues from transportation of

gas through transmission facilities;

Account 489.3 in which the pipeline

would include revenues from

transportation of gas through

distribution facilities; and Account

489.4 in which the pipeline would

include revenues from storing gas of

others. In addition, the Commission

proposes to add a new item to the list

of items in Account 495. This is item 8,

‘‘Gains on settlements of imbalance

receivables (See Account 806).’’

The Commission is proposing the

above changes in order to appropriately

record revenues from unbundled

services.

2. Gas Supply Expenses

The Commission proposes to revise

Account 806, Exchange gas, so that it

will include debits or credits for the cost

of gas in unbalanced transactions and

not just unbalanced exchange

transactions. Such unbalanced

transactions would be those whereby

gas is delivered to another party in

exchange, load balancing, or no-notice

transportation transactions. In addition,

the Commission proposes to revise the

instructions in paragraph B concerning

the recording of revenue, gain, expense,

or loss in connection with the

performance of exchange services and to

revise paragraph C with respect to the

maintenance of records so that there

would be readily available for each

party entering gas exchange, load

balancing, or no-notice transportation

transactions by point of receipt and

delivery, the quantity of gas delivered

and received, the amount of

consideration if other than gas, and the

basis for the consideration. The

Commission also proposes to revise

Account 813, Other gas supply

expenses, so that it will include losses

on settlements of imbalance receivables.

3. Major/Nonmajor Accounts

The Commission is proposing to

eliminate all Nonmajor accounts in the

Uniform System of Accounts and to

require all natural gas companies to use

the same accounts. The Commission is,

thus, also proposing that the Major

accounts be changed to eliminate their

application to Major natural gas

companies only and to revise the

instructions, notes and items

accordingly. In addition, as discussed

below, the Commission is proposing to

revise Form No. 2–A to require

Nonmajor respondents to file certain

Form No. 2 pages as their Form No. 2–

A report. The Commission is also

proposing to revise part 158 of the

regulations to delete the references to

major and nonmajor in sections 158.10

and 158.11. In addition, the

Commission proposes to further amend

section 158.10(a) so that it applies to all

examinations of accounts without

limitation and requires independent

licensed public accountants to be

licensed on or before December 30, 1970

as is the case in current section

158.10(b) and to delete present section

158.10(b). Further, the Commission

proposes to revise section 158.11 to

require the filing of the independent

accountant’s letter or report of

certification with the original and each

copy of the Form No. 2 or Form No. 2–

A. Last, the Commission proposes to

revise section 158.12 by removing the

words, ‘‘The Commission will not

recognize any certified public

accountant or public accountant

through December 31, 1975, who is not

in fact independent. Beginning January

1, 1976, and each year thereafter, the’’

and adding in their place, the word

‘‘The’’.

4. Mcf to Dth

At present, the Uniform System of

Accounts requires reporting volumes by

Mcf. The Commission proposes to

amend the Uniform System of Accounts

where applicable to measure gas by

dekatherms rather than by Mcf to reflect

the current measurement of gas by heat

content rather than by volume.

IV. Part 250

Part 250 of the Commission’s

regulations specifies the use of certain

forms for accomplishing specific

actions. The most significant change

proposed in Part 250 is the removal of

section 250.16 (Format of compliance

plan for transportation services and

affiliate transactions) of the

transportation discount information that

a pipeline transporting gas under

subparts B or G of Part 284 and

conducting discounted transportation

transactions with a marketing or

brokering affiliate must maintain for

each billing period. As more fully

explained under the discussion in this

NOPR regarding the changes proposed

for Part 284, infra, the discount

reporting requirements under section

250.16(d) are somewhat duplicative of

the discount reports required under

section 284.7(d)(5)(iv). Therefore, the

Commission is proposing in this NOPR

various modifications to section

284.7(d)(5)(iv) (proposed section

284.7(c)(6)) that will make the discount

reporting information under section

250.16(d) unnecessary. Accordingly, the

Commission proposes to delete section

250.16(d).

The other proposed changes to Part

250 are essentially intended to simplify,

update, or eliminate these forms to

reflect current regulatory practice, and

to eliminate the forms related to the

regulation of producers and gatherers,

since the wellhead gas market has been

finally deregulated and such forms are

required by regulations that have been

removed in Parts 154 and 157.

Section 250.2 sets forth the forms

required under section 154.64 (proposed

section 154.602) for notification to the
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3147

13 68 FERC ¶ 61,135 (1994).

14Pub. L. No. 101–60; 103 Stat. 157 (1989).

Commission of a cancellation of a filed

tariff or part thereof, or a termination of

the tariff by its own terms, when no new

tariff or part thereof is to be filed in its

place. The Commission proposes to

simplify and clarify section 250.2 by

stating that the notices of cancellation to

be used when canceling an entire tariff

or an entire rate schedule should be

filed as a tariff sheet. Currently, the

existing forms themselves include the

header and footer information normally

associated with a tariff sheet, which is

unnecessary and confusing.

In addition, the Commission proposes

to modify section 250.2 by eliminating

the requirement that a specific form be

used when providing notice of the

cancellation of individual tariff sheets.

Rather, section 250.2 will provide that

when a single sheet is canceled, it

should be reserved for future use. This

does not represent a substantive change,

but more accurately represents the

current practice in canceling a tariff

sheet, and will allow the sheet to

conform better to the Commission’s

electronic tariff sheet filing

requirements.

Section 250.3 specifies the form

required under section 154.64 (proposed

section 154.602) for notification to the

Commission of a cancellation or

termination of a contract, or executed

service agreement. The Commission

proposes to change the current

instruction in the form to indicate the

‘‘name of purchaser or purchasers’’ to an

instruction to indicate the ‘‘name of

customer or customers.’’ The use of

‘‘customer’’ rather than ‘‘purchaser’’

better reflects the shift in today’s gas

market from sales to transportation

service.

The Commission proposes to modify

the headings of sections 250.2, 250.3,

and 250.4 (governing the form of the

certificate of adoption required under

existing section 154.65 (proposed

section 154.603) to be used when the

tariff or contracts of a natural gas

company are to be adopted by a

successor entity) to refer to the new

section numbers of the regulations from

which their authority stems, since the

Commission proposes in the companion

rulemaking to redesignate the

referenced sections of Part 154. Thus,

the reference in sections 250.2 and

250.3 to section 154.64 is changed to

section 154.602, and the reference in

section 250.4 to section 154.65 is

changed to section 154.603. The

Commission also proposes, in section

250.4, to modify the line indicating the

date of the form of certificate of

adoption by removing the year indicator

of ‘‘194 —.’’

Many of the forms set forth in Part

250 relate to the filing requirements of

natural gas producers and gatherers

under Parts 154 and 157 of the

Commission’s regulations. Specifically,

section 250.5 specifies the form of

contract summary required to be filed

under section 154.24(a) by independent

producers applying for a certificate of

public convenience and necessity under

section 7 of the NGA for the

transportation, or sale for resale, of

natural gas in interstate commerce.

Section 250.7 specifies the form of

contract summary required to be filed

under section 157.30(b) by independent

producers seeking abandonment

authorization. Section 250.8 specifies

the form for the summary of contract

information required by section

154.92(d) to be filed by independent

producers seeking authority to provide

natural gas service, previously

authorized by the Commission, as a

successor-in-interest. Section 250.9

specifies the form of notice required

under section 154.97(a) to be filed by an

independent producer when a rate

schedule is proposed to be cancelled, or

will terminate by its own terms, and no

new schedule is to be filed in its place.

Section 250.10 specifies the form

required to be filed under section

157.40(b)(4) by independent producers

applying for a small producer

exemption from certain filing

requirements. Section 250.14 specifies

the form of the initial billing statement

required under section 154.92 to be filed

with the filing of a rate schedule by

every independent producer, and the

form required under section 154.94(f) to

be used by an independent producer

seeking a change in its rate schedule.

All of the above-referenced sections of

Parts 154 and 157 have been removed

from the Commission’s regulations by

Order No. 567, issued July 28, 1994, in

Docket No. RM94–18–000.13 Order No.

567 deleted certain regulations related

to natural gas producer rate regulation

that were either obsolete or nonessential

in light of the deregulation of wellhead

gas prices under the Natural Gas

Wellhead Decontrol Act of 1989,14 that

finally occurred on January 1, 1993.

Since the regulations requiring that

independent producers make certain

filings, and in specific forms, have been

deleted, sections 250.5, 250.7, 250.8,

250.9, 250.10, and 250.14 of part 250,

setting forth the actual forms, should

also be deleted. Thus, the Commission

is proposing to remove these sections.

The Commission also proposes to

remove section 250.12, governing the

form of escrow agreements. This

regulation was originally promulgated

by Order No. 400, issued April 28, 1970,

in Docket No. R–376. It is rarely used.

In the instances in which companies are

required to place funds in escrow, the

Commission proposes to determine in

the proceeding establishing the escrow

requirement whether, and in what form,

the escrow agreement should be filed

with the Commission. However, the

Commission will invite comments from

parties who believe it would be useful

to retain a form of escrow agreement, or

suggestions as to how this regulation

could be modified to become more

useful, rather than eliminated.

Finally, the Commission proposes to

change all references in Part 250 from

the ‘‘FPC’’ and the ‘‘Federal Power

Commission’’ to the ‘‘FERC,’’ and to the

‘‘Federal Energy Regulatory

Commission,’’ respectively.

V. Part 260

The provisions of Part 260 require

that pipelines file certain forms and

reports with the Commission, such as

the FERC Form Nos. 2, 2–A, 11, and

549–ST. As further discussed below, the

Commission is proposing to modify the

actual Form Nos. 2, 2–A, and 11, and

various sections of Part 260. The

proposed changes to Part 260 are simply

designed to update these reporting

requirements to reflect current

regulatory practice, and to conform

these prescriptive requirements to the

changes to the other parts of the

Commission’s regulations proposed in

this NOPR.

A. Revisions to Form No. 2

The Commission is proposing to

revise Form No. 2 for a variety of

reasons. First, it is desirable to update

Form No. 2 by deleting unneeded

schedules, or individual data elements,

by clarifying and modernizing

schedules and instructions, and by

increasing the thresholds for the

reporting of certain information.

Second, it is vital to revise Form No. 2

to accurately present the restructured

nature of the natural gas pipeline

industry, which is primarily focused on

the transportation of gas rather than the

sale of gas. Only then will the Form No.

2 provide more useful and relevant

information to the Commission and to

pipeline customers for the assessment of

pipeline operations. A sample copy of

the proposed revised Form No. 2 is

attached as Appendix A.

The specific changes the Commission

proposes are:
3148 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

15Btu refers to British Thermal Unit—the quantity

of heat required to raise the temperature of one

pound of water by one degree Fahrenheit.

General Information—Pages i and ii

The Commission proposes to require

Form No. 2 to be filed by each major

interstate natural gas company having

combined gas transported or stored for

a fee exceeding 50 million dekatherms

(Dth) in each of the three previous

calendar years. This will replace the

present requirement that Form No. 2

must be filed by major companies which

are those having combined gas sold for

resale and gas transported or stored for

a fee exceeding 50 million Mcf at 14.70

psia (60°F) in each of the three previous

calendar years. The proposed

elimination of ‘‘gas sold for resale’’

reflects the current nature of the

pipeline industry where pipelines are

primarily transporters of gas and make

sales for resale on an unbundled basis

in the supply area. The proposed

replacement of Mcf with Dth reflects the

current measurement of gas by heat

content rather than by volume.

The Commission also proposes to

eliminate the words ‘‘is a Regulatory

Support Requirement (18 CFR 260.1)’’

in the first sentence of page i as not

needed and to revise the last sentence

in Instruction 1, to eliminate the

reference to the Energy Information

Administration’s statistical publication

(Financial Statistics of Interstate Natural

Gas Pipeline Companies), to delete the

words, ‘‘as classified in the

Commission’s Uniform System of

Accounts Prescribed for Natural Gas

Companies Subject to the Provisions of

the Natural Gas Act (18 CFR 201),’’ from

the first sentence in Instruction II, and

to add the words, ‘‘which meets the

filing requirements of 18 CFR 260.1’’

after the word company in that

sentence.

The Commission proposes to revise

Instruction III(a) to add the present

requirement for filing on an electronic

medium. The Commission further

proposes to change Instruction III(c) to

replace the present Certified Public

Accountant (CPA) certification

statement with a flexible format that

will enable the respondent’s CPA firm

to prepare its certification statement in

accordance with current standards of

reporting and still attest as to the

conformity of listed FERC Form No. 2

schedules with the Commission’s

Uniform System of Accounts and the

Chief Accountant’s published

accounting releases.

In addition, the Commission proposes

that the letter or report required by

Instruction III(c) for the CPA

certification be submitted with each

copy as well as with the original

submission and be submitted with that

submission rather than alternatively

within 30 days after the filing date for

Form No. 2.

General Instructions—Page iii

The Commission proposes to replace

Mcf with Dth in General Instruction II

on page (ii) and ‘‘14.73 psia and a

temperature base of 60°F’’ with ‘‘in Btu

and Dth,’’ in General Instruction XII on

page (iii). The Commission also

proposes to delete General Instruction V

with respect to the means of completing

the report as outdated and unnecessary.

Definitions—Page iv

The Commission proposes to define

dekatherm as a unit of heating value

equivalent to 10 therms or 1,000,000

Btu.15

Excepts From the Law—Page iv

The Commission proposes to correct

the quoted language of the Natural Gas

Act.

List of Schedules (Natural Gas

Company)—Pages 2–4

The Commission proposes to revise

the list of schedules to conform with the

changes proposed to the schedules by

this NOPR.

Control Over Respondent—Page 102

The Commission proposes to revise

the instructions and provide a format for

information required with respect to

entities controlling the respondent

natural gas company to provide better

reporting of the vertical integration of

the respondent and its parents.

The Commission is proposing to

delete referencing the SEC 10–K Report

Form because most respondents are

included in consolidated reports and do

not prepare separate 10–K reports.

Corporations Controlled By

Respondent—Page 103

The Commission proposes to delete

instruction 4, which permits referencing

the SEC 10–K Report Form filing for the

reason stated above. The Commission

also proposes to add a new instruction

4 and new column (b) for designation of

the type of control held by the

respondent.

Definitions—Page 103

The Commission proposes to delete

column (d) entitled ‘‘Footnote Ref.’’

Officers—Page 104

The Commission proposes to delete

this page because it is not needed for

Commission regulatory purposes.

Directors—Page 105

The Commission proposes to delete

this page because it is no longer needed

for Commission regulatory purposes.

Security Holders and Voting Powers

(Continued)—Page 107

The Commission proposes to delete

this continuation page because it is not

needed with electronic reporting since

supplemental pages can be added if

more space is needed.

Important Changes During the Year—

Page 108

The Commission proposes to delete

item 12, which allows the respondent to

substitute notes from the annual report

to stockholders for required data

because most respondents are included

in consolidated reports and do not

prepare separate annual reports.

Important Changes During the Year—

Page 109

The Commission proposes to delete

this continuation page because it is not

needed with electronic reporting.

Comparative Balance Sheet (Assets and

Other Debits)—Page 110

The Commission proposes to modify

column (c) by deleting ‘‘Balance at

Beginning of Year’’ and inserting

‘‘Balance at End of Current Year (in

dollars)’’ and to modify column (d) by

deleting ‘‘Balance at End of Year (in

dollars)’’ and inserting ‘‘Balance at End

of Previous Year (in dollars).’’ The

Commission also proposes to delete

‘‘Gas Stored Underground Noncurrent

(117)’’ at Line 12 and replace it with

four new accounts—Gas Stored—Base

Gas (117.1), System Balancing Gas

(117.2), Gas Stored in Reservoirs and

Pipelines—Noncurrent (117.3), and Gas

Owed to System Gas (117.4). The

Commission discussed the proposed

new accounts above.

Comparative Balance Sheet (Assets and

Other Debits) (Continued)—Page 111

The Commission proposes to modify

column (c) by deleting ‘‘Balance at

Beginning of Year’’ and inserting

‘‘Balance at End of Current Year (in

dollars)’’ and to modify column (d) by

deleting ‘‘Balance at End of Year’’ and

inserting ‘‘Balance at End of Previous

Year (in dollars).’’

Comparative Balance Sheet (Liabilities

and Other Credits)—Page 112

The Commission proposes to modify

column (c) by deleting ‘‘Balance at

Beginning of Year’’ and inserting

‘‘Balance at End of Current Year (in

dollars)’’ and to Modify Column (d) by

deleting ‘‘Balance at End of Year’’ and
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3149

inserting ‘‘Balance at End of Previous

Year (in dollars).’’ The Commission also

proposes to add the language ‘‘(Less)

Current Portion of Long-Term Debt’’ to

Line 22 and to add the language

‘‘Current Portion of Long-Term Debt’’ as

Line No. 33.

Comparative Balance Sheet (Liabilities

and Other Credits) (Continued)—Page

113

The Commission proposes to modify

column (c) by deleting ‘‘Balance at

Beginning of Year’’ and inserting

‘‘Balance at End of Current Year (in

dollars)’’ and to modify column (d) by

deleting ‘‘Balance at End of Year’’ and

inserting ‘‘Balance at End of Previous

Year (in dollars).’’

Statement of Income for the Year—Page

114

The Commission proposes to move

instructions 5 and 6 from this schedule

to Notes to Financial Statements on

page 122.

Statement of Income for the Year

(Continued)—Page 115

The Commission proposes to delete

instruction 7, which permits the

attaching at page 122 of any notes

appearing in the report to stockholders

that are applicable to this Statement of

Income, and to move instruction 8 from

this schedule to Notes to Financial

Statement on page 122.

