Document ID: FERC-2007-0294-0004
Agency: ferc
Document Type: Rule
Title: Revisions to Forms, Statements, and Reporting Requirements for Natural Gas Pipelines
Posted Date: 2008-04-10T04:00Z

[Federal Register: April 10, 2008 (Volume 73, Number 70)]
[Rules and Regulations]               
[Page 19389-19431]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10ap08-1]                         

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Rules and Regulations
                                                Federal Register
________________________________________________________________________

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to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 
Prices of new books are listed in the first FEDERAL REGISTER issue of each 
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[[Page 19389]]

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 158 and 260

[Docket No. RM07-9-000; Order No. 710]

 
Revisions to Forms, Statements, and Reporting Requirements for 
Natural Gas Pipelines

Issued March 21, 2008.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

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SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission 
(Commission) is revising its financial forms, statements, and reports 
for natural gas companies, contained in FERC Form Nos. 2, 2-A and 3-Q. 
The revisions are designed to enhance the forms' usefulness by updating 
them to reflect current market and cost information relevant to 
interstate natural gas pipelines and their customers. The changes will 
provide additional information that the Commission needs to carry out 
its responsibilities under the Natural Gas Act (NGA).

DATES: This Final Rule is effective April 10, 2008. The revisions to 
FERC Form Nos. 2, 2-A, and 3-Q are applicable on January 1, 2008, and 
the termination of FERC Form No. 11 is applicable on February 28, 2009.

FOR FURTHER INFORMATION CONTACT:

Michelle Veloso (Technical Information), Division of Financial 
Regulation, Office of Enforcement, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, Telephone: 
(202) 502-8363, E-mail: michelle.veloso@ferc.gov.
Scott Molony (Technical Information), Chief Accountant, Division of 
Financial Regulation, Office of Enforcement, Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426, Telephone: 
(202) 502-8919, E-mail: scott.molony@ferc.gov.
Jane E. Stelck (Legal Information), Office of Enforcement, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426, Telephone: (202) 502-6648, E-mail: jane.stelck@ferc.gov.

SUPPLEMENTARY INFORMATION: Before Commissioners: Joseph T. Kelliher, 
Chairman; Suedeen G. Kelly, Marc Spitzer, Philip D. Moeller, and Jon 
Wellinghoff.

I. Introduction

    1. The Federal Energy Regulatory Commission (Commission) is 
revising Parts 158 and 260 of its regulations to effect changes to its 
FERC Form No. 2 (Form 2), Annual report for major natural gas 
companies, FERC Form No. 2-A (Form 2-A), Annual report for nonmajor 
natural gas companies, and FERC Form No. 3-Q (Form 3-Q), Quarterly 
financial report of electric utilities, licensees and natural gas 
companies to expand and update the forms to reflect current market and 
cost information relevant to interstate natural gas pipelines and their 
customers.\1\ The Commission is revising these financial forms to 
provide, in greater detail, the information the Commission needs to 
carry out its responsibilities under the NGA to ensure that rates are 
just and reasonable, and to provide pipeline customers and the public 
the information they need to assess the justness and reasonableness of 
pipeline rates.
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    \1\ Section 10 of the Natural Gas Act (NGA), 15 U.S.C. 717g, 
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.
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II. Background

    2. Before the restructuring of pipeline services promulgated by the 
Commission's Order No. 636, interstate natural gas pipelines offered 
both sales and transportation services.\2\ Gas costs were charged to a 
purchased gas adjustment (PGA) account and were periodically adjusted 
and passed through to customers. The quid pro quo for the ability to 
recover the gas costs through a PGA tracker was the requirement that 
the pipelines file to restate their rates every three years. Order No. 
636 eliminated the PGA regulations and the triennial filing 
requirement. Subsequently, the Commission issued a final rule that 
changed pipeline filing and reporting requirements in the post-Order 
No. 636 unbundled environment.\3\
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    \2\ See Pipeline Service Obligations and Revisions to 
Regulations Governing Self-Implementing Transportation; and 
Regulation of Natural Gas Pipelines After Partial Wellhead 
Decontrol, Order No. 636, FERC Stats. & Regs. ] 30,939, order on 
reh'g, Order No. 636-A, FERC Stats. & Regs. ] 30,950, order on 
reh'g, Order No. 636-B, 61 FERC ] 61,272 (1992), order on reh'g, 62 
FERC ] 61,007 (1993), aff'd in part and remanded in part sub nom. 
United Distribution Cos. v. FERC, 88 F.3d 1105 (D.C. Cir. 1996), 
order on remand, Order No. 636-C, 78 FERC ] 61,186 (1997).
    \3\ See Filing and Reporting Requirements for Interstate Natural 
Gas Company Rate Schedules and Tariffs, FERC Stats. & Regs. ] 31,025 
(1995).
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    3. The financial reporting forms for natural gas companies were 
again revised in 1995, in Order No. 581, to reflect the changed 
regulatory environment of unbundled pipeline sales for resale at 
market-based prices and open-access transportation of natural gas.\4\ 
Order No. 637, issued in 2000, among other things, revised the 
Commission's regulatory approach to pipeline pricing by permitting 
pipelines to propose peak/off peak and term differentiated rate 
structures.\5\
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    \4\ Revisions to Uniform System of Accounts, Forms, Statements, 
and Reporting Requirements for Natural Gas Companies, Order No. 581, 
FERC Stats. & Regs. ] 31,026 (1995), order on reh'g, Order No. 581-
A, FERC Stats. & Regs. ] 31,032 (1996).
    \5\ Regulation of Short-Term Natural Gas Transportation 
Services, and Regulation of Interstate Natural Gas Transportation 
Services, Order No. 637, FERC Stats. & Regs. ] 31,091, clarified, 
Order No. 637-A, FERC Stats. & Regs. ] 31,099, reh'g denied, Order 
No. 637-B, 92 FERC ] 61,062 (2000), aff'd in part and remanded in 
part sub nom. Interstate Natural Gas Ass'n of America v. FERC, 285 
F.3d 18 (D.C. Cir. 2002), order on remand, 101 FERC ] 61,127 (2002), 
order on reh'g, 106 FERC ] 61,088 (2004), aff'd sub nom. American 
Gas Ass'n v. FERC, 428 F.3d 255 (D.C. Cir. 2005).
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    4. Since the Commission eliminated the triennial restatement of 
rates filing requirement in Order No. 636, there has been a decline in 
filings under NGA section 4.\6\ As stated in the NOPR, the records 
indicate that as many as 15 major and 20 nonmajor gas pipelines have 
not filed a section 4 rate case in