Statement of Income for the Year

(Continued)—Page 116

The Commission proposes to delete

this continuation page because it is not

needed with electronic reporting.

Statement of Retained Earnings for the

Year—page 118

The Commission proposes to modify

column (c) by deleting ‘‘Amount’’ and

inserting ‘‘Current Year Amount (in

dollars)’’ and to add column (d)

‘‘Previous Year Amount (in dollars).’’

The Commission also proposes to delete

instruction 8, which requires the

attaching at page 122 of applicable notes

in the annual report to stockholders.

Statement of Retained Earnings for the

Year (Continued)—Page 119

The Commission proposes to modify

column (b) by deleting ‘‘Amount’’ and

inserting ‘‘Current Year Amount’’ and

adding column (c) ‘‘Previous Year

Amount.’’

Statement of Cash Flows—Pages 120

and 121

The Commission proposes to delete

the first sentence of instruction 1, which

requires the attaching at page 122 of

applicable notes in the annual report to

stockholders.

The Commission proposes to modify

column (b) by deleting ‘‘Amounts’’ and

inserting ‘‘Current Year Amount’’ and to

add Column (c) ‘‘Previous Year

Amount.’’

Notes to Financial Statement—Page 122

The Commission proposes to change

instruction one to require at least the

same level of detail for disclosures that

would be given in shareholder annual

reports and to add new instructions to

provide significant details on: the

respondent’s pension and other benefit

plans; income tax accounting;

differences in the way in which

transactions are presented in the

shareholder annual reports versus the

Form No. 2; and disclosure of financial

changes either to the respondent or the

respondent’s consolidated group that

will directly affect the respondent’s gas

pipeline operations. The Commission

also proposes to delete instructions 3

(‘‘For Account 116, Utility Plant

Adjustments’’) and 6 (permitting the

attaching of notes to financial

statements in the annual report to

stockholders). In addition, as stated

above, the Commission proposes to

move three instructions from pages 114

and 115 to page 122.

Notes to Financial Statement

(Continued)—Page 123

The Commission proposes to delete

this continuation page between it is not

needed with electronic reporting.

Summary of Utility Plant and

Accumulated Provisions for

Depreciation, Amortization and

Depletion (Continued)—Page 201

The Commission proposes to delete

columns (f) and (g) both entitled ‘‘other

(specify)’’ as unneeded because

electronic reporting permits additional

columns to be added as necessary.

Gas Property and Capacity Leased From

Others—Page 212

The Commission proposes a new

schedule to provide detailed

information about gas property and

capacity leased from others, including

leases involving property constructed by

the respondent, sold, and then leased

back. The Commission proposes to

require only the reporting of property

leases in which the average annual lease

payment under the initial term of the

lease exceeds $500,000.

Gas Property and Capacity Leased to

Others—Page 213

The Commission proposes to revise

the schedule on page 213 entitled ‘‘Gas

Plant Leased to Others (Account 104)’’

by changing the schedule and

instructions to obtain details about gas

property and capacity leased to others.

The changes are necessary to provide

information that would allow the

Commission to determine whether

ratepayers are paying for facilities not

used in the respondent’s utility

operations. The Commission proposes

to require only the reporting of property

leases in which the average lease

income over the initial term of the lease

exceeds $500,000.

Gas Plant for Future Use (Account

105)—Page 214

The Commission proposes to raise the

reporting threshold from $250,000 to

$500,000 and to delete the language in

Line No. 1 which refers to pages 500–

01, which are proposed to be deleted.

Production Properties Held for Future

Use (Account No. 105.1)—Page 215

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Gas Stored (Accounts 117.1, 117.2,

117.3, 117.4, 164.1, 164.2, and 164.3)—

Page 220

The Commission proposes to delete

Account 117 and replace it with four

new accounts as discussed above. The

Commission also proposes to change

Mcf to Dth in instruction 1 and lines 6

and 7, to redesignate the column letters,

to eliminate instructions 2 through 5 as

no longer necessary, and to add a new

instruction on encroachments on base

gas, system gas, and gas properly

recordable.

Non-utility Property (Account No. 121)

and Accumulated Provision for

Depreciation and Amortization of

Nonutility Property (Account 122)—

Page 221

The Commission proposes to delete

these schedules because they are not

needed for Commission regulatory

purposes.

Gas Prepayments Under Purchase

Agreements—Pages 226 and 227

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Advances for Gas Prior to Initial

Deliveries or Commission Certification

(Accounts 124, 166, and 167)—Page 229

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Prepayments (Account 165)—Page 230

The Commission proposes to

eliminate the instruction requiring the
3150 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

16The proposed new sales line includes Accounts

480–84 which are now reported on lines 2–12.

17Revenues excludes GRI, ACA, and other

revenues.

18Other revenues are Order No. 636 transition

costs and take-or-pay costs.

reporting of all payments for

undelivered gas and the completion of

pages 226 to 227, along with Line 5, Gas

Prepayments (pages 226–227). Pages 226

and 227 are also proposed to be

eliminated.

Preliminary Survey and Investigation

Charges (Account 183)—Page 231

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Other Regulatory Assets (Account

182.3)—Page 232

The Commission proposes to raise the

reporting threshold for minor items

from $50,000 to $100,000 and to add

new instruction 4—‘‘Report separately

any ‘deferred regulatory Commission

expenses’ that are also reported on

pages 350–351, Regulatory Commission

Expenses.’’

Miscellaneous Deferred Debits (Account

186)—Page 233

The Commission proposes to raise the

reporting threshold for minor items

from $100,000 to $250,000 and to delete

Line No. 48 ‘‘Deferred Regulatory

Commission Expenses (see pages 350–

351).

Capital Stock (Accounts 201 and 204)—

Page 250

The Commission proposes to delete

part of instruction 1, which permits

referencing the SEC 10–K Report Form

filing. The Commission is proposing

this deletion because most respondents

are included in consolidated reports and

do not prepare separate 10–K reports.

Long-Term Debt (Accounts 221, 222,

223, and 224)—Page 256

The Commission proposes to delete

part of instruction 1, which permits

referencing the SEC 10–K report Form

filing for the reason stated above.

Investment Tax Credits Generated and

Utilized—Pages 264 and 265

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Accumulated Deferred Investment Tax

Credits (Account 253)—Pages 266 and

267

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Miscellaneous Current and Accrued

Liabilities (Account 242)—Page 268

The Commission proposes to raise the

reporting threshold for minor items

from $100,000 to $250,000.

Other Deferred Credits (Account 253)—

Page 269

The Commission proposes to raise the

reporting threshold for minor items

from $100,000 to $250,000 and to delete

instruction 4 as not needed for

Commission regulatory purposes in that

it refers to undelivered gas obligations

to customers under take-or-pay clauses

in sales agreements.

Undelivered Gas Obligations Under

Sales Agreements—Pages 270 and 271

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Accumulated Deferred Income Taxes—

Accelerated Amortization Property

(Account 281)—Pages 272 and 273

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Other Regulatory Liabilities (Account

254)—Page 278

The Commission proposes to raise the

reporting threshold for minor items

from $50,000 to $100,000 and to correct

a typographical error.

Gas Operating Revenues (Account

400)—Pages 300, 301, and 301A

The Commission proposes substantial

and significant changes to this schedule.

The proposed changes are: (1) the

elimination of instruction 1’s reference

to manufactured gas revenues; (2) the

deletion of instruction 2 defining

natural gas; (3) the deletion of

instruction 3 and present columns (f)

and (g) concerning average number of

natural gas customers per month; (4) the

deletion of instruction 4 with respect to

Mcf and therms; (5) the revision of

instruction 5 to eliminate the reference

to columns (c), (e), and (g); (6) the

deletion of instruction 6 concerning

commercial and industrial sales; (7) the

revision of instruction 7 to read,

‘‘Include information on page 106,

Important Changes During Year, for

important new service added and

important rate increases and decreases;’’

(8) the addition of new instruction 2 to

provide that other revenues are recovery

of Order No. 636 transition costs and

take-or-pay costs; (9) the addition of a

new instruction 5 with respect to

reporting the revenue of bundled

transportation and storage service as

transportation service revenue; (10) the

addition of new instruction 6 with

repect to the reporting in columns (j)

and (k) of revenues received for

operational penalties (e.g., operational

flow order penalties, scheduling

penalties, penaties for failure to cycle

storage gas, (11) the revising of

operating revenues in columns (b) and

(c) to revenues excluding GRI, ACA,

other revenues, and penalties, (12) the

deletion of lines 2–12 and 28–32, which

provide for the reporting of sales

revenues; (13) the addition of lines to

show separately sales revenues,16 and

revenues from gathering, transmission,

distribution, and storage services; and

(14) added columns showing GRI

revenues, ACA revenues, other

revenues, penalty revenues, and total

operating revenues and dekatherms of

natural gas, each for the current

reporting year and the previous year.

The Commission’s main reason for

proposing these changes is to recognize

that pipelines now receive most of their

revenues from transportation and not

sales. Hence, the breakout of

information by types of sales is not

needed. The Commission proposes to

break out Account 489 into four new

accounts (Accounts 489.1–489.4) as

discussed above. The segregation of

operating revenues from other types of

revenues will facilitate comparisons to

operating costs.

Revenues From Transportation of Gas of

Others Through Gathering Facilities

(Account 489.1)—Pages 302, 303, and

304

The Commission proposes to replace

the schedule ‘‘Distribution Type Sales

by States’’ with several new schedules.

The current schedule, which reflects

residential, commercial, and industrial

revenues and volumes by state is no

longer needed for Commission

regulatory purposes because with

unbundling those sales are now

unbundled and occur in the production

area rather than in the market area.

In the proposed new Revenues from

Transportation of Gas of Others Through

Gathering Facilities Schedule, the

pipeline would have to report its

revenues by state of delivery and by

rate. The pipeline would have to report

for both the current and previous year

its revenues,17 GRI revenues, ACA

revenues, other revenues,18 and total

operating revenues, along with its Dth of

gas delivered. The Commission believes

that this proposed schedule will provide

the information needed with respect to

gathering to obtain a good description of

the pipeline’s activities in the

unbundled environment.
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3151

19Revenues excludes GRI, ACA, and other

revenues.

20Other revenues are Order No. 636 transition

costs and take-or-pay costs.

21Revenues excludes GRI, ACA, and other

revenues.

22Other revenues are Order No. 636 transition

costs and take-or-pay costs.

23The respondent’s Dth of gas reported would not

be adjusted for discounting.

24Operating revenues excludes GRI, ACA, and

other revenues and includes reservation and usage

charges.

25Other revenues are Order No. 636 transition

costs, take-or-pay costs.

26Operating revenues excludes GRI, ACA, and

other revenues and includes reservation,

deliverability, injection, and withdrawal charges.

27Other revenues are Order No. 636 transition

costs, take-or-pay costs.

28Operating revenues excludes GRI, ACA, and

other revenues and includes reservation and usage

charges.

29Other revenues are Order No. 636 transition

costs, take-or-pay costs.

Revenues From Transportation of Gas of

Others Through Transmission Facilities

(Account 489.2)—Pages 302A, 303A,

and 304A

In the proposed new Revenues from

Transportation of Gas of Others Through

Transmission Facilities Schedule, the

pipeline would have to report its

revenues by state of delivery and by rate

schedule. The pipeline would have to

report for both the current and previous

year its revenues,19 GRI revenues, ACA

revenues, other revenues,20 and total

operating revenues, along with its Dth of

gas delivered. The Commission believes

that this reporting reflects the current

unbundled environment’s emphasis on

transportation for others.

Revenues From Storage of Gas of

Others—Pages 302B, 303B and 304B

In the proposed new Revenues from

Storage of Gas of Others schedule, the

pipeline would have to report its

revenues by rate schedule. The pipeline

would have to report for both the

current and previous year its revenues,21

GRI revenues, ACA revenues, other

revenues,22 and total operating

revenues, along with the Dth withdrawn

from storage.

The Commission believes that this

proposed schedule will provide the

information needed with respect to

unbundled storage to obtain a good

description of the pipeline’s activities in

the unbundled environment.

Residential and Commercial Space

Heating Customers and Interruptible,

Off-Peak, and Firm Sales to Distribution

System Industrial Customers—Page 305

The Commission proposes to delete

this page because it is not needed for

Commission regulatory purposes.

Sales of Natural Gas—Pages 306

Through 309

The Commission proposes to change

the title of this schedule from Field and

Main Line Industrial Sales of Natural

Gas to ‘‘Sales of Natural Gas’’, to revise

instruction 1, and the information

required, and to delete continuation

sheets on pages 308 and 309.

The proposed new schedule will

include all sales information on the

schedule. The pages when revised will

require respondents to report all sales

by customer in Dth rather than Mcf

(column (c)), by point of delivery

(column (b)), and with total sales

revenue from the customer (column (d)).

The Commission also proposes to

eliminate current instructions 2, 3, 4, 6,

7, and 8 and current columns (b), and

(d)–(m) because that detailed

information is no longer needed for

Commission regulatory purposes. Pages

308 and 309 are proposed to be deleted

because they are continuation pages and

are no longer needed with electronic

reporting.

Sales for Resale—Natural Gas (Account

483)—Pages 310 and 311

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Transportation Dth and Revenues—

Pages 312 and 313

The Commission proposes to replace

the schedule ‘‘Revenue From

Transportation of Gas of Others—

Natural Gas (Account 489)’’ (pages 312

and 313) with ‘‘Transportation Dth and

Revenues’’, ‘‘Storage Dth and

Revenues’’, and ‘‘Gathering Dth and

Revenues.’’

In the proposed new Transportation

Dth and Revenues schedule, the

respondent would have to list annual

Dth of Gas delivered by state of delivery

by rate schedule by customer.23 The

respondent would have to report its

deliveries separately to interstate

pipelines and to others. The respondent

would no longer have to set forth the

distance the gas was transported in

miles. In addition, the respondent

would have to report operating

revenues,24 GRI revenues, ACA

revenues, other revenues,25 and total

revenues by state of delivery by rate

schedule by customer.

Storage Dth and Revenues—Pages

312(a) and 313(a)

In the proposed new Storage Dth and

Revenues schedule, the respondent

would have to list annual Dth

withdrawn from storage by rate

schedule by customer. In addition, the

respondent would have to report

operating revenues,26 GRI revenues,

ACA revenues, other revenues,27 and

total revenues by rate schedule and by

customer.

Gathering Dth and Revenues—Pages

312(b) and 313(b)

In the proposed new Gathering Dth

and Revenues schedule, the respondent

would have to list annual Dth of gas

delivered by state of delivery by rate by

customer. In addition, the respondent

would have to report operating

revenues,28 GRI revenues, ACA

revenues, other revenues,29 and total

revenues by rate of delivery by rate by

customer.

Revenues From Natural Gas Processed

by Others (Account 491)—Page 315

The Commission proposes to replace

Mcf with Dth in column (b).

Other Gas Revenues (Account 495)—

Page 316

The Commission proposes new

schedule ‘‘Other Gas Revenues (Account

495)’’ for the reporting of a variety of

other gas revenues, such as revenues

from dehydration and gains on

settlements of imbalance receivables.

Exploration and Development Expenses

(Accounts 795, 796, 798) (Except

Abandoned Leases, Account 797)—Page

326

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Abandoned Leases (Account 797)—Page

326

The Commission proposes to delete

this schedule because it is not needed

for Commission regulating purposes.

Gas Receipts—Page 327

The Commission proposes to revise

instruction 5 to require the providing of

the total quantity and cost data for gas

supplied by shippers on lines 12, 13,

and 14. The Commission proposes to

add line 11 as a heading, ‘‘Gas Received

From Shippers Included in Accounts

800–805,’’ line 12, ‘‘Gas Received From

Shippers as Fuel’’, line 13, ‘‘Gas

Received From Shippers As Lost and

Unaccounted’’, and line 14, ‘‘Total

(Enter Total of Lines 12 and 13).’’ The

Commission also proposes that gas

purchases in column (b) and average

cost in column (d) be reported in Dth.
3152 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

Exchange Gas Transactions (Account

806, Exchange Gas)—Pages 328, 329

and 330

The Commission proposes to revise

instruction 1 to require the reporting of

gas quantities rather than gas volumes

and to require the reporting of load

balancing and no-notice transactions

separately from other exchange

transactions. The Commission also

proposes to revise instruction 4 by

adding the words, ‘‘For exchanges

only,’’ at the beginning of the

instruction and to delete instruction 6

with respect to the pressure base of gas

volumes. The Commission also

proposes to replace Mcf with Dth in

instruction 1 and in columns (c), (f) and

(h).

Gas Used In Utility Operations—Page

331

The Commission proposes to strike

‘‘Credit (Accounts 810, 811, 812)’’ from

the title, to replace Mcf with Dth, and

to delete part of Instruction 1 and all of

instructions 2, 3 and 5 concerning the

definition of natural gas and Mcf

reporting.

Transmission and Compression of Gas

By Others (Account 858)—Pages 332

and 333

The Commission proposes to replace

Mcf with Dth and to delete current

columns (b)–(f) and to require the

reporting of Dth of gas delivered in new

column (b). This would eliminate the

reporting of the distance gas is

transported and revenue information.

The continuation page 333 is deleted.

Other Gas Supply Expenses (Account

813)—Page 334

The Commission proposes to require

the reporting of losses on settlements of

imbalance receivables.

The Commission also proposes to

require that items of $25,000 or more be

listed separately.

Miscellaneous General Expenses

(Account 930.2)(Gas)—Page 335

The Commission proposes to divide

Line No. 2 (Experimental and general

research expenses) into (a) Gas Research

Institute (GRI) expenses and (b) other

expenses. In addition, the Commission

proposes to raise the thresholds from

$5,000 to $25,000.

Depreciation, Depletion, and

Amortization of Gas Plant (Accounts

403, 404.1, 404.2, 404.3, 405) (Except

Amortization of Acquisition

Adjustment)—Page 336

The Commission proposes to delete

instruction 2 to report information

called for in Section B every fifth year

after 1974 and to insert the words ‘‘and

amortizable’’ in the first line of new

instruction 2 after the word

‘‘depreciable.’’

Depreciation, Depletion, and

Amortization of Gas Plant (continued)—

Page 338

The Commission proposes to revise

the headings to column (b) to read

‘‘Plant Base (thousands)’’ and column

(c) to read ‘‘Applied Depreciation or

Amortization Rates (Percent).’’

Income From Utility Plant Leased to

Others (Account 412 and 413)—Page

339

The Commission proposes to delete

this schedule because the information

will be reported on page 213.

Particulars Concerning Certain Income

Reductions and Interest Charges

Accounts—Page 340

The Commission proposes the raise

the threshold for the grouping of items

from $10,000 to $25,000.

Regulatory Commission Expenses—

Pages 350 and 351

The Commission proposes to change

the account number reference in the

headings to columns (e), (i) and (l) from

186 to 182.3, and to replace instruction

4 on page 351, which references

Account No. 186, with ‘‘4. Identify

separately all annual charge adjustments

(ACA).’’ In addition, the Commission

proposes to raise the threshold for

minor items from $25,000 to $50,000.

Research, Development, and

Demonstration Activities—Pages 352

and 353

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Charges for Outside Professional and

Consultative Services—Pages 357

The Commission proposes to raise the

threshold from $25,000 to $50,000.

Natural Gas Reserves and Land

Acreage—Pages 500 and 501

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Changes in Estimated Gas Reserves—

Page 503

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Changes in Estimated Hydrocarbon

Reserves and Costs, and Net Realizable

Value—Page 504 and 505

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Natural Gas Production and Gathering

Statistics—Page 506

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Products Extraction Operations—

Natural Gas—Page 507

The Commission proposes to replace

Mcf with Dth and to delete Line 15,

‘‘For Line 9, Do Fuel Costs Include Gas

Used From Company’s Own Supply?’’

Compressor Stations—Pages 508 and

509

The Commission proposes to replace

the reporting of number of employees in

column (b) with a report of the number

of units and the horsepower of each unit

and to redesignate the remaining

columns. In addition, gas for

compressor fuel would be reported by

Dth rather than by Mcf.

Gas and Oil Wells—Page 510

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Field and Storage Lines—Page 511

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Gas Storage Projects—Page 512

The Commission proposes to delete

this schedule because it is not needed

in that the same information is reported

on Form No. 8.

Gas Storage Projects—Page 513

The Commission proposes to replace

Mcf with Dth and to delete Lines 42–44

and 58 concerning top gas and cushion

gas because this information is reported

on Form No. 8. In addition, the

Commission proposes to renumber

Lines 45–57 as 1–13 and to add two new

instructions.

Liquefied Petroleum Gas Operations—

Pages 516 and 517

The Commission proposes to delete

this schedule because it is not needed

for Commission regulatory purposes.

Transmission System Peak Deliveries—

Page 518

The Commission proposes to replace

Mcf with Dth and to require the

reporting of total deliveries, deliveries

of gas to interstate pipelines, and
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3153

30Nonmajor means having total annual gas sales

or volume transactions exceeding 200,000 Mcf at

14.73 psia (60° F) in the previous calendar year and

not classified as ‘‘Major.’’ The Commission

proposes to revise the definition of Nonmajor as

follows: ‘‘Nonmajor means having annual gas sales

or volume transactions exceeding 200,000 Dth in

each of the three previous calendar years and not

classified as ‘Major’.’’ This comports with proposed

section 260.2 of the Commission’s regulations.

31Appendix C is not being published in the

Federal Register, but is available from the

Commission’s Public Reference Room.

deliveries to others. The Commission

also proposes to delete the information

with respect to the second and third

highest peak day deliveries and the

section, Highest Month’s System

Deliveries. Single peak day and

consecutive three-day peak deliveries

would be reported by various services

and activities. The differentiation

between jurisdictional and nonjurisdictional deliveries would be

eliminated as no longer pertinent with

unbundling.

Auxiliary Peaking Facilities—Page 519

The Commission proposes to replace

Mcf with Dth.

Gas Account-Natural Gas—Pages 520

and 521

The Commission proposes to revise

instruction 1 to exclude the reference to

consideration of pressure bases in

measuring Mcf of natural gas and

replace Mcf with Dth in instruction 3

and column (c) on pages 520 and 521.

The Commission also proposes to make

line 17, ‘‘Exchange Gas Received,’’ into

a heading, to add lines 18,

‘‘Imbalances,’’ and 19, ‘‘Other’’, to make

line 48, ‘‘Exchange Gas Delivered,’’ a

heading, and to add lines 5,

‘‘Imbalances,’’ and 52, ‘‘Other.’’ The

proposed changes reflect the proposed

changes on pages 328 and 329.

System Maps—Page 522

The Commission proposes to clarify

the information to be shown on the

maps and to eliminate the requirement

that transmission lines be colored in

red, if they are not otherwise clearly

indicated.

Index—Pages 1–4

The Commission proposes to revise

the index to reflect the above proposed

changes.

B. Revisions to Form No. 2–A

At present, a Nonmajor natural gas

company 30 must submit Form No. 2–A.

The respondent is required to submit

designated pages reflecting data

designed for Nonmajor natural gas

companies in the Uniform Systems of

Account. However, if the respondent

maintains the ‘‘Major’’ designated

accounts, it may substitute certain pages

from Form No. 2. The Commission

proposes to require Nonmajor

respondents to submit only Form No. 2

type pages as their Form No. 2–A report.

In addition, the Commission proposes to

replace Mcf with Dth and to revise the

instructions, including the CPA

certification as discussed above. A

sample copy of the proposed revised

Form No. 2–A is attached as Appendix

B.

The proposed Form No. 2–A will

consist of instructions, identification,

attestation, and list of schedules (pages

i and ii and 1 and 2), the following

pages from Form No. 2 as proposed to

revised by this NOPR: 106, 110–115,

117–122, 204–209, 212, 213, 219, 300,

301, 320–325, 327, 520, 521, and the

following pages from current Form No.

2–A as renumbered: 26 as 211, 16 as

232, 19 as 250, and 20 as 278.

C. Revisions to Form No. 11

The Commission proposes to modify

Form No. 11, attached as Appendix C. 31

The Commission has identified certain

portions of Form No. 11 which are no

longer necessary. Those portions of the

Form No. 11 are removed or

consolidated to reduce the reporting

burden on the pipelines. In addition,

much of Form No. 11 was geared

towards the collection of sales related

data. In view of the restructuring of the

interstate pipeline industry under Order

No. 636, the pipeline’s sales business is

declining while the pipeline’s

transportation and storage business is

increasing in relative importance.

Therefore, the Commission proposes to

modify the Form No. 11 to reflect the

reduced emphasis on sales and the

greater emphasis on transportation and

storage. Finally, the Commission wishes

to ensure that data collected in the Form

No. 11 and the Form No. 2, as revised,

is more consistent and interconnected.

This interconnection will improve the

usefulness of the data collected by the

Commission. As a result, the proposed

rule modifies Form No. 11 to collect

data in the same general format as

proposed in Form No. 2. This is

particularly apparent in Part II of the

revised Form No. 11. The specific

changes the Commission proposes are as

follows:

General Information and General

Instructions

Currently, the Form No. 11 is filed

monthly. The report is submitted within

40 days of the end of the month being

reported. The Commission proposes to

reduce the monthly reporting

requirement to a semi-annual

requirement. The proposed rule requires

the first report covering the last six

months of the calendar year to be

submitted with the Form No. 2 on April

30 of each year. The second report

covering the first six months of the

calendar year will be filed on October

31. Parts II, III, and V require the data

to be filed for each individual month of

the six-month period. The proposed rule

requires that the balances in the

required accounts in Part IV be filed as

of the end of each six-month reporting

period with the exception of item 42.

On line 42, the pipeline will report in

the aggregate all projects valued in

excess of $5,000,000 started within the

six-month reporting period.

The proposed rule modifies

instruction I to require consistency

between the data filed on Form No. 11

and the data filed with Form No. 2. It

is the intent of the Commission to be

able to compare the aggregation of

twelve months of information submitted

on the Form No. 11 with data filed on

the Form No. 2. Comparisons with the

Form No. 2 data may require aggregation

of the Form No. 2 data as well.

In a departure from current

requirements, the Commission proposes

that quantities reported on Form No. 11

be in thousands of dekatherms, rather

than in thousands of Mcf. The change to

dekatherms is consistent with the

changes proposed to the Form No. 2.

Costs and revenues will continue to be

reported in thousands of dollars.

Since there will be a longer lag time

between the end of the reporting period

and the date the report is due, the

Commission anticipates actual data will

be readily available. Consequently,

former instruction V relating to

estimated data is removed. It is replaced

with the instruction regarding the filing

of monthly data described above.

Specific Instructions and Definitions

The instruction for the item ‘‘All’’ is

modified and the instructions for items

7 through 12 and 15 through 17 are

added to conform to the instructions

contained in Form No. 2 for reporting

transportation and storage services.

Instructions for items 15 through 17 are

added to clarify the reporting of storage

revenues. Since storage injections and

withdrawals are reported separately on

Part V, revenues related to quantities

withdrawn or injected should not be

reported here. Existing instructions for

items 22, 24, and 27 are retained and

renumbered 30, 32, and 35. The

instructions for items 38 and 40 are

deleted, since the Commission no longer

proposes to collect details on

manufactured gas. An instruction is
3154 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

32FERC Statutes and Regulations, Regulations

Preambles, 1977–1981, ¶30,013 (1978).

added to explain the contents of item

43, Natural Gas Manufactured,

Purchased or Produced.

All existing definitions relate to

purchases or sales of natural gas. The

Commission proposes to simplify the

reporting of sales and purchase

information; therefore, the definitions

are removed as no longer necessary.

Identification (Part I) and Revenue Data

(Part II)

Except for the revision to the period

reported, Part I is unchanged. The

proposed rule replaces Part II, which

relates primarily to sales. The

Commission proposes to modify Part II

to recognize the de-emphasis of sales

and the increased emphasis on

transportation and storage subsequent to

the implementation of Order No. 636.

Specifically, Part II is modified to

collect information for sales,

transportation, gathering, storage and

other revenue categories in the same

way it is proposed to be collected in the

Form No. 2, but in aggregate, rather than

in detail.

Income Data (Part III) and Other

Selected Data (Part IV)

Part III is unchanged except for the

numbering of the line items and the

addition of two items, 37 and 38, which

currently appear on Part IV as items 33

and 35. These items were moved to Part

III since they are related more closely to

revenues than to plant information.

The proposed rule modifies the

monthly reporting requirement for Part

IV. Instead, the pipeline would report

the balances at the end of the reporting

period for each of the indicated

accounts. The Commission proposes to

replace the item ‘‘gross additions to

construction work in progress (107) for

this month being reported’’ with an

aggregate value for major plant

additions in excess of $5,000,000 started

during the reporting period. As noted

items 33 and 35 will be moved to Part

III. Items 34 and 36 are no longer

necessary for regulatory purposes and

are removed.

Operation and Maintenance Expense

(Part V)

The Commission proposes to

consolidate on one line the items

previously reported on lines 38, 39, 41,

42, 43, 44, 45, 46, 47, 48, 49, 50, 52, 68,

69, and 70. These items are related to

the costs of manufactured petroleum

gas, other manufactured gas, liquefied

natural gas, gasified coal and synthetic

gas, production and gathering, products

extraction, exploration and

development, gas purchased from

producers, intracompany transfers,

imports, gas purchased from other

pipelines, and gas produced by the

pipeline along with other gas purchases.

The consolidation of these items

recognizes the reduced role that sales of

natural gas now play for the interstate

pipelines. In addition, exchange gas-in

and exchange gas-out are consolidated

into one line, net exchange gas.

D. Other Revisions

Section 260.1 requires that major

natural gas companies, as defined in

part 201 of the Commission’s

regulations, file with the Commission an

annual report, designated as FERC Form

No. 2. The Commission proposes to

modify section 260.1 to remove

references to reporting requirements

pre-dating December 30, 1988, and to

correct a typographical error that

referenced ‘‘§ 385.201’’ instead of

‘‘§ 385.2011.’’

Section 260.2 requires that nonmajor

natural gas companies file an annual

report, designated as FERC Form No. 2–

A. The Commission proposes to modify

section 260.1 to remove references to

reporting requirements pre-dating

December 30, 1988, to correct a

typographical error that referenced

‘‘§ 385.201’’ instead of ‘‘§ 385.2011,’’

and to conform to the format set forth

in section 260.1 governing the FERC

Form No. 2.

Section 260.3 requires that natural gas

companies file with the Commission a

monthly statement—the FERC Form No.

11—containing information concerning

selected revenues, income statements,

and other items, and details of operation

and maintenance expenses. The

Commission proposes to modify section

260.3 to remove references to dates that

have long since passed, and references

to reporting requirements pre-dating

November 30, 1988.

Section 260.4 requires that importers

and exporters of natural gas file with the

Commission an annual report, Form No.

14. Section 260.11 requires natural gas

companies operating an underground

natural gas storage field to file with the

Commission a monthly underground gas

storage report, Form No. 8. The

Commission is not proposing any

substantive changes to these sections in

this NOPR. However, the Commission is

seeking comments on whether the

collection of the information contained

in these forms by other governmental or

private sources is currently adequate,

making the collection of the same

information in these Commission forms

unnecessary. In addition, the

Commission is proposing to modify

section 260.4 to remove references to

reporting requirements pre-dating

December 30, 1988.

Section 260.9 requires every natural

gas pipeline company to report to the

Commission serious interruptions of

service to any wholesale customer

involving facilities operated under

certificate authorization from the

Commission. The Commission proposes

to modify sections 260.9(b) and (e) to

include facsimile transmission as an

optional method for reporting

interruptions of service. This recognizes

advances in technology and current

practice. Further, the Commission

proposes to modify sections 260.9(b)

and (c) to require that companies send

telegrams, facsimile transmissions, or

supplemental information to the

Director, Division of Environmental and

Engineering Review, the successor to

the Director, Division of Engineering,

Market and Environmental Analysis. A

correction to the Commission’s zipcode

in 260.9(b) is also proposed.

Section 260.13 sets forth the

requirements for the filing of the FERC

Form No. 549–ST, Form of selfimplementing transportation reports.

The initial and subsequent reports

currently filed by interstate and

intrastate pipelines, Hinshaw

companies, and local distribution

companies undertaking transportation

transactions under subparts B, C, or G

of part 284 are required to be made on

the FERC Form No. 549–ST. Because the

Commission is proposing in this NOPR

to eliminate the requirements of filing

initial and subsequent reports for

companies subject to the requirements

of subparts B, C, and G of part 284, as

further described below, the FERC Form

No. 549–ST is no longer necessary.

Accordingly, the Commission proposes

to remove section 260.13.

Section 260.15 requires that natural

gas companies making direct sales in

interstate commerce of natural gas to

customers consuming such gas file a

Report of Alternate Fuel Demand Due to

Natural Gas Curtailment, FPC Form No.

69. As noted in the footnote to section

260.15, Form No. 69 was discontinued

and replaced with Form No. EIA–50 by

order issued June 23, 1978. 32 The EIA

Form No. 50 was eliminated in 1984

after the Office of Management and

Budget (OMB) rejected the Energy

Information Administration’s (EIA)

request for an extension of OMB

approval of the data collection. Thus, it

now appears that the footnote to 18 CFR

260.15 references a non-existent EIA

form as a replacement for the Form No.

69. Since neither the Commission nor

EIA has collected this data since 1984,

and there has been no significant
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3155

33The Commission also proposes to retain the

semi-annual storage reports currently required

under sections 284.106(g) and 284.223(d)(5).

curtailment of natural gas in the nation

for more than ten years, the Commission

proposes to remove section 260.15.

In addition, the Commission proposes

to change all references in Part 260 from

the ‘‘FPC’’ and the ‘‘Federal Power

Commission’’ to the ‘‘FERC,’’ and

‘‘Federal Energy Regulatory

Commission,’’ respectively.

VI. Part 284

A. Introduction

Under Part 284, the Commission is

proposing revisions to the reporting

requirements, and/or certain nonreporting requirements, contained in

Subparts A, B, C, E, G, J and L. These

subparts set forth general provisions and

conditions (Subpart A), and govern the

transportation of natural gas by

interstate pipelines under section

311(a)(1) of the NGPA (Subpart B), the

transportation of natural gas by

intrastate pipelines under section

311(a)(2) of the NGPA (Subpart C), the

assignment by any intrastate pipeline to

any interstate pipeline or local

distribution company of contractual

rights to receive surplus natural gas

under section 312 of the NGPA (Subpart

E), the transportation of natural gas by

interstate pipelines on behalf of others,

and services by local distribution

companies, under blanket certificates

authorized by section 7(c) of the NGA

(Subpart G), (General Provisions and

Conditions), as well as the sale of

natural gas under section 7(c) blanket

certificates by interstate pipelines

offering transportation service under

subparts B or G (Subpart J), and by noninterstate pipeline sellers (Subpart L).

As further discussed below, many of

the simplifying changes being proposed

to the reporting requirements of the

interstate pipelines are attributable to

the fact that the Commission’s close

regulation of the interstate pipelines has

required, in many instances, the

reporting of the same information under

several different reporting provisions in

the regulations.