[[Page 19390]]

more than a decade.\7\ While the Commission may, on its motion, 
institute a section 5 investigation, it relies also on section 5 
complaints filed by pipeline customers or state public utility 
commissions, to review a pipeline company's rates outside of a section 
4 proceeding.\8\ A section 5 complaint may rely on Forms 2, 2-A, and 3-
Q financial data to support a complaint.
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    \6\ 15 U.S.C. 717c.
    \7\ Revisions to Forms, Statements, and Reporting Requirements 
for Natural Gas Pipelines, 72 FR 54860 (Sept. 27, 2007), FERC Stats. 
& Regs. ] 32,623, at note 60 (2002). (NOPR).
    \8\ 15 U.S.C. 717d.
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    5. In 2006, two section 5 complaints were filed with the 
Commission, both relying on data provided in Forms 2 and 2-A to support 
allegations that the pipeline's rates were unjust and unreasonable.\9\ 
In National Fuel, the pipeline responded that the Form 2 data relied 
upon by the complainants was not sufficient to support a complaint and 
that only a detailed cost and revenue study could provide the necessary 
justification for a section 5 investigation. In setting the complaint 
for hearing, the Commission rejected National Fuel's contention, noting 
that the Form 2 data relied upon by complainants was sufficient to 
raise serious questions about the pipeline's rates.\10\ The National 
Fuel complaint was followed by a section 5 action filed by a group of 
Southwest Gas customers alleging unjust and unreasonable rates and 
relying, in that instance, on Form 2-A data.\11\
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    \9\ See Public Service Commission of New York, Pennsylvania 
Public Utility Commission and Pennsylvania Office of Consumer 
Advocate v. National Fuel Gas Supply Corp., 115 FERC ] 61,299 
(2006), (National Fuel), order approving uncontested settlement, 118 
FERC ] 61,091 (2007); Panhandle Complainants v. Southwest Gas 
Storage Co., 117 FERC ] 61,318 (2006) (Southwest Gas).
    \10\ National Fuel at P 37.
    \11\ Southwest Gas, 117 FERC at P 1.
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    6. The question of whether the Commission's financial forms provide 
data sufficient to support a complaint resulted in a review of Forms 1, 
1-F, 2, 2-A, and 3-Q data in the fall of 2006. Staff met with both form 
filers and users to discuss the need for additional information or 
other clarifications. Thereafter, on February 15, 2007, the Commission 
issued a Notice of Inquiry (NOI).\12\
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    \12\ Assessment of Information Requirements for FERC Financial 
Forms, Notice of Inquiry, 72 FR 8316 (Feb. 26, 2007), FERC Stats. & 
Regs. ] 35,554 (2007). The NOI also invited comments from filers and 
users of Form 6 and 6-Q.
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    7. The NOI sought comments on the need for changes to the financial 
forms. The Commission received 35 comments and 15 reply comments in 
response to the NOI. Eleven initial comments and two reply comments 
specifically addressed Forms 2, 2-A, and 3-Q data, with most pipeline 
customers seeking expanded information and pipelines opposing 
additional filing requirements.
    8. Following a careful review of the comments and reply comments, 
the Commission issued a Notice of Proposed Rulemaking (NOPR) on 
September 20, 2007, proposing revisions to Forms 2, 2-A, and 3-Q, and 
the elimination of Form 11.\13\ The NOPR proposed to add several new 
schedules, requiring pipelines to report: (1) The disposition of 
shipper-supplied gas; (2) transactions between the pipeline and its 
affiliates; (3) revenues and volumes applicable to discount and 
negotiated rate services; and (4) identification of rate treatment 
afforded new pipeline projects. In addition, the NOPR proposed 
modifications to existing schedules to require more detail regarding: 
(1) Sales data; (2) deferred income taxes; (3) state income tax 
expense; (4) regulatory assets and liabilities; (5) distribution of 
salaries and wages; and (6) employee pensions and benefits.
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    \13\ See NOPR.
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    9. The Commission received 17 comments in response to the proposed 
reporting requirements which ranged from favorable to those seeking yet 
more detailed information, and a few who argued that the proposed 
modifications were unnecessary or burdensome.\14\ In general, most 
commenters applauded the Commission's efforts to improve the quality of 
the financial forms. After careful consideration of the comments 
received, the Commission is adopting the changes and revisions as 
proposed in the NOPR with certain modifications and clarifications as 
discussed below. If no comments were received on a particular issue and 
it is not discussed below, the proposal is adopted as set forth in the 
NOPR.
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    \14\ A list of commenters is attached as Appendix B.
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III. Discussion

A. General

    10. The NOPR discussed a concern raised by the Interstate Natural 
Gas Association of America (INGAA) that the proposed changes to 
reporting requirements could blur the distinction between sections 4 
and 5 of the NGA, and invited comments on this issue.\15\ A few 
commenters addressed this issue. Dominion Resources, Inc. (Dominion) 
commends the Commission for recognizing this concern and requests that 
the Commission keep the concern in mind when finalizing the rule.\16\ 
The Michigan Public Service Commission (MPSC) urges the Commission to 
reject any argument that the reporting requirements proposed in the 
NOPR would improperly shift the burden of proof under section 5 of the 
NGA by requiring pipelines to justify their existing rates outside the 
context of a section 4 rate case.\17\ The MPSC states that the NGA 
explicitly gives the Commission the authority to require periodic 
reporting as necessary for purposes of administering the NGA.\18\ The 
Process Gas Consumers Group (PGC) states that the NOPR is proposing 
greater transparency and accuracy, which are essential to the 
Commission's oversight obligations and neither of which could 
reasonably impact the burden of proof in section 5 proceedings.\19\
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    \15\ NOPR at P 28.
    \16\ Dominion NOPR Comments at 4.
    \17\ MPSC NOPR Comments at 4.
    \18\ MPSC NOPR Comments at 4.
    \19\ PGC NOPR Comments at 5.
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    11. The Kansas Corporation Commission (KCC) and Apache Corporation 
(Apache) express concern that the ability of a pipeline to file a 
section 4 rate case even after parties have filed a section 5 
complaint, as transpired in the recent Southwest Gas proceeding, may 
serve as a disincentive for some parties to file section 5 
complaints.\20\ Apache recommends that the Commission add to the Form 2 
and 2-A a cost and revenue summary page that would provide the 
Commission and interested parties a clear view of whether a pipeline's 
filed rates are just and reasonable.\21\ The KCC agrees that the 
possibility that a pipeline may file a section 4 rate case after a 
complaint has been lodged will make potential complainants hesitant 
about incurring the costs of a section 5 complaint.\22\ The KCC further 
notes the fact that any relief under a section 5 proceeding is limited 
since it is prospective only and urges the Commission to reinstate a 
periodic rate-refiling requirement as a condition to approval of 
pipeline blanket certificates.\23\
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    \20\ KCC NOPR Comments at 15-16; Apache NOPR Comments at 2.
    \21\ Apache NOPR Comments at 2.
    \22\ KCC NOPR Comments at 17.
    \23\ KCC NOPR Comments at 17-18.
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    12. As an initial matter, the Commission has no intention of 
obscuring the distinction between sections 4 and 5 of the NGA by any 
changes implemented here to the financial forms filed by natural gas 
companies. Therefore, the Commission will not reinstate a periodic rate 
review absent a concomitant benefit as was the case when, in exchange 
for recovering

[[Page 19391]]

purchased gas costs through a tracker, pipelines were required to 
restate their rates every three years.\24\ In addition, the Commission 
rejects the proposal to order companies to file cost and revenue 
studies as part of these forms. Also, the changes being implemented 
here do not affect existing rates nor change any rate on file. In like 
vein, the Commission cannot alter the rights and obligations of 
pipelines and their customers under sections 4 and 5 of the NGA. Under 
section 4 of the NGA, a pipeline has the right to file a rate case at 
any time. The Commission cannot compel a pipeline to file under section 
4, nor can it preclude it from filing under section 4 for any reason, 
including the presence of a section 5 complaint. The pipeline can agree 
to bind itself, for example through an agreement to a rate moratorium 
in a rate case settlement, but the Commission does not have the power 
to prohibit a pipeline from filing a rate case. The requested data is 
designed to provide the Commission and pipeline customers with 
information that will aid their ability to make a reasonable assessment 
of a pipeline's cost of service. Greater transparency is essential to 
the Commission's oversight responsibilities and, as implemented here, 
will not affect the burden of proof in section 5 proceedings. A party 
filing a section 5 complaint would still have the burden to show why 
the information in the Commission's financial forms support an 
allegation that the pipeline's existing rates are unjust and 
unreasonable. Stated briefly, the changes adopted in the final rule 
will not be used to limit an entity's right under the NGA and our 
regulations. Nor will the changes to the forms change the Commission's 
obligation to rule on complaints, petitions, or other requests for 
relief based on a full record and substantial evidence.
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    \24\ See Public Service Commission of the State of New York v. 
FERC, 866 F.2d 487, 492 (D.C. Cir. 1989).
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B. Acquisition and Disposition of Gas: Shipper-Supplied Gas

1. Financial Forms NOPR
    13. In the NOPR, the Commission noted that despite current 
accounting and reporting requirements for gas used in operations, gas 
lost, and gas sold, Forms 2 and 2-A users cannot readily determine the 
disposition and value of any shipper-supplied gas that exceeds the 
pipeline's operational needs or the source and cost of any gas acquired 
to meet deficiencies in shipper-supplied gas.\25\ Comments on the NOI 
identified information regarding the pipeline's fuel retainage 
percentage as particularly lacking in detail. The complainants in the 
National Fuel case, referenced above, asserted that the principal 
reason for the pipeline's alleged excess revenue was due to its 
retention of more than twice as much fuel from shippers than is 
necessary to operate the system and that it then sold and retained all 
revenues from those sales.\26\ In light of these concerns, the 
Commission proposed the addition of a new schedule to Forms 2, 2-A, and 
3-Q, which would require the pipeline to report the following: (1) The 
difference between the volume of gas received from shippers and the 
volume of gas consumed in pipeline operations each month; (2) the 
disposition of any excess and the accounting recognition given to such 
disposition, including the basis of valuing the gas and the specific 
accounts charged or credited; and (3) the source of gas used to meet 
any deficiency, including the accounting basis of the gas and the 
specific account(s) charged or credited.\27\ In addition, the NOPR 
proposed to add page 520 (Gas Account-Natural Gas) to Form 3-Q in order 
to provide more timely reporting of the quantity of natural gas 
received and delivered by the pipeline.\28\ The NOPR also proposed to 
require pipelines to provide in a footnote to page 520, the volumes of 
gas purchased applicable to each of the gas pipeline expense 
accounts.\29\
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    \25\ NOPR at P 37.
    \26\ See National Fuel, 115 FERC ] 61,299 at P 8.
    \27\ NOPR at P 39.
    \28\ Id.
    \29\ Id. See 18 CFR Part 201, Account Nos. 800-05.
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2. Commenters
    14. Most commenters support the addition of this information to 
Forms 2, 2-A, and 3-Q. INGAA and Williston Basin Interstate Pipeline 
Company (Williston), however, request that the Commission revise pages 
521a and 521b to remove the monthly reporting requirement and replace 
it with a quarterly reporting requirement.\30\ INGAA also requests that 
the Commission revise its proposal to remove the requirement that 
pipelines categorize the discrete offsetting gas transactions of any 
excess or deficiency related to shipper supplied gas.\31\ Dominion 
requests that the Commission modify the proposal to require the new 
reporting on shipper-supplied gas on only an annual basis and not in 
quarterly reports.\32\
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    \30\ INGAA NOPR Comments at 5; Williston NOPR Comments at 5-6.
    \31\ INGAA NOPR Comments at 5.
    \32\ Dominion NOPR Comments at 7.
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    15. The American Gas Association (AGA) supports the NOPR's proposal 
to require this information but believes that greater clarity can be 
achieved if the Commission requires the information to be broken out by 
function (e.g., transportation, storage, gathering, etc.) and to 
include, by function, the amount of fuel that has been waived, 
discounted or reduced as part of a negotiated rate agreement.\33\ The 
Natural Gas Supply Association (NGSA) requests that a column be added 
to proposed page 521 to require pipelines to identify the specific 
accounts being used to record the various sources and disposition of 
fuel gas.\34\ In NGSA's view, this information would enable users to 
reconcile the volumes broken out by account reported on proposed page 
521 to data recorded elsewhere in Forms 2, 2-A and 3-Q.\35\ Calpine 
Corporation (Calpine) requests that the Commission require the fuel gas 
accounts to be broken down by month so that these costs can be 
reconciled with those reported in other filings such as annual fuel 
tracker reports.\36\
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    \33\ AGA NOPR Comments at 5.
    \34\ NGSA NOPR Comments at 5.
    \35\ Id.
    \36\ Calpine NOPR Comments at 5.
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3. Commission Determination
    16. As stated in the NOPR, the Commission is concerned about the 
increased impact on the pipeline's cost of service resulting from 
rising gas prices.\37\ The escalation of gas prices coupled with the 
decline of section 4 rate reviews has made this an important issue in 
the pipeline's cost of transportation. Currently, Forms 2 and 2-A users 
cannot determine the disposition and value of any shipper-supplied gas 
that exceeds the pipeline's operational needs or the source and cost of 
any gas acquired to meet deficiencies in shipper-supplied gas. While we 
recognize INGAA's desire that the data be reported on a quarterly, and 
not monthly basis, we agree with Calpine that monthly data is necessary 
for the purpose of comparing and attempting to reconcile these costs 
with other routine pipeline filings such as annual fuel tracker 
reports. In addition, INGAA objects to the requirement that pipelines 
categorize the discrete offsetting gas transactions relating to any 
excess or deficiency in shipper-supplied gas. The Commission deems this 
information critical to the clarity and transparency needed to support 
a reasonable analysis of gas costs. The information broken out by 
function (e.g., transportation, storage, gathering, etc.) sought by AGA 
is

[[Page 19392]]

available in Form 2 at page 520. On page 520 (Gas Account), pipelines 
are required to provide detailed information regarding gas received and 
delivered by the pipeline, identified by function and account number. 
Regarding NGSA's request that a column be added to page 521 to require 
pipelines to identify the specific accounts being used to record the 
various sources and disposition, we reject it as unnecessary. Pages 
521a and 521b already require in columns (d) and (e) that the specific 
account(s) be identified. The NOPR's proposals are designed to provide 
needed transparency but also to reflect a fair balance between the need 
for the information and the additional burden on the pipeline. We 
believe that the new schedules (pages 521a and 521b) proposed in the 
NOPR reflect this balance. Accordingly, the proposal is adopted as 
outlined in the NOPR.
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    \37\ See NOPR at P 38.
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C. Other Gas Dispositions