There are six major categories of

proposed changes to the Part 284

provisions: (1) The removal of the initial

full report, subsequent reports, annual

report, and notification of termination,

currently required under subparts B, G,

and/or J; (2) the removal of the initial

full report, subsequent reports, and

notification of termination required

under subpart C; (3) the modification of

the Commission’s discount reporting

requirement; (4) the addition of a new

reporting requirement under subparts B

and G, that the pipelines maintain an

electronic index of customers; (5) the

elimination as obsolete of certain nonreporting provisions in subparts A and

G, setting forth interim measures related

to the implementation of Order Nos. 436

and 636; and (6) other changes that

either are grammatical in nature, remove

references to deadlines that have long

since passed or other outdated

requirements, or reflect the use of

current, more accurate, terminology.

These revisions are discussed more fully

below.

B. Removal of Initial, Subsequent,

Annual, and Termination Reports

Under Subparts B, G and J

In light of all of the broad changes

that are being proposed in this NOPR,

and the changes to the industry brought

about by Order No. 636, it is no longer

necessary to require interstate pipelines

to provide the detailed and duplicative

reporting set forth under the initial,

subsequent, termination, and annual

reports in sections 284.106 and 284.223.

Most of the information included in

these reports will be reported in other

ways. For example, the Commission

proposes to collect some contract

information, including the date the

contract terminates, through an Index of

Customers, as discussed below. Under

changes being proposed in the

contemporaneous NOPR being issued in

Docket No. RM95–3–000 to section

154.1, contracts will be filed if the

contract differs in a significant manner

from the form of service agreement in

the pipeline’s tariff. If it does not, the

form of service agreement will provide

information relating to the basic terms

and conditions of the contract.

Accordingly, the Commission

proposes to remove paragraphs (a), (b),

(c), and (d) of section 284.106, and

paragraph (d) of section 284.223, to

delete the requirements that pipelines

file the initial full report, subsequent

reports, notification of termination, and

annual report. However, the

Commission proposes to retain the

requirement in section 284.106(a)(4)

that an interstate pipeline file a

statement with the Commission that the

pipeline has provided notification of

bypass of a local distribution company

(LDC) to the LDC and the LDC’s

regulatory agency. 33 In addition, the

Commission proposes to remove

sections 284.106(e) and 284.223(b)

relating to the fees accompanying the

initial full report, and sections

284.106(f) and 284.223(c), prescribing

the use of FERC Form No. 549–ST for

the initial and subsequent reports, since

they would no longer apply due to the

proposed discontinuance of the

associated reporting requirements.

Because sections 284.106 and 284.223

will require identical reporting

requirements, the Commission proposes

to remove all of the filing requirements

from section 284.223(d), and to

substitute a statement that all pipelines

transporting gas under section 284.223

of Subpart G must comply with the

reporting requirements specified under

section 284.106 of Subpart B. There is

no reason to require an identical report

under section 284.223.

The Commission is also proposing to

remove the annual report required

under section 284.288 of Subpart J,

applicable to pipelines that engage in

sales under a blanket certificate and also

offer interstate transportation under

subparts B and G. Most of the sales

information required by this annual

report is being reported in the FERC

Form No. 2. Removal of this section will

eliminate duplicative reporting

requirements.

C. Removal of Initial, Subsequent, and

Termination Reports Under Subpart C

The Commission proposes to delete

certain of the reporting requirements for

intrastate pipelines transporting gas

under NGPA section 311 under Subpart

C. The Commission proposes to

eliminate the initial full report,

subsequent reports, and notification of

termination currently required under

section 284.126. The Commission no

longer finds these reports useful for

regulatory review. However, the

Commission invites parties to comment

on our proposed removal of these

reports.

The Commission will continue to

require intrastate pipelines to file the

annual report and semi-annual storage

reports required under section 284.126,

as well as the notification of bypass

requirement currently included in the

initial report. However, the Commission

is revising the annual report to reflect

the fact that the transportation

transactions are no longer docketed, and

to require the specification of whether

the transportation service is firm or

interruptible. Until recently, intrastate

pipelines only provided interruptible

transportation service. Since they are

now performing firm transportation

service, firm and interruptible

transactions must be separately

identified for accurate reporting.

Additionally, as a conforming change

to reflect the elimination of the initial

and subsequent reporting requirements

under section 284.126, the Commission

proposes to remove section 284.227(d),

governing the conversion reports filed

by intrastate pipelines transporting
3156 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

34Standards of Conduct and Reporting

Requirements for Transportation and Affiliate

Transactions, Order No. 566, 59 FR 32885 (June 27,

1994), III FERC Stats. & Regs. Preambles ¶ 30,997

(June 17, 1994), Order No. 566–A, 59 FR 52896

(Oct. 20, 1994), III FERC Stats. & Regs. Preambles

¶ 31,002 (Oct. 14, 1994).

35Slip op. at 31.

36For interruptible discounts, the Commission is

proposing to include the zone in which the

quantities are delivered. Information on zones is not

needed for firm service because the information

would be reported in the index of customers under

section 284.106.

37Standards For Electronic Bulletin Boards

Required Under Part 284 of the Commission’s

Regulations, Order No. 563, 59 FR 516 (Jan. 5,

1994), III FERC Stats. & Regs. Preambles ¶ 30,988

(Dec. 23, 1993), order on reh’g, Order No. 563–A,

59 FR 23624 (May 6, 1994), III FERC Stats. & Regs.

Preambles ¶ 30,994 (May 2, 1994), reh’g denied,

Order No. 563–B, 68 FERC ¶ 61,002 (1994).

38Order No. 563–A, III FERC Stats. & Regs.

Preambles at 31,047.

39Although the initial and subsequent reports

had included interruptible contracts, it is not

necessary to require the posting of interruptible

contracts in the Index of Customers.

certain gas produced offshore. That

section requires the initial and

subsequent reports filed under section

284.126 to state that service is now

being provided under section 284.227.

Further, the Commission proposes to

revise the filing requirements under

section 284.123(e) to require that the

statement filed by an intrastate pipeline

within 30 days after commencement of

new service under subpart C, include

the rate election made by the intrastate

pipeline under section 284.123(b).

D. Modification of Discount Reports

In considering revisions to the

Commission’s marketing affiliate

regulations implemented in Order No.

566,34 the Commission received

comments contending that the discount

information that had to be filed with the

Commission under section

284.7(d)(5)(iv) was duplicative of the

information on transportation discounts

provided to affiliate and non-affiliate

shippers that pipelines are required to

maintain under section 250.16(d). There

are two major differences between the

sections: section 250.16(d) requires

maintenance of information on

quantities scheduled under the

discount, while section 284.7(d)(5)(iv)

does not require filing of quantity

information; and the information

required under section 250.16 only has

to be maintained and made available to

the Commission upon request, while the

information in section 284.7(d)(5)(iv)

must be filed with the Commission.

In Order No. 566, the commenters

urged the Commission to consider

reconciling the duplicative

requirements.35 The Commission

declined to make a piecemeal change at

that time, because the Part 284 discount

reporting requirements are not identical

with the requirements of section

250.16(d). The Commission, however,

noted that it was in the process of

examining its regulations, in light of the

changes caused by Order No. 636, and

that revisions to these requirements

would be made at the appropriate time

when all the regulations could be

considered as a whole.

The Commission is now proposing to

eliminate the section 250.16(d)

maintenance requirement and to expand

the Part 284 filing requirement to

include the relevant information

previously maintained under section

250.16 (proposed section 284.7(c)(6)).

The major change from the existing Part

284 regulations would be the addition of

a requirement for filing information on

quantities delivered for interruptible

service and the contract demand for

firm service.36 In light of the

Commission’s adoption of a capacity

release program under Order No. 636,

information on quantities shipped and

contract demand would enable the

Commission and the market to compare

the extent of interruptible and firm

discounting by the pipelines with the

extent of capacity release transactions.

Under this proposal, the discount

information would be required to be

filed electronically with the

Commission.

The discount reports would not apply

to capacity releases at a discounted rate,

except when the release is permanent.

The discount report is designed to

capture discounts granted by the

pipelines. In a temporary capacity

release, the releasing shipper is still

obligated to the pipeline under its initial

contract. Thus, even if the shipper

obtaining released capacity pays a

discounted rate, the pipeline has not

agreed to the discount because the

releasing shipper will owe the pipeline

the maximum rate under its contract. In

a permanent capacity release, however,

the releasing shipper’s contractual

obligations end, and the replacement

shipper enters into a new primary

contract with the pipeline. Thus, if the

pipeline offers a discount for a

permanent capacity release, the pipeline

is providing the discount and would

have to report it.

The Commission is not proposing to

require the filing of two items of

information that the pipelines are now

required to maintain under section

250.16(d): the duration of discounts and

the delivery points to which the gas is

delivered. Elimination of these items

would reduce the filing burden.

Moreover, the filing of this information

for every transaction involving both

affiliates and non-affiliates does not

appear necessary for monitoring of

affiliate discount transactions given the

Commission’s other regulations

regarding affiliate discount transactions.

Under Standard H of the Standards of

Conduct, section 161.3(h), pipelines are

now required to post discount

information concerning affiliate

transactions on their EBBs, including

the delivery points to which the

discount applies. The proposed

elimination of section 250.16(d),

therefore, would have no effect on the

ability of non-affiliates to learn the

details of affiliate discounts so they can

assess whether possible undue

discrimination has occurred. With

respect to non-affiliate transactions,

filing of information on delivery points

for every discount transaction does not

appear warranted, since the

Commission only requires this

information in specific situations. The

Commission, however, continues to

require pipelines to maintain records of

affiliate and non-affiliate discount

transactions, including the delivery

points used, in case the Commission

requires this information for specific

investigations.

E. Establishment of Electronic Index of

Customers

In the Electronic Bulletin Board (EBB)

standardization proceeding in Docket

No. RM93–4–000, some groups had

proposed to include an electronic Index

of Purchasers to provide the market

with information about capacity

rights.37 The EBB Industry Working

Groups, which developed the standards

implemented by the Commission, failed

to reach consensus on an Index of

Purchasers proposal. However, several

groups of participants in the process

submitted proposals for consideration.

In Order No. 563–A, the Commission

found that one proposal by a group of

44 participants had significant merit.38

Under this proposal, the Commission

would eliminate some of the paper

reporting requirements relating to firm

and interruptible transportation,

specifically, the initial and subsequent

reports (but not the annual reports or

the reports on bypasses), and the

requirement in section 154.41 (proposed

section 154.111) to include an Index of

Purchasers in a pipeline’s tariff. These

reports would be replaced by an

electronic index provided in

downloadable form consisting of the

following nine data elements for each

firm transportation and storage

shipper: 39 shipper’s name, contract

identifier, rate schedule, contract start
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3157

40Conjunctive restrictions are provisions that

operate across multiple points or contracts and may

limit a shipper’s rights at a particular receipt or

delivery point. For example, a shipper with stated

rights of 2,000 MDQs at three points may but not

be able to ship more than a total of 2,500 MDQ’s

from all three points on a single day.

41The Commission is proposing to term the

electronic index an ‘‘Index of Customers’’ rather

than an ‘‘Index of Purchasers,’’ to reflect the

proposed use of that term in the NOPR revising part

154. ‘‘Index of Customers’’ more accurately captures

the nature of the current natural gas market.

42The Commission also is considering whether

other changes to facilitate the release of capacity are

warranted. Any such changes would be

promulgated in another proceeding. The

Commission is proceeding with the proposed

electronic index in this proceeding because, in

addition to fostering capacity release, the

Commission finds that such index is necessary to

provide the information previously provided

through the initial and subsequent reports.

Moreover, regardless of the changes made to the

capacity release system, information on contractual

rights appears to be important to facilitating the

secondary market in capacity.

43 In addition, the Commission is proposing to

include a unique customer identifier to permit the

information in the Index of Customers to be tied to

the electronic data interchange information on

capacity release, and an authorization code to

delineate whether the information is for Part 284,

Subpart B, Part 284, Subpart G, or Part 157 service.

44Order No. 636–A, III FERC Stats. & Regs.

Preambles at 31,047–48.

date, contract end date, contract

quantity, receipt points (and associated

maximum daily quantities (MDQs)),

delivery points (and associated MDQs),

and conjunctive restrictions, if any.40

In Order No. 563–A, the Commission

was unclear with respect to some details

in the proposal, and directed the

Working Groups, together with

Commission staff, to work on

developing a final proposal. In a report

filed on October 3, 1994, in Docket No.

RM93–4–005, the Working Group

reported that it was still unable to reach

consensus on a final Index of

Purchasers. However, a drafting

committee, composed both of opponents

and proponents of the Index of

Purchasers, filed on October 4, 1994, a

proposal addressing the mechanics for

implementing such an Index of

Purchasers, should the Commission

decide to proceed with one.

After considering the elements

included in the industry proposals and

the Commission’s own need for

information about shippers’ contracts,

the Commission is proposing to require

pipelines to provide an electronic Index

of Customers 41 through a downloadable

file that is updated monthly, and

restated in its entirety annually

(sections 284.106 and 284.243). The

proposed requirement includes many of

the elements proposed during the

Working Group process, as well as

independent requirements the

Commission deems necessary. The

electronic Index of Customers

information would serve two functions.

It would provide the Commission with

the information that the Commission

requires for analyzing capacity held on

pipelines (which previously was

included in the initial and subsequent

reports); and it would provide capacity

information to the market, which will

aid the capacity release system by

enabling shippers to locate those

holding capacity rights that the shippers

may want to acquire.42

The proposed Index of Customers

would contain the nine data elements

referenced above. The Commission also

is proposing some additional elements:

information on capacity held by rate

zones to permit verification of

reservation billing determinants; and

additional elements for storage to

capture the additional detail required to

assess storage capacity.43 When a

pipeline has implemented the electronic

Index of Customers, its obligation to

provide for an Index of Customers in its

tariff would cease.

In the EBB proceeding, some

commenters objected to the inclusion of

receipt and delivery points, contending

that the provision of such information

would be burdensome and might

disclose information that would place

firm shippers at a competitive

disadvantage with respect to future gas

purchase decisions.44 Since pipelines

must currently file receipt and delivery

point information for all their shippers

in the initial and subsequent reports, the

Commission would not anticipate that

including such information in the Index

of Customers would create undue

burdens. Commenters, however, should

address the relative burden or difficulty

in including the receipt and delivery

point information under the assumption

that all the other information would be

required.

Once the Commission decides upon

the data elements to be included in the

Index of Customers, the EBB Working

Group should work with the

Commission staff to develop the data

sets and other procedures necessary to

provide for downloading of the

information. For example, the EBB

Working Group and the Commission

Staff must determine whether the data

should be reported as a data set suitable

for electronic data interchange or for

posting on the pipeline’s electronic

bulletin board. Further, instructions for

reporting the data elements listed in the

regulations will need to be finalized. In

particular, the participants must

determine how the contract end date

will be reported, so that the Commission

may know with certainty when a

contract has terminated.

The finalization of the Index of

Customers by the EBB Working Group

and the Commission Staff will not occur

until some time after the effective date

of this rule. The Commission is

proposing to require the pipelines to

initially comply with the Index of

Customers requirement within 180 days

of the effective date of the final rule.

Such deadline should allow ample time

for the EBB Working Group and Staff to

conclude their conferences, and for the

pipelines to implement the resulting

electronic elements of the Index of

Customers. However, in the intervening

period between the effective date of the

rule and the pipelines’ implementation

of the electronic Index of Customers

under sections 284.106 and 284.223, the

Commission proposes, as an interim

measure, to require pipelines providing

transportation service under sections

284.106 or 284.223 to comply with the

non-electronic index of customer

requirements applicable to

transportation and sales under Part 157,

as set forth in sections 154.111 (b) and

(c).

F. Removal of Obsolete Transitional

Requirements

Several sections in Part 284 were

established by either Order No. 436 or

Order No. 636 as interim measures to

implement those orders, or to bridge the

transition between the two orders. Some

of these provisions contained action

deadlines that have long since passed.

The Commission proposes to remove

the following sections because they

have become outdated due to

subsequent events, and the current state

of the regulatory environment.

Section 284.7(b) provides for interim

rates for part 284 transactions to be

charged until new transportation rates

are filed under section 284.7, which had

to have been filed by July 1, 1986. This

section has become obsolete, and

therefore is no longer necessary.

Section 284.10 provides an interim

program for bundled sales customers to

convert to firm transportation services.

Since Order No. 636 has unbundled

sales service, so that sales and

transportation services are now separate

services, there is no need for customers

to convert from one to the other. This

section is no longer applicable to the

current regulatory framework.

Section 284.14—Provisions governing

pipeline restructuring—was designed to

implement the restructuring of

pipelines’ services under Order No. 636,

and contains, among other things, the

requirements for the compliance filings

pipelines were required to make, and for
3158 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

45See 50 FR 42408 (October 18, 1985). 46 61 FERC ¶ 61,281 (1992).

47 68 FERC ¶ 61,135 (1994).

48Revisions to Regulations Governing

Transportation under Section 311 of the Natural

Gas Policy Act of 1978 and Blanket Transportation

Certificates, 56 FERC ¶ 61,415 (1991).

the associated restructuring

proceedings. The restructuring process

is now complete; therefore this section

is no longer necessary. Any pipeline

who proposes to offer transportation

service under subpart B or G of part 284

in the future will simply file to comply

with the requirements of this part and

Order No. 636.

Section 284.122 governs

transportation by intrastate pipelines

under Section 311(a)(2) of the NGPA.

The Commission proposes to delete

paragraph (e) of section 284.122, which

sets a January 31, 1992 expiration date

for the authorization provided under

that section for certain transportation.

This transitional provision is no longer

required. Similarly, section 284.123,

governing the rates and charges for this

section 311 transportation service,

contains in subparagraph (e)(2) a

transitional filing requirement deadline

of February 1, 1985 for certain preexisting transportation arrangements;

thus, the Commission proposes to

remove section 284.123(e)(2).

The Commission also proposes to

remove sections 284.223(e) (Transitional

rule for transportation arrangements)

and 284.223(f) (governing the

conversion of transportation service

under NGPA section 311 to NGA section

7(c) blanket transportation service.

Section 284.223 authorizes an interstate

pipeline to transport gas under a section

7 blanket certificate of public

convenience and necessity for any

shipper for any end use by that shipper

or any other person. Section 284.223(e)

was established as a transitional

provision to permit transportation

arrangements authorized under section

157.209(a)(1), which commenced before

October 9, 1985, to qualify as

transportation under section 284.223.

Section 157.209(a)(1) permitted section

7 certificate holders under section

157.201 to transport natural gas only on

behalf of a high-priority end user for a

high-priority end use. Section

157.209(a)(1) was replaced by section

284.223, and was removed from the

regulations effective November 18,

1985.45 Accordingly, the transitional

rule contained section 284.223(e)

applicable to transportation under

section 157.209 is obsolete, and no

longer necessary. Similarly, section

284.223(f) is an interim measure that

was designed to implement the addition

of blanket transportation services. This

section requires that all conversions be

made prior to November 1, 1990.

Consequently, sections 284.223(f) is also

obsolete, and no longer necessary.

Finally, section 284.402 of Subpart L,

setting forth the authorization for

blanket marketing certificates, provides

in paragraph (c)(1) that the

authorization for an ‘‘affiliated

marketer’’ with respect to transactions

involving affiliated pipelines becomes

effective either when the affiliated

pipeline receives its blanket sales

certificate under Subpart J, a

transportation-only affiliated pipeline’s

Order No. 636 compliance filing is

approved, or when the Commission

terminates the affiliated pipelines RS

proceeding. The Commission proposes

to delete the latter two conditions, since

those occurrences have passed.

G. Other Revisions

The Commission proposes to delete

most of Subpart D, governing certain

sales under section 311 of the NGPA by

intrastate pipelines. In Order No. 547,46

the Commission granted any person

who is not an interstate pipeline a

blanket certificate of public convenience

and necessity pursuant to section 7 of

the Natural Gas Act, authorizing the

certificate holder to make sales for

resale at negotiated rates in interstate

commerce of any category of gas that is

subject to the Commission’s Natural Gas

Act jurisdiction. The certificate of

limited jurisdiction does not subject the

certificate holder to any other regulation

under the Natural Gas Act by virtue of

transactions under the certificate.

Although the blanket certificate

eliminates the need for Subpart D, the

Commissison will retain the basic

authorization and rate provisions under

Subpart D in sections 284.141, 284.142,

and 284.144 for those persons who may

wish to make sales under the NGPA

instead of the blanket certificate under

the Natural Gas Act. However, in

recognition that an intrastate pipeline

can also sell natural gas in an

unbundled transaction under the

blanket certificate, at negotiated rates,

the Commission proposes to retain a

simplified version of section 284.144

governing rates and charges as part of

the authorization provision set forth in

section 284.142. The proposed rate rule

within section 284.142, simplifies the

current maximum sales rate rule to

permit the gas commodity price

negotiated in the contract, plus a fair

and equitable transportation rate.

The Commission proposes to delete

Subpart E in its entirety, governing the

assignment by any intrastate pipeline to

any interstate pipeline or local

distribution company of its contractual

right to receive surplus natural gas at

any first sale, without prior Commission

approval. The Natural Gas Wellhead

Decontrol Act of 1989 amended the

definition of ‘‘surplus natural gas’’ in

section 312 of the NGPA to mean ‘‘any

natural gas.’’ Moreover, the only filings

under Subpart E were made in 1979.

Therefore, Subpart E is no longer

necessary.

Further, in light of the proposed

elimination of Subpart E, the

Commission proposes to remove all

references in section 284.224, governing

certain transportation, sales and

assignments by local distribution

companies, to Subpart E, as well as to

the word ‘‘assignments’’ in the section

provisions and in the section heading.

The Commission also proposes to

remove the reference to assignment in

section 284.3, which sets forth the NGA

jurisdiction. In addition, the

Commission proposes to delete the

references in section 284.224(e)(5) to

those reporting requirements that the

Commission is proposing to delete in

subparts C and D. The Commission is

retaining the blanket certificate and rate

election procedures in section 284.224

that allow local distribution companies

served by an interstate pipeline or

Hinshaw pipeline to engage in sales and

transportation of natural gas to the same

extent as intrastate pipelines are

authorized to engage in such activities

under subparts C and D.

The Commission proposes to remove

sections 284.225 and 284.226

concerning the transportation of gas

released under the good faith

negotiation procedures. Order No.

567, 47 issued July 28, 1994, in Docket

No. RM94–18–000, removed the good

faith negotiation procedures under

Section 270.201 as a result of the repeal

of maximum lawful ceiling prices under

the NGPA.

The Commission proposes to remove

section 284.222, regarding

transportation by interstate pipelines on

behalf of other interstate pipelines.

Since the Commission deleted the prior

notice requirement in Order No. 537,48

which applied to transportation by

interstate pipelines on behalf of

shippers other than interstate pipelines

under section 284.223, but did not

apply to transactions under section

284.222, there is no longer any reason

to distinguish between transportation

under sections 284.222 and 284.223.

Thus, the Commission proposes to

delete section 284.222, and apply

section 284.223 to transportation by
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3159

49Order No. 486, Regulations Implementing the

National Environmental Policy Act, 52 FR 47897

(Dec. 17, 1987), FERC Statutes and Regulations,

Regulations Preambles 1986–1990 ¶ 30,783 (1987).

50 18 CFR 380.4.

51See 18 CFR 380.4(a)(2)(ii).

52 5 U.S.C. 601–612.

53 5 U.S.C. 605(b).

54Section 601(c) of the RFA defines a ‘‘small

entity’’ as a small business, a small not-for-profit

enterprise, or a small governmental jurisdiction. A

‘‘small business’’ is defined by reference to section

3 of the Small Business Act as an enterprise which

is ‘‘independently owned and operated and which

is not dominant in its field of operation.’’ 15 U.S.C.

632(a).

55 5 CFR 1320.13.

interstate pipelines on behalf of other

interstate pipelines, as well as

transportation by interstate pipelines on

behalf of non-interstate pipeline

shippers. Therefore, the Commission is

also proposing to modify the title of

section 284.223 to read ‘‘Transportation

by interstate pipelines on behalf of

shippers.’’

The Commission proposes to modify

paragraph (b) of section 284.221, setting

forth the general rules regarding the

transportation by interstate pipelines on

behalf of others under section 7(c)

blanket certificates, to delete reference

to an October 31, 1989 date no longer

relevant, and a fee no longer collected.

In section 284.102(e), governing the

certifications interstate pipelines must

obtain from shippers to be able to

transport gas on behalf of an intrastate

pipeline or local distribution company

under section 311, the Commission

proposes to delete reference to a January

3, 1992 deadline for tariff revisions

establishing the certification

requirement.

Finally, the Commission proposes to

make a grammatical revision in section

284.8(b)(4)(iii).

VII. Environmental Analysis

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.49 The Commission has

categorically excluded certain actions

from these requirements as not having a

significant effect on the human

environment.50 The action proposed

here is procedural in nature and

therefore falls within the categorical

exclusions provided in the

Commission’s regulations.51 Therefore,

neither an environmental impact

statement, nor an environmental

assessment is necessary, and will not be

prepared in this proposed rulemaking.

VIII. Reporting Flexibility Certification

The Regulatory Flexibility Act

(RFA) 52 generally requires the

Commission to describe the impact that

a proposed rule would have on small

entities or to certify that the rule will

not have a significant economic impact

on a substantial number of small

entities. An analysis is not required if a

proposed rule will not have such an

impact.53 Most gas companies to whom

the proposed rule will apply do not fall

within the definition of a ‘‘small

entity.’’ 54 Consequently, pursuant to

section 605(b) of the RFA, the

Commission certifies that the proposed

rule will not have a significant impact

on a substantial number of small

entities.

IX. Information Collection Statement

The Office of Management and

Budget’s (OMB) regulations 55 require

that OMB approve certain information

and recordkeeping requirements

imposed by an agency. The information

collection requirements in this proposed

rule are contained in the following:

FERC Form No. 2 ‘‘Annual Report of

Major Natural Gas Companies’’ (1902–

0028); FERC Form No. 2–A ‘‘Annual

Report of Nonmajor Natural Gas

Companies’’ (1902–0030); FERC Form

No. 11 ‘‘Natural Gas Pipeline Company

Monthly Statement’’ (1902–0032); FERC

Form No. 549 ‘‘Gas Pipeline Rates:

Natural Gas Policy Act Title III

Transactions’’ (1902–0086); FERC Form

No. 549B ‘‘Gas Pipeline Rates: Capacity

Release Information’’ (1902–0169);

FERC Form No. 576 ‘‘Reports on

Pipeline Systems Service Interruptions’’

(1902–0004); FERC Form No. 8

‘‘Underground Gas Storage Report’’

(1902–0026); and FPC–14 (redesignated

herein FERC Form No. 14) ‘‘Annual

Report for Importers and Exporters of

Natural Gas’’ (1902–0027).

The Commission in this proposed rule

intends to modernize its regulations to

reflect the current regulatory

environment that it instituted with

Order No. 636 and the restructuring of

the natural gas industry. Specifically,

the Commission intends to revise the

Uniform System of Accounts to provide

financial information that will be of

greater benefit than what is available

now, and to create forms and reports

that reflect open-access transportation of

natural gas and unbundled pipeline

sales for resale at market-based prices.

The Commission’s Office of Chief

Accountant uses the data in its audit

program and continuous review of the

financial condition of regulated

companies. The Office of Pipeline

Regulation uses the data in its various

rate proceedings and supply programs,

and the Office of Economic Policy and

Office of General Counsel use the data

in their programs relating to the

administration of the Natural Gas Act.

The Commission is submitting to the

Office of Management and Budget a

notification of these proposed

collections of information. Interested

persons may obtain information on

these reporting requirements by

contacting the Federal Energy

Regulatory Commission, 941 North

Capitol Street, NE, Washington, DC

20426 [Attention: Michael Miller,

Information Services Division, (202)

208–1415]. Comments on the

requirements of this rule can be sent to

the Office of Information and Regulatory

Affairs of OMB, Washington, D.C.

20503, (Attention: Desk Officer for

Federal Energy Regulatory

Commission).

X. Comment Procedures

The Commission invites all interested

persons to submit written comments on

the proposals of this NOPR. To the

extent possible, the comments should be

keyed to the topic headings of this

NOPR. An original and 14 copies of the

written comments must be filed with

the Commission by April 13, 1995.

Comments must refer to Docket No.

RM95–4–000 and be submitted to the

Office of the Secretary, Federal Energy

Regulatory Commission, 825 North

Capitol Street, N.E., Washington, D.C.

20426.

All written submissions will be

placed in the Commission’s public file

and will be available for public

inspection, during regular business

hours, at the Commission’s Public

Reference Room, Room 3408, 941 North

Capitol Street, N.E., Washington, D.C.

20426.

List of Subjects

18 CFR Part 158

Administrative practice and

procedure, Natural gas, Reporting and

recordkeeping requirements, Uniform

System of Accounts.

18 CFR Part 201

Natural gas, Reporting and

recordkeeping requirements, Uniform

System of Accounts.

18 CFR Part 250

Natural gas, Reporting and

recordkeeping requirements.

18 CFR Part 260

Natural gas, Reporting and

recordkeeping requirements.
3160 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

18 CFR Part 284

Continental shelf, Natural gas,

Reporting and recordkeeping

requirements.

By direction of the Commission.

Lois D. Cashell,

Secretary.

In consideration of the foregoing, the

Commission proposes to amend Parts

158, 201, 250, 260, and 284, Chapter I,

Title 18, Code of Federal Regulations, as

set forth below.

PART 158—ACCOUNTS, RECORDS,

AND MEMORANDA

PART 158—AUTHORITY CITATION

[REVISED]

1. The authority citation for Part 158

is revised to read as follows:

Authority: 42 U.S.C. 7101–7352; 15 U.S.C.

717–717w, 3301–3432.

2. Section 158.10 is revised to read as

follows:

§ 158.10 Examination of accounts.

All natural gas companies not

classified as Class C or Class D prior to

January 1, 1984 shall secure for each

year, the services of an independent

certified public accountant, or

independent licensed public accountant

(licensed on or before December 31,

1970), certified or licensed by a

regulatory authority of a State or other

political subdivision of the United

States, to test compliance in all material

respects of those schedules that are

indicated in the General Instructions set

out in the applicable Annual Report,

Form No. 2 or Form No. 2–A, with the

Commission’s Uniform System of

Accounts and published accounting

releases. The Commission expects that

identification of questionable matters by

the independent accountant will

facilitate their early resolution and that

the independent accountant will seek

advisory rulings by the Commission on

such items. This examination shall be

deemed supplementary to periodic

Commission examinations of

compliance.

3. Section 158.11 is revised to read as

follows:

§ 158.11 Report of certification.

Each natural gas company not

classified as Class C or Class D prior to

January 1, 1984 shall file with the

Commission a letter or report of the

independent accountant certifying

approval, together with the original and

each copy of the filing of the applicable

Annual Report, Form No. 2 or Form No.

2–A, covering the subjects and in the

format prescribed in the General

Instructions of the applicable Annual

Report. The letter or report shall also set

forth which, if any, of the examined

schedules do not conform to the

Commission’s requirements and shall

describe the discrepancies that exist.

The Commission shall not be bound by

the certification of compliance made by

an independent accountant pursuant to

this paragraph.

4. In section 158.12, the words ‘‘The

Commission will not recognize any

certified public accountant or public

accountant through December 31, 1975,

who is not in fact independent.

Beginning January 1, 1976, and each

year thereafter, the’’ are removed and

the word ‘‘The’’ is added in their place.

PART 201—UNIFORM SYSTEM OF

ACCOUNTS PRESCRIBED FOR

NATURAL GAS COMPANIES SUBJECT

TO THE PROVISIONS OF THE

NATURAL GAS ACT

5. The authority citation for Part 201

continues to read as follows:

Authority: 15 U.S.C. 717–717w, 3301–

3432; 42 U.S.C. 7101–7352, 7651–7651o.

PART 201—[AMENDED]

6. In Part 201, Definitions, Definitions

13, 15, 16, 32B, 38, and 39 are amended

by removing the words ‘‘in the case of

Major natural gas companies,’’ and

Definition 29 is amended by removing

the word ‘‘(Major natural gas

companies).’’

7. In Part 201, General Instructions,

paragraph 1 is revised to read as

follows:

General Instructions

1. Applicability. Each natural gas company

must apply the system of accounts prescribed

by the Commission.

* * * * *

8. In Part 201, General Instructions,

paragraphs 8, 12, 14, 15, and 16, the

words ‘‘(Major natural gas companies)’’

are removed at the end of each heading,

and in the heading for paragraph 21, the

words ‘‘(Nonmajor Natural Gas

Companies)’’ are removed.

9. In Part 201, Gas Plant Instructions,

paragraph 1, the words ‘‘Classification

of utilities (Major natural gas

companies)’’ are removed from the

heading and the words ‘‘Classification

of gas plant at effective date of system

of accounts’’ are added in their place.

10. In Part 201, Gas Plant Instructions,

paragraph 3, introductory text, the

words ‘‘For Major natural gas

companies’’ are removed and the words

‘‘A. The’’ are added in their place, the

words ‘‘(Major and Nonmajor Natural

Gas Companies)’’ are removed from

paragraphs 3A.(17) and 3A.(19), and

paragraph 3B. is removed.

11. In Part 201, Gas Plant Instructions,

paragraph 4C., the words ‘‘For Major

natural gas companies, the’’ are

removed and the word ‘‘The’’ is added

in their place.

12. In Part 201, Gas Plant Instructions,

paragraph 6A., the words ‘‘(For

Nonmajor companies, account 404,

Amortization of Limited-Term Gas

Plant)’’ are removed.

13. In Part 201, Gas Plant Instructions,

paragraphs 7C. and 7E., the words ‘‘or

in the case of Major companies,’’ are

removed.

14. In Part 201, Gas Plant Instructions,

paragraph 7D., the words ‘‘In the case of

Major companies, a parcel,’’ are

removed and the words ‘‘A parcel’’ are

added in their place.

15. In Part 201, Gas Plant Instructions,

paragraph 7G., the words ‘‘in the case of

Major Companies,’’ are removed.

16. In Part 201, Gas Plant Instructions,

paragraph 7H., the words ‘‘(For Major

companies, see,’’ are removed and the

word ‘‘(See’’ is added in its place, and

the two sentences ‘‘For Nonmajor

companies, see account 403.1,

Depreciation and Depletion Expense,

and account 110, Accumulated

Provision for Depreciation, Depletion

and Amortization of Gas Utility Plant.

See also account 797, Abandoned

Leases, for the accounting for

abandonments of natural gas leases

which have never been productive’’ are

removed and the words ‘‘, and account

797, Abandonment, leases’’ are added in

their place.