1. Financial Forms NOPR
    17. The NOPR proposed to expand the detail provided on pages 300-01 
of Forms 2 and 2-A (Gas Operating Revenues) to require filers to report 
sales amounts reported in Account 480 (Residential Sales); Account 481 
(Commercial and Industrial Sales); Account 482 (Other Sales to Public 
Authorities); Account 483 (Sales for Resale); and Account 484 
(Interdepartmental Sales). Currently this schedule, entitled ``Gas 
Operating Revenues,'' aggregates on one line all sales data for these 
separate accounts. Providing this data by account, rather than in an 
aggregated number, will enable users to identify the dispositions of 
gas acquired by or tendered to the pipeline and how those transactions 
may affect the pipeline's cost of service. In addition, the NOPR 
proposed to modify the schedule for Account 495, Other Gas Revenues, on 
page 308 of Form 2 and add a new page to Form 2-A to specify that the 
following types of revenues must be separately reported on the 
schedule: (1) Commissions on sale or distribution of gas of others; (2) 
compensation for minor or incidental services provided for others; (3) 
profit or loss on sale of material and supplies not ordinarily 
purchased for resale; (4) sales of steam, water, or electricity, 
including sales or transfers to other departments; (5) miscellaneous 
royalties; (6) revenues from dehydration and other processing of gas of 
others except as provided for in the instructions to Account 495; (7) 
revenues for rights and/or benefits received from others which are 
realized through research, development, and demonstration ventures; (8) 
gains on settlements of imbalances receivable and payables; (9) 
revenues from penalties earned pursuant to tariff provisions, including 
penalties associated with cash-out settlements; and (10) revenues from 
shipper-supplied gas.
2. Commenters
    18. NGSA states that the information on pages 300-01 of the forms 
could be made more useful by requiring pipelines that use these 
accounts to add footnotes detailing the type of transaction(s) being 
reported.\38\ NGSA argues that the activities listed under these 
accounts are outdated and the Commission should require additional 
detail.\39\ NGSA also requests that to the extent a pipeline has 
revenues associated with items not listed for Account 495 on page 308 
of Form 2, the pipeline be required to specify each such type and 
amount of revenue on a separate line under line 11 and provide 
sufficient detail for customers to identify the accounts to which these 
revenues are attributable.\40\ The Independent Petroleum Association of 
America (IPAA) and the Texas Independent Producers and Royalty Owners 
Association (TIPRO) also request that pipelines that continue to use 
Account Nos. 480-484 be required to add footnotes on revised pages 300-
301 of Form 2 detailing the type of transaction(s) reported.\41\ 
Finally, Calpine suggests the addition of a revenue category to page 
308 for purposes of capturing any environmental credits earned by the 
pipeline.\42\
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    \38\ NGSA NOPR Comments at 5.
    \39\ Id. at 6.
    \40\ NGSA NOPR Comments at 6.
    \41\ IPAA and TIPRO NOPR Comments at 4.
    \42\ Calpine NOPR Comments at 6.
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3. Commission Determination
    19. The NOPR proposed the disaggregation of this revenue data to 
enable the Commission and the forms' users to achieve a meaningful 
understanding of the nature of the business activities from which the 
revenues are derived. The Commission recognized that greater detail 
concerning these revenue accounts could provide data that would enable 
the Commission and pipeline customers to identify the dispositions of 
gas acquired by or tendered to the pipeline and how these transactions 
may affect the pipeline's cost of service. To that end, the NOPR 
proposed a new schedule which requires a breakdown of revenue into ten 
categories. The NOPR addressed many of the issues raised by NGSA, IPAA 
and TIPRO and we believe that the additional detail sought by these 
parties would add unnecessary burden to this new reporting requirement. 
We agree with Calpine that identifying environmental credits received 
by the pipeline is useful and important information. Rather than add a 
new revenue category to page 308, we will require pipelines that 
receive environmental credits to list those credits in a footnote to 
the Financial Statements.

D. Affiliate Transactions

1. Financial Forms NOPR
    20. The NOPR proposed that pipelines be required to provide 
detailed information regarding affiliate transactions. The Commission 
agreed with the form users' assertions that currently, Forms 2 and 2-A 
do not require any reporting of affiliate transactions and that 
disclosures of affiliate transactions are needed to prevent cross-
subsidization between regulated and unregulated companies. The NOPR 
proposed to add a new schedule, page 358, to both Forms 2 and 2-A 
entitled ``Transactions with Associated (Affiliated) Companies'' that 
would require filers to report affiliate transactions. The NOPR 
proposed that filers be required to report the following: (1) A 
description of the good or service transacted; (2) the name of the 
associated (affiliated) company; (3) the FERC account charged or 
credited; and (4) the amount charged or credited. The NOPR proposed 
that where amounts billed to or from an affiliate are based on an 
allocation process, filers be required to explain the basis of the 
allocation in a footnote. The NOPR also proposed to amend the existing 
instructions for page 357, Charges for Outside Professional and Other 
Consultative Services, to exclude affiliate transactions, and remove 
the existing $250,000 threshold for reporting services.
2. Commenters
    21. INGAA, AGA, Williston, Kinder Morgan Interstate Pipelines 
(Kinder Morgan) and other commenters ask the Commission to reconsider 
the proposed removal of the $250,000 cost threshold for the reporting 
of non-affiliated ``Charges for Outside Professional and Other 
Consultative Services'' on page 357 of Form 2.\43\ INGAA and Williston 
assert that eliminating the threshold will add a significant burden to 
Form 2

[[Page 19393]]

filers without adding a significant benefit to the form's users.\44\ 
For similar reasons, AGA and Williston also recommend that the $250,000 
cost threshold be applied to the new schedule for affiliate 
transactions.\45\ AGA requests that the Commission clarify that the 
required affiliate information be limited to transactions between a 
jurisdictional entity and its affiliates and not include transactions 
solely between affiliated entities that are not subject to the 
Commission's reporting requirements.\46\ Dominion asks the Commission 
to clarify that when an affiliate provides a service on an on-going 
basis, only a single line entry describing that service is 
required.\47\
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    \43\ INGAA NOPR Comments at 3-4; AGA NOPR Comments at 6; 
Williston NOPR Comments at 3; Kinder Morgan NOPR Comments at 3-4; 
Enbridge Energy Partners (Enbridge) NOPR Comments at 7-9; Dominion 
NOPR Comments at 11.
    \44\ INGAA NOPR Comments at 4; Williston NOPR Comments at 3-4.
    \45\ AGA NOPR Comments at 6; Williston NOPR Comments at 3-4.
    \46\ AGA NOPR Comments at 5-6.
    \47\ Dominion NOPR Comments at 10-11.
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3. Commission Determination
    22. The Commission agrees that elimination of the $250,000 cost 
threshold for page 357 of Forms 2 and 2-F and the absence of a similar 
threshold for the new schedule for reporting affiliate transactions may 
add a substantial burden to the forms' filers. Accordingly, we will 
reinstate the $250,000 cost threshold on page 357 (Charges for Outside 
Professional and Other Consultative Services) and add an instruction to 
the new schedule on page 358 (Transactions with Associated (Affiliated) 
Companies) to require reporting of amounts in excess of $250,000. 
However, in order to ensure full reporting of these expenses, we will 
add a requirement for pages 357 and 358 that the filer must provide the 
total amount of all services amounting to $250,000 or less. As 
requested by AGA, we clarify that affiliate transactions reported are 
limited to transactions between a jurisdictional entity and its 
affiliates. Finally, in response to Dominion's request, we clarify that 
when an affiliate provides an on-going service, only a single line 
entry describing that service is required.

E. Incremental Pricing Policy

1. Financial Forms NOPR
    23. The NOPR proposed to add a new schedule to Forms 2 and 2-A 
(page 217), entitled ``Non-Traditional Rate Treatment Afforded New 
Projects,'' to collect information regarding a company's individual 
rate treatments for services. The necessity for more information 
regarding rate treatment for new pipeline construction arose as a 
result of the evolution of the Commission's pricing policy for pipeline 
capacity expansions, due in part to the changes in the industry brought 
by Order No. 636. The ``rolled-in'' rate treatment approach for 
pipeline capacity pricing, where added facilities were integrated into 
the pipeline's mainline system to the benefit of all customers, has 
changed as Commission policy now requires that a pipeline be prepared 
to financially support expansion projects without relying on 
subsidization from existing customers.\48\ Where incremental rates for 
new capacity have been approved, the Commission has required pipelines 
to maintain their accounting records so as to be able to identify the 
facilities and related costs used to provide service to the incremental 
rate customers.\49\ To date, however, the Commission has not required 
the disaggregation of these costs in Forms 2 and 2-A. The NOPR proposed 
that a proper rate assessment would be enhanced by providing a 
breakdown of costs related to these separate facilities. The NOPR 
proposed to add a new schedule to Forms 2 and 2-A, at page 217, 
entitled ``Non-Traditional Rate Treatment Afforded New Projects,'' to 
report the following: (1) The name of the facility; (2) the docket 
number under which the facility was approved; (3) the type of rate 
treatment (e.g., incremental or another rate treatment); (4) the amount 
of plant in service; (5) the amount of accumulated depreciation; (6) 
the amount of accumulated deferred income taxes; (7) amount of 
operating expenses; (8) the amount of maintenance expenses; (9) the 
amount of depreciation expense; (10) incremental revenues; and (11) 
other expenses.
---------------------------------------------------------------------------

    \48\ See Certification of New Interstate Natural Gas Pipeline 
Facilities, Statement of Policy, 88 FERC ] 61,227 (1999), order 
clarifying policy, 90 FERC ] 61,128 (2000), order clarifying policy, 
92 FERC ] 61,094 (2000) (Certificate Policy Statement).
    \49\ See 18 CFR 154.309.
---------------------------------------------------------------------------

2. Commenters
    24. Most commenters supported the addition of this requirement. 
Calpine requests that the list of required information be expanded to 
include other items such as incremental fuel treatment and project 
financing.\50\ Calpine asserts that this separate recording of 
incremental costs and functions should be expanded throughout the 
proposed modifications to Forms 2 and 2-A.\51\ Dominion states that the 
Commission should exempt from these new reporting requirements LNG 
import projects authorized on a ``proprietary'' basis with deregulated 
rates under the Energy Policy Act of 2005 (EPAct 2005) and the 
Commission's ``Hackberry'' policy.\52\
---------------------------------------------------------------------------

    \50\ Calpine NOPR Comments at 8.
    \51\ Id.
    \52\ Dominion NOPR Comments at 8-9. See Hackberry LNG Terminal 
LLC, 101 FERC ] 61,294 (2002) (Hackberry), order issuing 
certificates and granting reh'g, 104 FERC ] 61,269 (2003).
---------------------------------------------------------------------------

 3. Commission Determination
    25. Calpine's request for additional information is granted in 
part. We agree that if incremental projects charge a separate fuel rate 
rather than using the systemwide fuel rate, the pipeline should 
identify the volumes received and used for a particular incremental 
project. We will require this information to be provided in a footnote 
to the report with the information identified for each incremental 
project to which the requirement applies. Further, we deny Calpine's 
request for information related to project financing. The Commission 
generally approves rates for incremental projects designed on the rate 
of return approved in the pipeline's last rate case; thus, the 
information is not necessary.\53\ With that addition, we adopt the new 
requirements proposed in the NOPR. Further, we clarify that this rule 
does not affect any waivers or exemptions from filing requirements 
granted previously by the Commission.
---------------------------------------------------------------------------

    \53\ See, e.g., Texas Eastern, LP, 99 FERC ] 61,383, at P 22 
(2002); Kern River Gas Transmission Co., 98 FERC ] 61,205, at 
61,721-22 (2002); Trailblazer Pipeline Co., 95 FERC ] 61,258, at 
61,903 (2001).
---------------------------------------------------------------------------

F. Discounted and Negotiated Rate Services

1. Financial Forms NOPR
    26. The NOPR proposed to add a new schedule, page 313, entitled 
``Discounted Rate Services and Negotiated Rate Services,'' to Forms 2 
and 2-A to require pipelines to report the revenues and volumes 
applicable to discounted and negotiated rate services provided during 
the reporting period. Currently, Form 2 filers report the dollar 
amounts and volumes associated with the type of transportation 
provided. These are pages 300-01, Gas Operating Revenue; pages 302-03, 
Revenues from Gas Transportation of Others Through Gathering 
Facilities; pages 304-05, Revenues from Gas Transportation of Others 
Through Transmission Facilities; pages 306-07, Revenues from Storing 
Gas of Others; and page 308, Other Gas Revenues. However, the current 
schedules do not require filers to identify the volumes and revenues 
applicable to discounted, negotiated, or recourse rates. The Commission 
believes that since individual pipelines may provide services from the 
same facilities using different rates, it is important for

[[Page 19394]]

the Commission and the pipeline customer to know the level of services 
provided under each rate schedule in order to protect against cross-
subsidization and to ensure that recourse rates remain just and 
reasonable.
2. Commenters
    27. One commenter, Calpine, requests that the Commission further 
clarify that filers of this schedule be required to complete a separate 
chart for each incremental vintage so that the revenues and volumes can 
be appropriately attributed.\54\
---------------------------------------------------------------------------

    \54\ Calpine NOPR Comments at 8-9.
---------------------------------------------------------------------------

3. Commission Determination
    28. The Commission believes that the proposed schedule described in 
the NOPR, requiring filers to report the revenues and volumes 
associated with the types of transportation provided, is adequate for 
purposes of assessing rates to prevent cross-subsidization and to 
ensure the justness and reasonableness of recourse rates. The 
Commission finds that the additional information requested by Calpine 
would add unnecessary burden to the pipeline's reporting requirements. 
Accordingly, the modification is accepted as outlined in the NOPR.

G. Rate Base and Other Cost of Service Components--Deferred Income 
Taxes

1. Financial Forms NOPR
    29. The NOPR proposed to add an instruction to each deferred income 
tax schedule, as listed below, requiring the pipeline to provide a 
summary of the type and amount of deferred income taxes reported in the 
beginning-of-year and end-of-year balances for deferred income taxes 
used to develop jurisdictional recourse rates. At present, Form 2 
filers are required to report only a single line of data for the total 
deferred income tax balance related to gas operations on the following 
schedules: (1) Accumulated Deferred Income Taxes (Account 190), pages 
234-35; (2) Accumulated Deferred Income Taxes--Other Property (Account 
282), pages 274-75; and (3) Accumulated Deferred Income Taxes--Other 
(Account 283), pages 276-77. Deferred income tax balances are an 
important factor in determining rate base and evaluating a pipeline's 
earned rate of return. The level of detail now required in Form 2 for 
deferred income taxes related to gas operations does not provide 
sufficient information to enable customers to evaluate the pipeline's 
current rates. The NOPR also proposed to add these deferred tax 
reporting schedules to Form 2-A to allow all pipeline customers access 
to this information.
2. Commenters
    30. Calpine asks the Commission to clarify that the reporting of 
deferred income taxes should be done on a disaggregated basis when 
possible.\55\ Williston, on the other hand, argues that due to the 
subjectivity of deferred income taxes, speculation on which deferred 
income taxes are included in rate base is a subject more appropriately 
addressed in a rate case.\56\
---------------------------------------------------------------------------

    \55\ Calpine NOPR Comments at 9.
    \56\ Williston NOPR Comments at 4-5.
---------------------------------------------------------------------------

3. Commission Determination
    31. Contrary to Williston's concern, the NOPR's proposal does not 
require speculation on the part of the pipeline. The proposal would 
simply require the pipeline to provide an estimate for the deferred 
income tax accounts for the immediate reporting year, and to provide a 
summary of the end-of-year and beginning of year balances for the 
reported amounts. These estimates are not binding on the pipeline at 
such time as it may file a section 4 rate case. Customers need this 
information in order to assess the reasonableness of the rates 
currently paid. With respect to Calpine's request that reporting of 
deferred income taxes be done on a disaggregated basis when possible, 
we believe that the required summary of the type and amount of deferred 
income taxes reported in the beginning-of-year and end-of-year balances 
will provide adequate detail. Accordingly, the proposal as outlined in 
the NOPR is adopted.