17. In Part 201, Gas Plant Instructions,

paragraph 8G., the words ‘‘(Major

natural gas companies)’’ are removed at

the end of Items 2, 6, 11, 12, 18, 19, 22,

28, 29, 32, 35, 36, 39, 40, 41, 42, 44, 45,

47, 49, 52, 53, 55, 58, 60, 61, 62, 62, 64,

65, 66, and 67.

18. In Part 201, Gas Plant Instructions,

paragraph 10E., the words ‘‘or in the

case of Major companies,’’ immediately

following the words ‘‘Gas Plant Held for

Future Use’’ are removed.

19. In Part 201, Gas Plant Instructions,

paragraph 10F., the words ‘‘(account

110, Accumulated Provision for

Depreciation, Depletion and

Amortization of Gas Utility Plant, in the

case of Nonmajor companies)’’ and the

words ‘‘(account 110 for Nonmajor

companies)’’ are removed.

20. In Part 201, Gas Plant Instructions,

paragraph 10G., the words ‘‘In the case

of Major companies, the accounting for’’

are removed and the words ‘‘The

accounting for’’ are added in their place.

21. In Part 201, Gas Plant Instructions,

paragraph 11C., the words ‘‘In the case

of Major companies, each utility’’ are
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3161

removed and the words ‘‘Each utility’’

are added in their place.

22. In Part 201, Gas Plant Instructions,

paragraph 12, the words ‘‘(105.1,

Production Properties Held for Future

Use, in the case of Major companies)’’

are removed and the words ‘‘105.1,

Production Properties held for Future

Use,’’ are added in their place, and the

words ‘‘(Major Companies)’’ in the note

are removed.

23. In Part 201, Gas Plant Instructions,

paragraph 14, the words ‘‘(Major natural

gas companies)’’ are removed at the end

of the heading.

24. In Part 201, Gas Plant Instructions,

paragraph 15A., the words ‘‘(account

180, Other Deferred Debits, in the case

of Nonmajor companies)’’ are removed

from paragraph A.(1), the words ‘‘(the

amounts recorded in account 186 shall

be cleared to the appropriate plant

accounts, in the case of Nonmajor

companies)’’ are removed from

paragraph A.(2), and the words

‘‘(Account 180 in the case of Nonmajor

companies)’’ are removed from

paragraph A.(3).

25. In Part 201, Gas Plant Instructions,

paragraph 16 is removed.

26. In Part 201, Operating Expense

Instructions, paragraph 1, the words

‘‘(Major natural gas companies)’’ at the

end of the heading are removed.

27. In Part 201, Balance Sheet Chart

of Accounts, and Balance Sheet

Accounts, the words ‘‘(Major only)’’ at

the end of the headings of Accounts

103, 105.1, 106, 108, 111, 115, 117, 123,

123.1, 125, 126, 128, 131 through 135,

151 through 153, 155, 156, 163, 164.3,

166, 167, 171 through 173, 183.1, 183.2,

184, 185, 188, 202, 203, 205 through

210, 216.1, 222, 238 through 241 are

removed.

28. In Part 201, Balance Sheet Chart

of Accounts, Accounts 103.1, 110, 129,

180, and 218, and their respective titles

are removed.

29. In Part 201, Balance Sheet

Accounts, Accounts 117A, 117D, 117E,

117F, and 117G are removed, Accounts

117B and 117C are redesignated 117.3B

and 117.3C, respectively, new Accounts

117.1, 117.2, 117.3A, and 117.4 are

added, and redesignated Account

117.3C is revised to read as follows:

Balance Sheet Accounts

* * * * *

117.1 Gas stored-Base gas.

This account is to include the cost of

recoverable gas volumes that are necessary,

in addition to those volumes for which cost

are properly includable in Account 101, Gas

plant in service, to maintain pressure and

deliverability requirements for each storage

facility. Subaccounts are to be maintained so

that the cost of base gas applicable to each

gas storage facility shall not be changed from

the amount initially recorded except for

changes in volumes designated as base gas.

117.2 System balancing gas.

This account is to be used to record the

cost of system gas designated as available for

transmission load balancing (including nonotice transportation) and other uses

associated with maintaining efficient

transmission operations other than gas

properly recordable in Account 117.1 or the

plant accounts. The cost initially recorded

herein shall not be changed except for

adjustments to volumes designated as system

gas. Detailed records must be kept separately

identifying volumes and unit prices of

system gas held in underground storage

facilities and held in pipelines.

117.3 Gas stored in reservoirs and

pipelines-noncurrent.

A. This account shall include the cost of

stored gas available for sale.

B. Gas stored during the year shall be

priced at cost according to generally accepted

methods of cost determination consistently

applied from year to year. Transmission

expenses for facilities of the utility used in

moving the gas to the storage area and

expenses of storage facilities shall not be

included in the inventory of gas except as

may be authorized or directed by the

Commission.

Note B–1: In general, gas stored from the

supply in an integrated system shall be

priced at the average cost of the gas

constituting the common supply of the

system, although this general rule may be

departed from where conditions of system

operation of gas supply and utilization

permit a valid presumption that the gas

stored may be considered to be from

specified sources, as indicated below.

Note B–2: When in harmony with the overall system operation of gas supply and

utilization, and the presumption is

consistently observed from year to year, gas

stored during the year may be presumed to

be from total gas purchases, or from

purchases from specified sources. When

either of these presumptions is proper, the

cost of gas stored shall be priced at the

weighted average cost of all gas purchased,

or at the weighted average cost of purchases

from the specified sources, as appropriate.

The weighted average cost may be the

average for preceding twelve months, except

where a significant change occurs in the cost

of gas, the full effect of such change shall be

reflected for the period after the change is

effective.

Note B–3: When in harmony with the overall system operation of gas supply and

utilization, and the presumptions are

consistently observed from year to year, gas

stored during the year may be presumed to

be from identified sources of the utility’s own

production. Such stored gas shall be priced

at the weighted average cost of gas produced

from the specified production areas. Where

this presumption is made, or where the

stored gas is identified as a matter of fact

under circumstances which do not permit a

proper application of the theory of

displacement, the utility shall maintain

separate records of the cost of gas produced

from such areas and the derivation of the cost

used for stored gas from such sources.

Note B–4: Where gas is purchased

specifically for storage, or a price concession

received because of the storing of purchased

gas, such gas shall be priced at the net

contract price of the gas so purchased and

stored.

Note B–5: The provisions of this

instruction and the related footnotes shall not

be construed as permitting or authorizing a

restatement of the amounts at which stored

gas inventories are stated on the utility’s

books at the effective date of this instruction,

except as may be authorized by the

Commission.

C. Withdrawals of gas may be priced

according to the first-in-first-out, last-in-firstout, or weighted average cost method,

provided the method adopted by the utility

is used consistently from year to year and the

inventory records are maintained in

accordance therewith. Approval of the

Commission must be obtained for any other

pricing method, or change in the pricing

method adopted by the utility.

117.4 Gas owed to system gas.

A. This account shall include credit

balances resulting from withdrawals from

system gas of volumes that encroach upon

the volumes designated as base gas (Account

117.1), system balancing gas (Account 117.2),

and gas properly recordable in the plant

accounts. Withdrawals are to be credited to

this account and charged to Account 808.1,

Gas Withdrawn From Storage-Debit, at an

amount equal to the current market price of

gas available to the utility. Gas owned by the

utility and injected into the system will be

deemed to satisfy the owed to system account

first before any other use. The gas injected is

to be priced at the same rate used to price

withdrawals by crediting Account 808.2, Gas

Delivered to Storage-Credit. If the owed to

system balance is due to more than one

transaction, the accounting for injections

should follow a queue with the earlier

transaction being the first accounted for.

B. Detailed records must be kept for each

transaction identifying volumes and unit

prices used for gas owed to system gas.

* * * * *

30. In Part 201, Balance Sheet

Accounts, Account 154, the words ‘‘For

Nonmajor utilities, this account shall

include the cost of fuel on hand and

unapplied materials and supplies

(except meters and house regulators).

For both Major and Nonmajor utilities,

it shall’’ are removed from the

introductory text of paragraph A,

paragraph C and Note B are removed,

Note A is redesignated Note, and the

words ‘‘they may be charged to a stores

expense clearing account (account 163,

Stores Expenses Undistributed, in the

case of Major Utilities), and distributed

therefrom to the appropriate accounts’’

in redesignated Note are removed and

the words ‘‘they shall be charged to

account 163, Stores expenses

Undistributed’’ are added in their place.
3162 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

31. In Part 201, Balance Sheet

Accounts, Account 164.1 is revised to

read as follows:

Balance Sheet Accounts

* * * * *

164.1 Gas stored-current.

This account shall be debited with such

amounts as are credited to account 117.3, Gas

Stored in Reservoirs and PipelinesNoncurrent, to reflect classification for

balance sheet purposes of such portion of the

inventory of gas stored as represents a

current asset according to conventional rules

for classification of current assets.

Note: It shall not be considered conformity

to conventional rules of current asset

classification if the amount included in this

account exceeds an amount equal to the cost

of estimated withdrawals of gas from storage

for purposes of sale within the 24-month

period from date of the balance sheet, or if

the amount represents a volume of gas

which, in fact, could not be withdrawn from

storage without impairing pressure levels

needed for normal operating purposes.

* * * * *

32. In Part 201, Balance Sheet

Accounts, Accounts 164.2D. and

164.3D., the words ‘‘Mcf’’ and ‘‘Mcf (or

Btu),’’ respectively, are removed, and

the words ‘‘Dth’’ are added in their

place.

33. In Part 201, Balance Sheet

Accounts, Account 186, the words ‘‘For

Major companies, this account shall’’

are removed from paragraph A, and the

words ‘‘This account shall’’ are added in

their place, paragraph B is removed,

paragraph C is redesignated as

paragraph B, and all the words in

parenthesis in redesignated paragraph B

are removed.

34. In Part 201, Balance Sheet

Accounts, Accounts 201 through 204,

Note, the words ‘‘(For Nonmajor

companies, account 211, Miscellaneous

Paid-In Capital)’’ are removed.

35. In Part 201, Balance Sheet

Accounts, Account 211, the words ‘‘(In

the case of Nonmajor companies, this

account shall be kept so as to show the

source of the credits includible herein)

are removed, the ITEMS section and

Note B are removed, Note A is

redesignated Note, and the words

‘‘(Major companies)’’ are removed from

the heading of redesignated Note.

36. In Part 201, Balance Sheet

Accounts, Account 242, the Items

section is removed.

37. In Part 201, Gas Plant Chart of

Accounts and Gas Plant Accounts, the

words ‘‘(Major only)’’ at the end of each

title of Accounts 363, 363.1, 363.2,

363.3, 363.4, 364.1, 364.2, 364.3, 364.4,

364.5. 364.6, 364.7 and 364.8 are

removed.

38. In Part 201, Gas Plant Accounts,

Accounts 302C. and 303B., the words

‘‘(For Nonmajor Companies; account

110, Accumulated Provisions for

Depreciation, Depletion and

Amortization of Gas Utility Plant)’’

following the words ‘‘Gas Utility Plant’’

are removed.

39. In Part 201, Gas Plant Accounts,

the first sentence of Account 352.3B is

revised to read as follows:

Gas Plant Accounts

* * * * *

352.3 Nonrecoverable natural gas

* * * * *

B. Such nonrecoverable gas shall be priced

at the acquisition cost of native gas or, when

acquired for storage by purchase or presumed

to be supplied from the utility’s own

production, priced as outlined in Paragraph

B of account 117.3 Gas Stored in Reservoirs

and Pipelines-Noncurrent. * * *

40. In Part 201, Income Chart of

Accounts and Income Accounts,

Accounts 403, 404.1, 404.2, 404.3, and

418.1, the words ‘‘(Major only)’’ are

removed from the end of the headings.

41. In Part 201, Income Chart of

Accounts, Accounts 403.1 and 404 are

removed.

42. In Part 201, Income Accounts,

Accounts 421.1 and 421.2, the words

‘‘(Major only)’’ are removed.

43. In Part 201, Operating Revenue

Chart of Accounts and Operating

Revenue Accounts, Account 482, the

words ‘‘(Major only)’’ are removed at the

end of the headings.

44. In Part 201, Operating Revenue

Accounts, Account 481C, the words

‘‘(Major companies)’’ is removed from

the introductory text, and the word

‘‘Mcf’’ is removed and the word ‘‘Dth’’

is added in its place.

45. In Part 201, Operating Revenue

Accounts, Account 488, Item 3, the

words ‘‘For Major Companies, see,’’ are

removed and the word ‘‘See’’ is added

in their place.

46. In Part 201, Operating Revenue

Accounts, Account 489 is deleted, and

new Accounts 489.1, 489.2, 489.3, and

489.4 are added read as follows:

Operating Revenue Accounts

* * * * *

489.1 Revenues from transportation of gas

of others through gathering facilities.

This account shall include revenues from

transporting gas for other companies through

the gathering facilities of the utility.

489.2 Revenues from transportation of gas

of others through transmission facilities.

This account shall include revenues from

transporting gas for other companies through

the transmission facilities of the utility.

489.3 Revenues from transportation of gas

of others through distribution facilities.

This account shall include revenues from

transporting gas for other companies through

the distribution facilities of the utility.

489.4 Revenues from storing gas of others.

This account shall include revenues from

storing gas for other companies.

* * * * *

47. In Part 201, Operating Revenue

Accounts, Account 491B is revised to

read as follows:

Operating Revenue Accounts

* * * * *

491 Revenues from natural gas processed

by others.

* * * * *

B. The records supporting this account

shall be so maintained that full information

concerning determination of the revenues

will be readily available concerning each

processor of gas of the utility, including as

applicable (a) the Dth of gas delivered to such

other party for processing, (b) the Dth of gas

received back from the processor, (c) the

field, general production area , or other

source of the gas processed, (d) Dth of gas

used for processing fuel, etc., which is

chargeable to the utility, (e) total gallons of

each product recovered by the processor and

the utility’s share thereof, (f) the revenues

accruing to the utility, and (g) the basis of

determination of the revenues accruing to the

utility. Such records shall be maintained

even though no revenues are derived from

the processor.

* * * * *

48. In Part 201, Operating Revenue

Accounts, Account 495 is revised to

read as follows:

Operating Revenue Accounts

* * * * *

495 Other gas revenues.

This account shall include revenues

derived from gas operations not includible in

any of the foregoing accounts.

Items

1. Commission on sale or distribution of

gas of others when sold under rates filed by

such others.

2. Compensation for minor or incidental

services provided for others such as customer

billing, engineering, etc.

3. Profit or loss on sale of material and

supplies not ordinarily purchased for resale

and not handled through merchandising and

jobbing accounts.

4. Sales of steam, water, or electricity,

including sales or transfers to other

departments of the utility.

5. Miscellaneous royalties received.

6. Revenues from dehydration and other

processing of gas of others, except products

extraction where products are received as

compensation and sales of such are

includible in account 490, Sales of Products

Extracted From Natural Gas, and except

compression of gas of others, revenues from

which are includible in accounts 489.1,
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3163

489.2, or 489.3, Revenues from

Transportation of Gas of Others.

7. Included in a separate subaccount,

revenues in payment for rights and/or

benefits received from others which are

realized through research, development, and

demonstration ventures.

8. Gains on settlements of imbalance

receivables (See Account 806).

49. In Part 201, Operation and

Maintenance Expense Chart of Accounts

and Operation and Maintenance

Expense Accounts, the words ‘‘(Major

only)’’ are removed at the end of each

title of Accounts 700 through 708, 711

through 730, 732 through 735, 740

through 742, 751 through 754, 756, 757,

761, 762, 765 through 775, 777 through

791, 800, 801 through 804.1, 806, 809.1,

809.2, 810 through 812, 815 through

822, 824, 830, 831, 833 through 837, 840

through 842, 842.1 through 842.3, 843.1

through 842.3, 843.1 through 843.9,

844.1 through 844.8, 845.1 through

845.6, 846.1, 846.2, 847.1 through 847.8,

851, 853, 854 through 857, 859, 861,

862, 865 through 867, 871 through 873,

875 through 877, 880, 885 through 892,

894, 901, 905, 907 through 913, and 916.

50. In Part 201, Operation and

Maintenance Expense Chart of

Accounts, and Operating and

Maintenance Expense Accounts,

Accounts 724.1, 729.1, 737, 743, 769.1,

792, 799, 812.1, 827, 838, 839, 853.1,

857.1, 868, 880.1, 892.1, 895, 906, 917,

and 933 are removed, and Account 935

is redesignated Account 932.

51. In Part 201, Operation and

Maintenance Expense Accounts,

Account 710, the words ‘‘For Major

companies, this’’ are removed from

paragraph A, and the word ‘‘This’’ is

added in their place, and paragraph B

and the Items section are removed.

52. In Part 201, Operation and

Maintenance Expense Accounts,

Account 731A and 731B, the words

‘‘(for Nonmajor companies, account 154,

Plant Materials and Operating

Supplies)’’ are removed.

53. In Part 201, Operation and

Maintenance Expense Accounts,

Account 750, the words ‘‘For Major

companies, this’’ in paragraph A are

removed and the word ‘‘This’’ is added

in their place, and paragraph B, the

headings ‘‘Major and Nonmajor’’ and

‘‘Nonmajor Only’’ under Items, and

Items 5 through 21 are removed.

54. In Part 201, Operation and

Maintenance Expense Accounts,

Account 755, the words ‘‘stations

(including in the case of Major

companies, applicable amounts of fuel

stock expenses)’’ in paragraph A are

removed and the words ‘‘stations,

including applicable amounts of fuel

stock expenses’’ are added in their

place, the words ‘‘For Major companies,

respective’’ in paragraph B are removed

and the word ‘‘Respective’’ is added in

their place, Note B is removed, Note A

is redesignated Note, and the words

‘‘(Major Companies)’’ are removed from

redesignated Note.