H. State Income Tax Expense

1. Financial Forms NOPR
    32. The NOPR proposed to add a new column Q to the Taxes Accrued, 
Prepaid and Charged During Year, Distribution of Taxes Charged schedule 
on pages 262-3 of Form 2 and to add the same schedule to Form 2-A to 
require pipelines to report state and local income tax rates. 
Currently, only the aggregate state deferred income tax for the entire 
reporting entity is required to be reported on Form 2. This information 
does not permit the Commission or the pipeline's customers to determine 
the amount of state income tax expense that should be associated with 
the before-tax net income generated from the sales of transportation 
services under more than one rate structure.
2. Commenters
    33. The American Public Gas Association (APGA) requests that the 
Commission add the requirement that pipelines include the property 
valuation used by taxing authorities.\57\
---------------------------------------------------------------------------

    \57\ APGA NOPR Comments at 5.
---------------------------------------------------------------------------

3. Commission Determination
    34. The Commission believes that the proposal to require pipelines 
to report the state and local income tax rates is sufficient to aid the 
forms' users in interpreting the data. We reject APGA's request that 
pipelines include the property valuation used by taxing authorities. We 
believe that access to disaggregated data will provide the necessary 
information. Accordingly, the proposed change outlined in the NOPR is 
adopted.

I. Regulatory Assets and Liabilities

1. Financial Forms NOPR
    35. The NOPR proposed to revise the schedule entitled ``Other 
Regulatory Assets,'' page 232, by adding footnote citations for each 
regulatory asset to record the item and adding a column to identify 
amounts written off during the period as non-recoverable. In addition, 
the NOPR proposed to revise the ``Other Regulatory Liabilities'' 
schedule, page 278, by adding footnote citations for each regulatory 
liability to identify the regulatory approval to refund the item and 
adding a column to identify amounts written off during the period as 
non-refundable. At present, Forms 2 and 2-A filers are required to 
report a breakout of regulatory assets and liabilities where future 
recovery/refunding from ratepayers is probable. These amounts, however, 
can be challenged in a section 4 rate case proceeding. The proposed 
revisions will allow the Commission and customers to determine which 
assets and liabilities have been written off or refunded during the 
reporting period.
2. Commenters
    36. Dominion argues that the regulatory assets and liability 
information should not be included in the Form 3-Q, but only in the 
annual report.\58\ The MPSC suggests that the Commission modify its 
proposal to require pipelines to report the asserted basis for 
recording a regulatory asset or liability, including, but not limited 
to, any regulatory approval to record the item.\59\
---------------------------------------------------------------------------

    \58\ Dominion NOPR Comments at 5-7.
    \59\ MPSC NOPR Comments at 7.
---------------------------------------------------------------------------

3. Commission Determination
    37. The Commission believes that the footnote citations proposed in 
the NOPR will provide a level of detail sufficient to enable the forms' 
users to assess the

[[Page 19395]]

pipeline's reporting for regulatory assets and liabilities. We believe 
it is unnecessary and burdensome to require the pipeline to report the 
basis for recording the asset or liability together with a citation to 
any regulatory approval. As drafted, the NOPR would require the 
pipeline to identify any regulatory approval to refund an item and to 
record such refund. We believe this data provides the forms' users with 
the information necessary to determine which pipeline assets have been 
written off or refunded during the relevant reporting period. 
Accordingly, the proposal as outlined in the NOPR is adopted.

J. Employee Pensions and Benefits

1. Financial Forms NOPR
    38. The NOPR proposed to amend Instruction 3 to page 122.1 to 
require filers that participate in multi-employer post-retirement 
benefit plans to disclose the amount of cost recognized in the filer's 
financial statements for each plan for the period presented and the 
basis for determining the filer's share of the total plan costs. In 
addition, the NOPR proposed to add a schedule entitled ``Employee 
Pensions and Benefits,'' page 352, to both Forms 2 and 2-A, to provide 
additional details about the types and costs of employee benefits. At 
present, this information is not readily available in Forms 2 and 2-A, 
due in part to the pipelines' participation in multi-employer benefit 
plans in which they are assigned a portion of the total cost, and the 
flexibility in the way in which information is described in a footnote 
disclosure. The NOPR would permit forms users to assess the cost of 
employee benefits and better compare this information between periods 
and entities.
2. Commenters
    39. The MPSC requests that the Commission require pipelines to 
report the recommended/required contributions to pension and post-
retirement benefits other than pensions (PBOP) funds identified by the 
pipelines' actuaries and reconcile any differences between these 
recommended contribution amounts and the cost recognized on the 
pipelines' financial statements.\60\ Further, MPSC requests that 
pipelines also be required to reconcile any difference between the 
actuary's recommended contribution and the amounts reported in Account 
926.\61\
---------------------------------------------------------------------------

    \60\ MPSC NOPR Comments at 8.
    \61\ Id.
---------------------------------------------------------------------------

3. Commission Determination
    40. The Commission believes that the proposed changes are 
reasonable and respond adequately to the request for additional 
information on pensions and benefits. The NOPR's proposal would require 
filers to disclose the amount of costs for benefit plans and the basis 
for determining the filer's share of the total cost. We believe this 
level of detail is sufficient and reject as burdensome MPSC's request 
that pipelines provide a reconciliation between costs recommended by an 
actuarial and costs adopted. The MPSC's request for reconciliation is 
the basis of review in a rate case for employer pension and PBOPs. 
Accordingly, the proposed change in the NOPR is adopted.

K. Other Issues

Source of Capital Structure
1.Financial Forms NOPR
    41. The NOPR rejected requests that pipelines be required to 
provide additional detail on capital structure.\62\ The Industry 
Coalition's request for additional capital structure information 
included the requirement that if the pipeline believes an alternative 
capital structure should be used for rate purposes, the appropriate 
capital structure should be included in a footnote along with an 
explanation of why another capital structure is appropriate.\63\ The 
NOPR rejected this request on the grounds that it would require the 
pipeline to speculate on a preferred capital structure.\64\
---------------------------------------------------------------------------

    \62\ See NOPR at P 27.
    \63\ See Industry Coalition NOI Comments at 4.
    \64\ NOPR at P 27.
---------------------------------------------------------------------------

2. Commenters
    42. Several commenters, including NGSA, APGA, Calpine, Enbridge, 
and Process Gas Consumers Group (PGC), urge the Commission to 
reconsider its ruling and to require pipelines to identify the specific 
entity used as the source for the capital structure figures reported on 
page 218a.\65\ PGC, APGA, NGSA and others observe that INGAA's reply 
comments in response to the NOI stated that it has no objection to 
identifying the entity whose capital structure is reported on page 218a 
of Form 2.\66\
---------------------------------------------------------------------------

    \65\ See APGA NOPR Comments at 3-4; NGSA NOPR Comments at 3; 
Enbridge NOPR Comments at 3-4; Calpine NOPR Comments at 12; PGC NOPR 
Comments at 3-4.
    \66\ NGSA NOPR Comments at 3; PGC NOPR Comments at 3; APGA NOPR 
Comments at 3-4. See INGAA NOI Reply Comments at 11.
---------------------------------------------------------------------------

3. Commission Determination
    43. In light of the comments on this issue, including the 
recognition that INGAA stated that it had no objection to identifying 
the entity whose capital structure is reported on page 218a of the 
form, the Commission will revise the instructions for page 218a of Form 
2. The reporting pipeline will be required to provide, in a footnote, 
the name of the entity whose capital structure is reported. We 
reiterate, however, that the pipeline will not be required to identify 
whether it plans to use a different capital structure and an 
explanation of its appropriateness.
Reporting the Source of Return on Equity Figures
1. Financial Forms NOPR
    44. The NOPR rejected proposals to add additional requirements to 
the current return on equity disclosure. At present, page 218a of Form 
2 requires that the pipeline provide the rate of return granted in the 
last rate proceeding. If this rate of return is not available, the form 
requires the pipeline to use the average rate of return earned during 
the preceding three years. The NOPR expressed concern that adding 
additional disclosures, including the pipeline's calculation of the 
three year average rate of return, would be burdensome to the pipelines 
and could have the unintended effect of turning the Form 2 into a 
``mini'' rate case.\67\
---------------------------------------------------------------------------

    \67\ NOPR P 27.
---------------------------------------------------------------------------

2. Commenters
    45. APGA, NGSA, and PGC request that the Commission reconsider this 
decision.\68\ At a minimum, PGC requests that the Commission require 
pipelines to document whether they have elected to use the FERC-
approved rate of return on equity or a three-year average.\69\ APGA 
requests that page 218a of Form 2 be amended to include a mandatory 
disclosure of whether the listed return on equity is from the 
pipeline's most recent rate proceeding (and if so, to identify such 
proceeding by docket number and reference to any applicable documents 
and/or Commission order), or if not, a description of the calculation 
used to derive the listed rate of return.\70\ APGA asserts that this 
approach would provide the public with vital information while not 
encumbering pipelines with any additional burden.\71\ NGSA states that 
INGAA's reply comments to the NOI indicated that it

[[Page 19396]]

did not object to providing which option was used for purposes of the 
rate of return, with the caveat that a ``black box'' settlement figure 
be viewed as an acceptable proxy for the pipeline's approved rate of 
return.\72\ NGSA urges the Commission to adopt INGAA's suggested 
compromise to document which option is reported.\73\
---------------------------------------------------------------------------

    \68\ APGA NOPR Comments at 4; NGSA NOPR Comments 4; PGC NOPR 
Comments at 3.
    \69\ PGC NOPR Comments at 3.
    \70\ APGA NOPR Comments at 4-5.
    \71\ Id.
    \72\ NGSA NOPR Comments at 4. See INGAA's Reply Comments to NOI 
at 12.
    \73\ NGSA NOPR Comments at 4.
---------------------------------------------------------------------------

3. Commission Determination
    46. The Commission agrees that it would be a fair compromise to 
require that pipelines disclose the following information when 
reporting common equity at line (5), column (d), on page 218a: (1) 
Indicate if the rate of return was formally approved in a rate case; 
(2) indicate if the rate of return was a calculated black-box 
settlement approved rate; or (3) if the rate of return was an actual 
three-year average rate of return. This information should provide 
sufficient clarification for the form's users and will not, we believe, 
unduly burden the pipeline's reporting requirements.
Costs and Revenues Associated With Trackers or Special Surcharges
1. Commenters
    47. The New York Public Service Commission (NYPSC) states that it 
supports the Commission's proposed amendments to Forms 2, 2-A, and 3-Q. 
NYPSC requests, however, that the Commission address its suggestions 
for additional reporting requirements on Form 2, including billing 
determinants for each rate schedule at the beginning and end of the 
year, as well as any revenues and costs associated with trackers or 
special surcharges.\74\
---------------------------------------------------------------------------

    \74\ NYPSC NOPR Comments at 3.
---------------------------------------------------------------------------

2. Commission Determination
    48. NYPSC's comments did not identify the items subject to tracking 
or special surcharges. The Commission does not believe that a specific 
cost and revenue analysis of these revenues is required since, with the 
exception of some timing differences, the transactions generally should 
be a wash, i.e., the reported revenues would include the surcharge 
recoveries and the pipeline's operation and maintenance expenses would 
reflect the costs incurred. We do agree that it would be beneficial to 
have a summary of the revenues and expenses for each tracked cost and 
special surcharge. Therefore, the Commission is adding this requirement 
to the final rule. We will require that the pipeline provide this 
summary in the footnotes to the financial statements. We decline to 
grant NYPSC's request to require the pipeline to include billing 
determinants for each rate schedule at the beginning and end of the 
year. This information is available on the Index of Customers, filed by 
pipelines on a quarterly basis.

L. Elimination of Form 11

1. Financial Forms NOPR
    49. The NOPR sought comments on whether the information in FERC No. 
11, Natural Gas Pipeline Company Quarterly Statement of Monthly Data 
(Form 11) is relied upon by pipeline customers. The NOPR also asked 
whether the information reported in Form 11 could, alternatively, be 
incorporated into Form 3-Q. Form 11 is a quarterly filing made by 
natural gas companies whose gas transported or stored for a fee 
exceeded 50 million Dth in each of the three previous years.\75\ In 
comments on the NOI, Williston had suggested that Form 11 be eliminated 
and that the information required in Form 11 be incorporated into Form 
3-Q.\76\
---------------------------------------------------------------------------

    \75\ See 18 CFR 260.3.
    \76\ See Williston Basin NOI Comments at 6-7.
---------------------------------------------------------------------------

2. Commenters
    50. Most commenters expressed a need for the information reported 
in Form 11. NGSA, Calpine, the IPPA and TIPRO oppose the elimination of 
the form unless the information reported is added to Forms 2 and 3-Q, 
with the assurance that this alternative would maintain the monthly 
volume detail currently provided in Form 11.\77\ NGSA stated that the 
information reported in Form 11 is the only source of contract demand 
and volume information that enables customers to properly attribute 
costs to incremental services and design rates.\78\ One commenter, 
Dominion, asserted that the information reported in Form 11 is 
unnecessary but stated that if the Commission deems that such 
information needs to be reported, Form 11 should be incorporated into 
Forms 2 and 3-Q.\79\
---------------------------------------------------------------------------

    \77\ NGSA NOPR Comments at 7-8; Calpine NOPR Comments at 11; 
ITPI NOPR Comments at 3-4.
    \78\ NGSA NOPR Comments at 7-8.
    \79\ Dominion NOPR Comments at 11-12.
---------------------------------------------------------------------------

3. Commission Determination
    51. The comments indicate that Form 11 information is unique and 
useful for performing a reasonable rate assessment. We agree with NGSA 
and others that eliminating Form 11 without incorporating the detail in 
other forms would remove from consideration data that is not available 
elsewhere. We believe that the most efficient way to collect the 
information now reported in Form 11 is to add a new schedule to Forms 2 
and 3-Q, entitled ``Monthly Quantity & Revenue Data by Rate Schedule,'' 
to require the reporting of information now contained in Form 11. An 
additional benefit of this change in reporting is that the data 
collected in Form 11 can now be filed using Commission issued software 
as part of the Form 2 filing rather than as a separate submission. 
Accordingly, FERC Form 11 will be terminated on February 29, 2009, the 
date that pipelines will be required to file a revised Form 3-Q.