55. In Part 201, Operation and

Maintenance Expense Accounts,

Account 759, the words ‘‘(Major

companies only)’’ in the introductory

text are removed, the headings ‘‘(Major

only)’’ and ‘‘(Nonmajor companies):’’ in

the Items section are removed, and

Items 1 through 18 are removed.

56. In Part 201, Operation and

Maintenance Expense Accounts,

Account 776, the words ‘‘in the case of

Major companies,’’ the words ‘‘(Major

only)’’ following the heading ‘‘Items’’,

and the Note at the end of the account

are removed.

57. In Part 201, Operation and

Maintenance Expense Accounts,

Account 795, Note, the words ‘‘(in the

case of Nonmajor Companies, account

105, Gas Plant Held for Future Use)’’ are

removed.

58. In Part 201, Operation and

Maintenance Expense Accounts,

Account 796, Note A, the words ‘‘(in the

case of Nonmajor companies, General

Instruction 21, Gas Well Records)’’

following the words ‘‘Each Plant’’ are

removed.

59. In Part 201, Operation and

Maintenance Expense Accounts,

Account 797, paragraph A, the words

‘‘For Major companies, this’’ are

removed, the word ‘‘This’’ is added in

their place, and the sentence following

the word ‘‘productive.’’ is removed, and

in paragraph B, the words ‘‘(Major

only)’’ are removed.

60. In Part 201, Operation and

Maintenance Expense Accounts,

Account 798, the words ‘‘for Major

companies,’’ and the words ‘‘for

‘‘Nonmajor companies, see account 186,

Miscellaneous Deferred Debits’’ are

removed.

61. In Part 201, Operation and

Maintenance Expense Accounts,

Account 806 is revised to read as

follows:

806 Exchange gas

A. This account shall include debits or

credits for the cost of gas in unbalanced

transactions whereby gas is received from or

delivered to another party in exchange, load

balancing, or no-notice transportation

transactions. The costs are to be determined

from the current market price of gas at the

time gas is tendered for transportation.

Contra entries to those in this account shall

be made to account 174, Miscellaneous

Current and Accrued Assets, for gas

receivable and to account 242, Miscellaneous

Current and Accrued Liabilities, for gas

deliverable under such transactions. Such

entries shall be reversed and appropriate

contra entries made to this account when gas

is received or delivered in satisfaction of the

amounts receivable or deliverable (See

Paragraph B of this account for unbalanced

transactions that are satisfied by other than

gas in kind).

B. If revenue is earned or amounts are

payable in consideration of the performance

of exchange services, or if consideration for

the amounts receivable or deliverable are

satisfied by other than gas, such as in cashout provisions, and at different amounts than

originally recorded pursuant to Paragraph A

of this account, such revenue, gain, expense,

or loss should be recorded in account 495,

Other Gas Revenues, or in account 813, Other

Gas Supply Expenses, as appropriate. See,

however, accounts 489.1, 489.2, and 489.3,

Revenues from Transportation of Gas by

Others, for transactions which, in fact, are for

transportation of gas rather than exchange of

gas.

C. Records shall be maintained so that

there is readily available for each party

entering gas exchange, load balancing, or nonotice transportation transactions by point of

receipt and delivery, the quantity of gas

delivered and received, the amount of

consideration if other than gas, and the basis

for the consideration.

62. In Part 201, Operation and

Maintenance Expense Accounts,

Account 807, paragraph D, the words

‘‘(Major companies’’) are removed.

63. In part 201, Operation and

Maintenance Expense Accounts,

paragraph A of Accounts 808.1 and

808.2 are revised to read as follows:

808.1 Gas withdrawn from storage-Debit

A. This account shall include debits for the

cost of gas withdrawn from storage during

the year. Contra credits for entries to this

account shall be made to accounts 117.3 Gas

Stored in Reservoirs and PipelinesNoncurrent, or account 117.4, Gas Owed to

System Gas, or account 164.2, Liquefied

Natural Gas Stored, as appropriate. (See

instructions to accounts 117.3 and 117.4).

* * * * *

808.2 Gas delivered to storage-Credit

A. This account shall include credits for

the cost of gas delivered to storage during the

year. Contra debits for entries to this account

shall be made to accounts 117.3 Gas Stored

in Reservoirs and Pipelines-Noncurrent,

account 117.4, Gas Owed to System Gas, or

account 164.2, Liquefied Natural Gas Stored,

as appropriate. (See instructions to accounts

117.3 and 117.4).

* * * * *

64. In Part 201, Operation and

Maintenance Expense Accounts,

Account 813, the words ‘‘including, in

the case of Major companies, research

and development expenses’’ are

removed and the words ‘‘including

research and development expenses.

This account shall include losses on

settlements of imbalance receivables

(See Account 806)’’ are added in their

place.
3164 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

65. In Part 201, Operation and

Maintenance Expense Accounts,

Account 814, paragraph B and the Items

(Nonmajor only) section are removed,

and in paragraph A, the designation

‘‘A.’’ and the words ‘‘For Major

companies, this’’ are removed and the

word ‘‘This’’ is added in their place.

66. In Part 201, Operation and

Maintenance Expense Accounts,

Account 823, the words ‘‘For Major

companies, see’’ are removed and the

word ‘‘See’’ is added in their place.

67. In Part 201, Operation and

Maintenance Expense Accounts,

Account 845.6B, the words ‘‘Mcf or Bth,

as appropriate,’’ are removed and the

word ‘‘Dth’’ is added in their place.

68. In Part 201, Operation and

Maintenance Expense Accounts,

Account 850, paragraph B and the Items

(Nonmajor only) section are removed,

and in paragraph A, the designation

‘‘A.’’ and the words ‘‘For Major

companies, this’’ are removed and the

word ‘‘This’’ is added in their place.

69. In Part 201, Operation and

Maintenance Expense Accounts,

Accounts 853.1B and 854B, the word

‘‘Mcf’’ is removed and the word ‘‘Dth’’

is added in its place.

70. In Part 201, Operation and

Maintenance Expense Accounts,

Account 858B, the word ‘‘Mcf’’ is

removed in two places and the word

‘‘Dth’’ is added in its place.

71. In Part 201, Operation and

Maintenance Expense Accounts,

Account 870, the words ‘‘(Major only)’’

are removed, and the words ‘‘For Major

companies, see’’ are removed, and in

their place the word ‘‘See’’ is added.

72. In Part 201, Operation and

Maintenance Expense Accounts,

Account 874, Items, the words ‘‘(Major

only)’’ in the heading ‘‘Labor’’ are

removed, the heading ‘‘Labor (Nonmajor

only):’’ and Items 1 through 3 under that

heading are removed, the words ‘‘(Major

and Nonmajor):’’ in the heading

‘‘Materials and Expenses’’ are removed,

and the words ‘‘(Major only)’’ are

removed from Items 2, and 8 through 12

under that heading.

73. In Part 201, Operation and

Maintenance Expense Accounts,

Account 878, Items, the words ‘‘(Major

only)’’ are removed at the end of each

Item 1 through 12 and 20.

74. In Part 201, Operation and

Maintenance Expense Accounts,

Account 879, Items, the words ‘‘(Major

only)’’ are removed at the end of Items

1, 2, 4, 5, 6, 9, and 11 through 13.

75. In Part 201, Operation and

Maintenance Expense Accounts,

Account 902, Items, Items 13 and 14 are

removed, and a new Item 13 is added to

read as follows:

902 Meter reading expenses

* * * * *

13. Transportation, meals and incidental

expenses.

76. In Part 201, Operation and

Maintenance Expense Accounts,

Account 903, the words ‘‘(Major only)’’

at the end of Item 26 are removed, and

Items 31 and 32 are removed.

77. In Part 201, Operation and

Maintenance Expense Accounts,

Account 924, the words ‘‘For Major

companies, it’’ are removed from

paragraph A and the word ‘‘It’’ is added

in their place, the words ‘‘(stores

expenses in the case of Nonmajor

companies)’’ are removed from

paragraph (1) of Note B, in paragraph (2)

of Note B, the words ‘‘For Major

companies, transportation’’ are removed

and the word ‘‘Transportation’’ is added

in their place, and the words ‘‘For

Nonmajor companies, transportation

and garage equipment, to account 933,

Transportation expenses.’’ are removed,

and the words ‘‘(Major only)’’ are

removed from the title of Note C.

78. In Part 201, Operation and

Maintenance Expense Accounts,

Account 925A, the words ‘‘For Major

Companies, it’’ are removed and the

word ‘‘It’’ is added in their place.

79. In Part 201, Operation and

Maintenance Expense Accounts,

Account 926D, the words ‘‘For Major

companies, records’’ are removed and

the word ‘‘Records’’ is added in their

place.

80. In Part 201, Operation and

Maintenance Expense Accounts,

Account 930.2, Item 4, the words ‘‘For

Major Companies, research’’ are

removed and the word ‘‘Research’’ is

added in their place, and the words

‘‘For Nonmajor companies,

experimental and general research work

for the industry.’’ are removed.

81. In Part 201, Operation and

Maintenance Expense Accounts,

Account 935 is redesignated Account

932, and redesignated Account 932 is

amended by removing the words ‘‘For

Nonmajor companies, include also other

general equipment accounts (not

including transportation equipment).’’

in paragraph A, revising paragraph B

after the words ‘‘the following

accounts:’’ and adding the Note to read

as follows:

932 Maintenance of general plant.

* * * * *

B. * * *

Manufactured Gas Production, accounts 708,

742.

Natural Gas Production and Gathering,

account 769

Natural Gas Production Extraction, account

791

Underground Storage, account 837

Local Storage, account 846.2

Transmission Expenses, account 867

Distribution Expenses, account 894

Merchandising and Jobbing, account 416

Garage, Shops, etc.—appropriate clearing

account, if used.

Note: Maintenance of plant included in

other general plant equipment accounts shall

be included herein unless charged to clearing

accounts or to a particular functional

maintenance expense indicated by the use of

the equipment.

PART 250—FORMS

82. The authority citation for part 250

continues to read as follows:

Authority: 15 U.S.C. 717–717w, 3301–

3432; 42 U.S.C. 7101–7352.

83. Section 250.2 is revised to read as

follows:

§ 250.2 Form of proposed cancellation of

tariff or part thereof (see § 154.602 of this

chapter).

When cancelling an entire tariff or an

entire rate schedule, the notice of

cancellation as set forth below must be

filed as a revised tariff sheet

superseding the first tariff sheet in the

sequence of tariff sheets containing the

tariff or part of the tariff being cancelled.

When cancelling an individual tariff

sheet, the tariff sheet should be

designated as reserved for future use.

Cancellation of Entire Tariff

Notice is hereby given that effective

llllllll(date) FERC Gas Tariff of

lllllll (Name of Company) is to be

cancelled.

Cancellation of Rate Schedule

Notice is hereby given that effective

lllllll(date) Rate Schedule

lllllll constituting lllllll

Sheet(s) No.(s) llllll of the FERC Gas

Tariff of lllllll (Name of Company)

is to be cancelled.

84. Section 250.3 is revised to read as

follows:

§ 250.3 Form of proposed cancellation or

termination of contract or part thereof (see

§ 154.602 of this chapter).

Notice is hereby given that effective the

llll day of llllll, lllll, the

contract with lllllll, (Name of

customer or customers) dated lllllll

and relating to service under rate

schedules(s) llllllll (Here identify

the rate schedule(s), giving sheet numbers in

the Tariff) is to be llllllll (Specify

whether it automatically terminates by its

terms or is to be canceled by action of the

parties) lllllll (Name of natural-gas

company filing notice)

By lllllllllllllllllll

lllllllllllllllllllll

(Title)

Dated llllllllllllllllll
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3165

85. Section 250.4 is revised to read as

follows:

§ 250.4 Form of certificate of adoption (see

§ 154.603 of this chapter).

The lllllllllllllllll

(Exact name of company or person)

lllllllllll (Address) effective

llllll (Effective date of adoption)

hereby adopts, ratifies, and makes its own, in

every respect, the Tariff and contracts listed

below, which have heretofore been filed with

the Federal Energy Regulatory Commission

by lllllll (Exact name of

predecessor) lllllllll (Here

identify the Tariff and contracts adopted.)

lllllllllllllllllllll

(Name of successor)

By lllllllllllllllllll

lllllllllllllllllllll

(Title)

Dated llllllllllllllllll

§ 250.16 [Amended]

86. In § 250.16, paragraph (d) is

removed, and paragraph (e) is

redesignated as paragraph (d).

§§ 250.5, 250.7, 250.8, 250.9, 250.10, 250.12,

and 250.14 [Removed]

87. Sections 250.5, 250.7, 250.8,

250.9, 250.10, 250.12, and 250.14 are

removed and reserved.

PART 260—STATEMENTS AND

REPORTS (SCHEDULES)

88. The authority citation for part 260

continues to read as follows:

Authority: 15 U.S.C. 717–717w, 3301–

3432; 42 U.S.C. 7101–7352.

89. In § 260.1, paragraph (a) is

amended by adding a heading, and

paragraph (b) is revised to read as

follows:

§ 260.1 FERC Form No. 2, Annual report

for Major natural gas companies.

(a) Prescription. * * *

(b) Filing requirements. Each natural

gas company, as defined in the Natural

Gas Act (15 U.S.C. 717, et seq.) which

is a major company (a natural gas

company whose combined gas

transported or stored for a fee exceeded

50 million Dth in each of the three

previous calendar years) must prepare

and file with the Commission for the

calendar year beginning January 1, 1995,

and for each calendar year thereafter, on

or before April 30 following the close of

such calendar year, FERC Form No. 2.

Newly established entities must use

projected data to determine whether

FERC Form No. 2 must be filed. The

form must be filed electronically as

indicated in the general instructions set

out in that form. The format for the

electronic filing can be obtained at the

Federal Energy Regulatory Commission,

Division of Public Information, 941

North Capitol Street, N.E., Washington,

D.C. 20426. One copy of the report must

be retained by the respondent in its

files. The conformed copies may be by

any legible means of reproduction.

90. In § 260.2, paragraph (b) is revised

to read as follows:

§ 260.2 FERC Form No. 2–A, Annual report

for nonmajor natural gas companies.

* * * * *

(b) Filing requirements. Each natural

gas company, as defined by the Natural

Gas Act, not meeting the filing threshold

for FERC Form No. 2, but having total

gas sales or volume transactions

exceeding 200,000 Dth in each of the

three previous calendar years, must

prepare and file with the Commission

for the calendar year beginning January

1, 1995, and for each calendar year

thereafter, on or before March 31

following the close of such calendar

year, FERC Form No. 2–A. Newly

established entities must use projected

data to determine whether FERC Form

No. 2–A must be filed. The form must

be filed electronically as indicated in

the general instructions set out in that

form. The format for the electronic filing

can be obtained at the Federal Energy

Regulatory Commission, Division of

Public Information, 941 North Capitol

Street, N.E., Washington, D.C. 20426.

91. In § 260.3, paragraph (b)(1) is

revised to read as follows:

§ 260.3 FERC Form No. 11, Natural gas

pipeline company monthly statement.

* * * * *

(b)(1) Who must file. Each natural gas

company, as defined in the Natural Gas

Act, whose combined gas sold for resale

and gas transported or stored for a fee

exceeded 50 million Dth in the previous

calendar year, must prepare and file

with the Commission FERC Form No.

11. The form must be filed

electronically. The format for the

electronic filing can be obtained at the

Federal Energy Regulatory Commission,

Division of Public Information, 941

North Capitol Street, NE., Washington,

DC. 20426.

* * * * *

92. § 260.4 is revised to read as

follows:

§ 260.4 Form No. 14, Annual report for

importers and exporters of natural gas.

(a) The form of the annual report for

importers and exporters of natural gas is

prescribed for the calendar year ending

December 31, 1972, and thereafter, and

is designated as FERC Form No. 14.

(b) Each person having authorization

from the Federal Energy Regulatory

Commission pursuant to section 3 of the

Natural Gas Act, to import or export

natural gas must, beginning with the

reporting year 1972, and thereafter

annually, filed on or before March 31,

Form No. 14. The form must be

submitted in the manner prescribed in

§ 285.2011 of this chapter.

93. In § 260.9, the introductory text of

paragraph (b), and paragraphs (c) and (e)

are revised to read as follows:

§ 260.9 Report by natural gas pipeline

companies on service interruptions

occurring on the pipeline system.

* * * * *

(b) Natural gas pipeline companies

must report such interruptions to

service by any electronic means,

including facsimile transmission or

telegraph, to the Director, Division of

Environmental and Engineering Review,

Office of Pipeline Regulation, Federal

Energy Regulatory Commission, 825

North Capitol Street NE., Washington,

DC 20426 (FAX: (202) 208–2853), at the

earliest feasible time following such

interruption to service, and must state

briefly:

* * * * *

(c) If so directed by the Commission

or the Director, Division of

Environmental and Engineering Review,

the company must provide any

supplemental information so as to

provide a full report of the

circumstances surrounding the

occurrence.

* * * * *

(e) Copies of the telegraphic or

facsimile report on interruption of

service must be sent to the State

commission in those States where

service has been or might be affected.

94. In § 260.11, paragraph (a) is

revised to read as follows:

§ 260.11 Form No. 8, Underground gas

storage report.

(a) The Form of Underground Gas

Storage Report as FERC Form No. 8, is

prescribed.

* * * * *

§§ 260.13 and 260.15 [Removed]

95. Sections 260.13 and 260.15 are

removed and reserved.

PART 284—CERTAIN SALES AND

TRANSPORTATION OF NATURAL GAS

UNDER THE NATURAL GAS POLICY

ACT OF 1978 AND RELATED

AUTHORITIES

96. The authority citation for part 284

continues to read as follows:

Authority: 15 U.S.C. 717–717w, 3301–

3432; 42 U.S.C. 7201–7352; 43 U.S.C. 1331–

1356.
3166 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

Subpart A—General Provisions and

Conditions

§ 284.3 [Amended]

97. In § 284.3(a), the words ‘‘, sale or

assignment’’ are removed and the words

‘‘or sale’’ are added in their place.

98. In § 284.7, paragraph (b) is

removed, paragraphs (c) and (d) are

redesignated (b) and (c), respectively,

redesignated paragraph (c)(5)(iv) is

removed, and a new paragraph (c)(6) is

added to read as follows:

§ 284.7 Rates.

* * * * *

(c) Rate design. * * *

(6) Discount reports.

(i) A pipeline that provides either firm

or interruptible transportation service at

a discounted rate must file within 15

days of the close of the billing period a

report containing the following

information:

(A) The name of the shipper being

provided the discount (including a

designation whether the shipper is a

local distribution company, an interstate

pipeline, an intrastate pipeline, an enduser, a producer, a marketer, or a

pipeline sales operating unit), and for

discounts of firm transportation, the

shipper’s contract number;

(B) Any affiliate relationship between

the pipeline and the shipper and the

affiliate’s role in the transportation

transaction (i.e., shipper, marketer,

supplier, seller);

(C) The maximum rate or fee;

(D) The rate or fee actually charged

during the billing period;

(E) For discounted interruptible

service, the quantity of gas delivered

during the billing period at the

discounted rate and the zone of

delivery; and

(F) For discounted firm service, the

contract demand for firm service

provided at the discounted rate.

(ii) The requirements of this section

do not apply to discounts relating to the

release of capacity under § 284.243,

unless the release is permanent.

(iii) The discount report information

must be provided in electronic format

according to the specifications and

format contained in Form No. llll,

which can be obtained at the Federal

Energy Regulatory Commission, Public

Reference and Files Maintenance

Branch, 941 North Capitol St., N.E.,

Washington, DC 20426. The discount

information with respect to each

transaction, including the delivery

points used, must be maintained for

three years from the date the transaction

commences.

99. In § 284.8, paragraph (b)(4)(iii) is

revised to read as follows:

§ 284.8 Firm transportation service.

* * * * *

(b) * * *

(4) * * *

(iii) Purging of information on

completed transactions from current

files,

* * * * *

§ 284.10 [Removed]

100. Section 284.10 is removed and

reserved.

§ 284.14 [Removed]

101. Section 284.14 is removed and

reserved.

Subpart B—Certain Transportation by

Interstate Pipelines

102. Section 284.102(e) is revised to

read as follows:

§ 284.102 Transportation by interstate

pipelines.

* * * * *

(e) An interstate pipeline must obtain

from its shippers certifications

including sufficient information to

verify that their services qualify under

this section. Prior to commencing

transportation service described in

paragraph (d)(3) of this section, an

interstate pipeline must receive the

certification required from a local

distribution company or an intrastate

pipeline pursuant to paragraph (d)(3) of

this section.

103. In § 284.106, paragraph (a) is

revised, paragraphs (b) through (f) are

removed, paragraph (g) is redesignated

as paragraph (b), the introductory text of

redesignated paragraph (b) is revised,

and a new paragraph (c) is added to read

as follows:

§ 284.106 Reporting requirements.

(a) Notice of bypass. An interstate

pipeline that provides transportation

(except storage) under § 284.102 to a

customer that is located in the service

area of a local distribution company and

will not be delivering the customer’s gas

to that local distribution company, must

file with the Commission, within thirty

days after commencing such

transportation, a statement that the

interstate pipeline has notified the local

distribution company and the local

distribution company’s appropriate

regulatory agency in writing of the

proposed transportation prior to

commencement.

(b) Semi-annual storage report.

Within 30 days of the end of each

complete storage injection and

withdrawal season, the interstate

pipeline must file with the Commission

a report of storage activity provided

under the authority of either § 284.102

or § 284.223, as applicable. The report

must be signed under oath by a senior

official, consist of an original and five

conformed copies, and contain a

summary of storage injection and

withdrawal activities to include the

following:

* * * * *

(c) Index of customers. (1) Within 180

days of the effective date of this

paragraph, and each year thereafter on

January 15, an interstate pipeline must

provide for electronic dissemination of

an index of all its firm transportation

customers under contract as of the

preceding December 31.

(2) Until an interstate pipeline is in

compliance with the reporting

requirements of this paragraph, the

pipeline must comply with the index of

customer requirements applicable to

transportation and sales under Part 154,

set forth under § 154.111(b) and (c) of

this chapter.

(3) For each customer receiving firm

transportation service, the index must

include the information listed below in

paragraphs (c)(3)(i) through (x) of this

section. For each customer receiving

firm storage service, the index must

include the information in paragraphs

(c)(3)(i) through (vi) and (c)(3)(x)

through (xiii) of this section.

(i) The legal name of the customer;

(ii) The DUNS number for the

customer;

(iii) The unique contract number;

(iv) Rate schedule;

(v) Contract start date;

(vi) Contract end date;

(vii) Contract quantity, or if

applicable, the contract quantity

associated with each zone, or other rate

subdivision of the pipeline, created in a

proceeding before the Commission;

(viii) Receipt points and associated

Maximum Daily Quantities (MDQ) and

any restrictions or limitations on the use

of points;

(ix) Delivery points and associated

Maximum Daily Quantities (MDQ) and

any restrictions or limitations on the use

of points;

(x) Source of authorization (i.e.,

Subpart B of this part implementing

Section 311 of the NGPA; Subpart G of

this part implementing Section 7(c) of

the NGA; or Part 157 of this chapter

implementing section 7(c) of the NGA);

(xi) Maximum Storage Quantity;

(xii) Maximum Daily Injection

Quantity;

(xiii) Maximum Daily Withdrawal

Quantity.

(4) During the year, between the

annual restatements provided on

January 15, the interstate pipeline must

provide updates detailing all changes or
Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules 3167

additions to the index prepared under

paragraph (c)(1) of this section occurring

during a calendar month. The updates

for each month must be provided by the

15th of the next month. The updates

must reflect only the new or modified

contracts without restating the entire

index.

(5) The information included in the

annual index and each monthly update

must be available until the next year’s

annual index is established. The

electronic files must be archived for at

least three years.

(6) The requirements of this section

do not apply to contracts which relate

solely to the release of capacity under

§ 284.243, unless the release is

permanent.

(7) The requirements for the

electronic index can be obtained at the

Federal Energy Regulatory Commission,

Division of Public Information, 825

North Capitol Street, NE., Washington

DC 20426.

Subpart C—Certain Transportation by

Intrastate Pipelines

§ 284.122 [Amended]

104. In § 284.122, paragraph (e) is

removed.

105. In § 284.123, paragraph (e) is

revised to read as follows:

§ 284.123 Rates and charges.

* * * * *

(e) Filing requirements. Within 30

days of commencement of new service,

any intrastate pipeline that engages in

transportation arrangements under this

subpart must file with the Commission

a statement that describes how the

pipeline will engage in these

transportation arrangements, including

operating conditions, such as, quality

standards and financial viability of the

shipper. The statement must also

include the rate election made by the

intrastate pipeline pursuant to

paragraph (b) of this section. If the

pipeline changes its operations or rate

election under this subpart, it must

amend the statement and file such

amendments not later than 30 days after

commencement of the change in

operations or the change in rate

election.

106. In § 284.126, paragraph (a) is

revised, paragraphs (b), (e), and (f) are

removed, paragraphs (c) and (g) are

redesignated (b), and (c), respectively,

and redesignated paragraph (b) is

revised to read as follows:

§ 284.126 Reporting Requirements

(a) Notice of bypass. An intrastate

pipeline that provides transportation

(except storage) under § 284.122 to a

customer that is located in the service

area of a local distribution company and

will not be delivering the customer’s gas

to that local distribution company, must

file with the Commission within thirty

days after commencing such

transportation, a statement that the

interstate pipeline has notified the local

distribution and the local distribution

company’s appropriate state regulatory

agency in writing of the proposed

transportation prior to commencement.

(b) Annual report. Not later than

March 1 of each year, each intrastate

pipeline must file an annual report with

the Commission and the appropriate

state regulatory agency that contains, for

each transportation service (except

storage) provided during the preceding

calendar year under § 284.122, the

following information:

(1) The name of the shipper receiving

the transportation service;

(2) The type of service performed (i.e.

firm or interruptible);

(3) Total volumes transported for the

shipper. If it is firm service, the report

should separately state reservation and

usage quantities; and

(4) Total revenues received for the

shipper. If it is firm service, the report

should separately state reservation and

usage revenues.

* * * * *

Subpart D—Certain Sales by Intrastate

Pipelines

107. Section 284.142 is revised to read

as follows:

§ 284.142 Sales by intrastate pipelines.

Any intrastate pipeline may, without

prior Commission approval, sell natural

gas to any interstate pipeline or any

local distribution company served by an

interstate pipeline. The rates charged by

an intrastate pipeline pursuant to this

subpart may not exceed the price for gas

as negotiated in the contract, plus a fair

and equitable transportation rate as

determined in accordance with

§ 284.123.

§ § 284.143 and 284.148 [Removed]

108. Sections 284.143 through

284.148 are removed and reserved.

Subpart E—Assignment of Contractual

Rights to Receive Surplus Natural Gas

Subpart E—[Removed]

109. Subpart E is removed and

reserved.

Subpart G—Blanket Certificates

Authorizing Certain Transportation by

Interstate Pipelines on Behalf of

Others and Services by Local

Distribution Companies

110. In § 284.221, the introductory

text of paragraph (b)(1) is revised to read

as follows:

§ 284.221 General rule; transportation by

interstate pipelines on behalf of others.

* * * * *

(b) Application procedure. (1) An

application for a blanket certificate

under this section must be filed

electronically. The format for the

electronic application filing can be

obtained at the Federal Energy

Regulatory Commission, Division of

Public Information, 941 North Capitol

Street, N.E., Washington, D.C. 20426,

and must include:

* * * * *

§ 284.222 [Removed]

111. Section 284.222 is removed and

reserved.

112. In § 284.223, the section heading

is revised, paragraphs (b) through (f) are

removed, and a new paragraph (b) is

added to read as follows:

§ 284.223 Transportation by interstate

pipelines on behalf of shippers.

* * * * *

(b) Reporting requirements. Any

interstate pipeline transporting gas

under this section must comply with

each of the reporting requirements

specified in § 284.106.

113. In § 284.224, the heading,

paragraphs (b)(3), (c) introductory text,

(d)(1), (e)(1), and (g) are revised,

paragraph (e)(5)(i) is redesignated as

paragraph (e)(5) and paragraph (e)(5)(ii)

is removed to read as follows:

§ 284.224 Certain transportation and sales

by local distribution companies.

* * * * *

(b) Blanket certificate— * * *

(3) The Commission will grant a

blanket certificate to such local

distribution company or Hinshaw

pipeline under this section, if required

by the present or future public

convenience and necessity. Such

certificate will authorize the local

distribution company to engage in the

sale or transportation of natural gas that

is subject to the Commission’s

jurisdiction under the Natural Gas Act,

to the same extent that and in the same

manner that intrastate pipelines are

authorized to engage in such activities

by subparts C and D of this part, except

as otherwise provided in paragraph

(e)(2) of this section.
3168 Federal Register / Vol. 60, No. 9 / Friday, January 13, 1995 / Proposed Rules

(c) Application procedure.

Applications for blanket certificates

must be accompanied by the fee

prescribed in § 381.207 of this chapter

or a petition for waiver pursuant to

§ 381.106 of this chapter, and shall state:

* * * * *

(d) Effect of certificate. (1) Any

certificate granted under this section

will authorize the certificate holder to

engage in transactions of the type

authorized by subparts C and D of this

part.

* * * * *

(e) General conditions. (1) Except as

provided in paragraph (e)(2) of this

section, any transaction authorized

under a blanket certificate is subject to

the same rates and charges, terms and

conditions, and reporting requirements

that apply to a transaction authorized

for an intrastate pipeline under subparts

C and D of this part.

* * * * *

(g) Hinshaw pipeline without blanket

certificate. A Hinshaw pipeline that

does not obtain a blanket certificate

under this section is not authorized to

sell or transport natural gas as an

intrastate pipeline under subparts C and

D of this part.

* * * * *

114. Sections 284.225 and 284.226 are

removed and reserved.

115. In § 284.227, paragraph (d) is

removed, and paragraphs (e), (f), and (g)

are redesignated (d), (e), and (f).

Subpart J—Blanket Certificates

Authorizing Certain Natural Gas Sales

by Interstate Pipelines

§ 284.288 [Removed]

116. Section 284.288 is removed and

reserved.

Subpart L—Certain Sales for Resale by

Non-interstate Pipelines

117. In § 284.402, paragraph (c)(1) is

revised to read as follows and in the

first sentence of paragraph (c)(2) the

word ‘‘criteria’’ in paragraph (c)(2) is

removed, and the word ‘‘criterion’’ is

added in its place:

§ 284.402 Blanket marketing certificates.

* * * * *

(c)(1) The authorization granted in

paragraph (a) of this section will become

effective for an affiliated marketer with

respect to transactions involving

affiliated pipelines when an affiliated

pipeline receives its blanket certificate

pursuant to § 284.284.

* * * * * *

[FR Doc. 95–653 Filed 1–12–95; 8:45 am]

BILLING CODE 6717–01–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 892

[Docket No. 94N–0345]

Medical Devices; Classification of

Transilluminators (Diaphanoscopes or

Lightscanners) for Breast Evaluation

AGENCY: Food and Drug Administration,

HHS.

ACTION: Proposed rule.

SUMMARY: The Food and Drug

Administration (FDA) is proposing to

classify the transilluminator

(diaphanoscope or lightscanner) for

breast evaluation into class III

(premarket approval). The agency is also

publishing in this document the

recommendations of the Obstetrics and

Gynecology Devices Panel regarding the

classification of the device. After

considering public comments on the

proposed classification, FDA will

publish a final regulation classifying the

device. This action is being taken under

the Federal Food, Drug, and Cosmetic

Act (the act), as amended by the

Medical Device Amendments of 1976

(the 1976 amendments) and the Safe

Medical Devices Act of 1990 (the

SMDA).

DATES: Written comments by April 13,

1995. FDA proposes that any final

regulation that may issue based on this

proposal become effective 30 days after

the date of its publication in the Federal

Register.

ADDRESSES: Submit written comments

to the Dockets Management Branch

(HFA–305), Food and Drug

Administration, 12420 Parklawn Dr.,

rm. 1–23, Rockville, MD 20857.

FOR FURTHER INFORMATION CONTACT:

Robert A. Phillips, Center for Devices

and Radiological Health (HFZ–470),

Food and Drug Administration, 1390

Piccard Dr., Rockville, MD 20850, 301–

594–1212.

SUPPLEMENTARY INFORMATION:

I. Background

The act, as amended by the 1976

amendments (Pub. L. 94–295) and the

Safe Medical Devices Act of 1990 (Pub.

L. 101–629), established a

comprehensive system for the regulation

of medical devices intended for human

use. Section 513 of the act (21 U.S.C.

360c) established three categories

(classes) of devices, depending on the

regulatory controls needed to provide

reasonable assurance of their safety and

effectiveness. The three categories of

devices are class I (general controls),

class II (special controls), and class III

(premarket approval). Under section 513

of the act, devices that were in

commercial distribution before May 28,

1976 (the date of enactment of the 1976

amendments) are classified after FDA

has: (1) Received a recommendation

from a device classification panel (an

FDA advisory committee); (2) published

the panel’s recommendations for

comment, along with a proposed

regulation classifying the device; and (3)

published a final regulation classifying

the device.

A device that is first offered in

commercial distribution after May 28,

1976, and which FDA determines to be

substantially equivalent to a device

classified under this scheme, is

classified into the same class as the

device to which it is substantially

equivalent. The agency determines

whether new devices are substantially

equivalent to previously offered devices

by means of premarket notification

procedures in section 510(k) of the act

(21 U.S.C. 360(k)) and part 807 of the

regulations (21 CFR part 807). A device

that was not in commercial distribution

prior to May 28, 1976, and that has not

been found by FDA to be substantially

equivalent to a legally marketed device,

is classified automatically by statute

(section 513(f) of the act) into class III

without any FDA rulemaking

proceedings.

In 1980, when other obstetric and

gynecological devices were classified

(45 FR 12684 through 12720, February

26, 1980), FDA was not aware that

transilluminators, also known as

lightscanners or diaphanoscopes, for

breast evaluation were preamendments

devices, and inadvertently omitted them

from the classification process. Based

upon the recommendations the

Obstetrics and Gynecological Devices

Panel made during its January 11, 1991,

meeting (Ref. 24), FDA is now proposing

to classify the transilluminator for breast

evaluation into class III, thereby

requiring each manufacturer of the

device to submit to FDA a PMA by a

date to be set in a future regulation

under section 515(b) of the act (21

U.S.C. 360e(b)). Specifically, a

preamendments class III device may be

commercially distributed without an

approved PMA until 90 days after FDA

issues a final rule requiring premarket

approval of the device or 30 months

after classification of the device under

section 513 of the act, whichever is

later. Each application must include

sufficient valid scientific evidence to

provide reasonable assurance that the

device is safe and effective under the

conditions of use prescribed,