M. Miscellaneous Issues

    52. The Commission proposed to extend the filing date for the 
Certified Public Accountant Certification Statement until May 18 of the 
following calendar year for natural gas companies.\80\ The Commission 
noted that this proposal would reduce the filing and administrative 
burden by allowing more time for the company and the certified public 
accountant to identify and resolve issues that may arise during the 
course of the examination.\81\ No comments were filed on this issue 
and, accordingly, the proposal is adopted as outlined in the NOPR.
---------------------------------------------------------------------------

    \80\ See 18 CFR 158.11.
    \81\ NOPR at P 63.
---------------------------------------------------------------------------

    53. The NOPR discussed two questions posed in the NOI: (1) Whether 
interstate pipelines should be required to notify the Commission when 
their total sales or transactions fall below the minimum thresholds 
established in the Commission's regulations such that the pipeline 
believes that it is no longer subject to the filing requirements; and 
(2) whether the Commission should require a showing of good cause 
before granting an extension of time in which to file the reports.\82\ 
Calpine supports the concept that a pipeline should advise the 
Commission if it believes it does not meet the threshold requirements 
for reporting.\83\ The Commission agrees that notification of non-
filing status would be helpful to the Commission and users of Forms 2 
and 2-A. Accordingly, at such time as a pipeline now subject to the 
reporting requirements for either Form 2 or 2-A has, in three 
consecutive years, experienced volumes and transactions below the 
threshold levels specified in the Commission's regulations and believes 
that it is no longer required to file a Form 2 or 2-A, it must notify 
the Commission of this change. The

[[Page 19397]]

pipeline must file the notification on the date that the form would 
otherwise be due. With respect to the requirement that a pipeline must 
provide good cause when requesting an extension of time in which to 
comply with the Commission's reporting regulations, the Commission 
believes that any request for an extension of time must show good 
cause. Without such a showing, the request may not be granted.
---------------------------------------------------------------------------

    \82\ See 18 CFR 260.1 and 260.2.
    \83\ Calpine NOPR Comments at 11.
---------------------------------------------------------------------------

IV. Implementation

    54. The NOPR proposed an effective date of January 1, 2008. 
Accordingly, companies subject to the new requirements would file their 
revised Form 3-Q beginning with the first quarter of 2009 and their 
revised Forms 2 and 2-A in 2009 for calendar year 2008. Form 11 data 
will continue to be collected through 2008 and pipelines will be 
required to file the form until February 28, 2009, when the revised 3-Q 
filings will commence. While INGAA did not object to the Commission's 
proposed effective date, it requests that the Commission recognize that 
meeting this deadline may be difficult for some pipeline companies.\84\ 
INGAA states that although pipelines will not be required to file their 
new annual Forms 2 and 2-A reflecting revised data for 2008 until 2009, 
the changes will require modifications to accounting and computer 
systems that will need to be in place on January 1, 2008, to capture 
data for the full year 2008.\85\ Enbridge requests that the effective 
date of the final rule be revised to the first day of the first full 
calendar quarter that falls at least 90 days after the Commission's 
issuance of a final rule.\86\
---------------------------------------------------------------------------

    \84\ INGAA NOPR Comments at 2.
    \85\ Id.
    \86\ Enbridge NOPR Comments at 10.
---------------------------------------------------------------------------

    55. The Commission proposed the January 1, 2008 effective date so 
that pipelines' revised Form 2 and 2-A filings, reflecting an entire 
year of data, could be filed in 2009. Enbridge's suggestion that the 
effective date be changed to a mid-year calendar quarter would mean 
that the new Form 2 data for filing year 2009 would be incomplete. The 
proposals contained in the September 20, 2007 NOPR have not changed 
substantially in the final rule. The reporting of some information, 
deemed burdensome by pipeline filers, has been modified. Most of this 
data will have been collected by the pipeline during the first quarter 
of 2008 and the Commission does not believe that the necessary changes 
warrant any delay in the filings required for 2009.

V. Regulatory Flexibility Act Certification

    56. The Regulatory Flexibility Act of 1080 (RFA) \87\ generally 
requires a description and analysis of final rules that will have a 
significant economic impact on a substantial number of small 
entities.\88\ However, the RFA does not define ``significant'' or 
``substantial.'' Instead, the RFA leaves it up to an agency to 
determine the effect of its regulations on small entities. Most filing 
companies regulated by the Commission do not fall within the RFA's 
definition of small entity.
---------------------------------------------------------------------------

    \87\ 5 U.S.C. 601-12.
    \88\ The RFA definition of ``small entity'' refers to the 
definition provided in the Small Business Act, which defines a 
``small business concern'' as a business that is independently owned 
and operated and that is not dominant in its field of operation. 15 
U.S.C. 632. The Small Business Size Standards component of the North 
American Industry Classification System defines a small natural gas 
pipeline company as one whose total annual revenues, including its 
affiliates, are $6.5 million or less. 13 CFR 121,201.
---------------------------------------------------------------------------

    57. The Commission estimates that there are 74 Major natural gas 
pipeline companies and 44 Non-major companies that will be affected by 
the final rule.\89\ As we stated in the NOPR, the rule will apply to 
all interstate natural gas companies subject to the Commission's 
jurisdiction. While we do not foresee that the Rule will have a 
significant impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, we will consider granting 
waivers in appropriate circumstances. In addition, the elimination of 
Form 11 will further reduce the economic impact on most entities.
---------------------------------------------------------------------------

    \89\ These numbers are based on the most recent filings.
---------------------------------------------------------------------------

    58. Accordingly, the Commission certifies that the Rule will not 
have a significant impact on a substantial number of small entities. As 
a result, no regulatory flexibility analysis is required.

VI. Environmental Statement

    59. Commission regulations require that an environmental assessment 
or an environmental impact statement be prepared for a Commission 
action that may have a significant effect on the human environment.\90\ 
However, in 18 CFR 380.4(a)(5), we categorically excluded the type of 
information gathering required in this Rule from the requirement to 
prepare an environmental impact statement. Thus, we affirm the finding 
we made in the NOPR that this final rule does not impose any 
requirements that might have a significant effect on the human 
environment and find that no environmental impact statement concerning 
this rule is required.
---------------------------------------------------------------------------

    \90\ Regulations Implementing National Environmental Policy Act, 
Order No. 486, 52 FR 47897 (Dec. 17, 1987); FERC Stats. & Regs. ] 
30,783 (Dec. 10, 1987) (codified at 18 CFR Part 380).
---------------------------------------------------------------------------

VII. Public Reporting Burden and Information Collection Statement

    60. The following collections of information contained in this 
Final Rule have been submitted to the Office of Management and Budget 
(OMB) for review under Section 3507(d) of the Paperwork Reduction Act 
of 1995.\91\ The Commission identifies the information provided under 
Parts 158 and 260 of the Commission's regulations. The Commission is 
revising the reporting requirements for interstate natural gas 
companies as contained in the above financial and operational 
information collections.
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    \91\ 44 U.S.C. 3507(d).
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Information Collection Statement

    Title: FERC Form No. 2, ``Annual Report for Major natural gas 
companies;'' FERC Form No. 2-A, ``Annual Report for Nonmajor public 
utilities and licensees; FERC Form No. 3-Q, ``Quarterly financial 
report of electric utilities, licensees, and natural gas companies.''
    FERC Form No. 11, ``Natural gas pipeline quarterly statement of 
monthly data.:
    Action: Final Rule.
    OMB Control Nos.: 1902-0028 (Form 2); 1902-0030 (Form 2-A); 1902-
0205 (Form 3-Q), and 1902-0032 (Form 11).
    Respondents: Business or other for profit.
    Frequency of responses: Quarterly and Annually.
    Necessity of the information: This Final Rule prescribes certain 
modifications to the Commission's financial reports for interstate 
natural gas companies, Form Nos. 2, 2-A, and 3-Q. The revisions adopted 
in this Final Rule will increase the forms' usefulness to both the 
public and the Commission. The Final Rule will improve the usefulness, 
accuracy and transparency of financial information submitted to the 
Commission. Expanding the detail of the financial data assists the 
Commission in carrying out its responsibilities under the NGA to ensure 
that rates are just and reasonable.
    Burden Statement: There are an estimated 44 Nonmajor and 74 Major 
natural gas companies that will be affected by the Final Rule, for a 
total of 118 affected respondents.\92\ The change in annual public 
reporting burden per

[[Page 19398]]

respondent for Form 2, Form 2-A, and Form 3-Q for Major and Form 3-Q 
for Nonmajor natural gas companies is estimated to be 53, 135, 30, and 
21 additional hours respectively. These estimates translate into 83 
additional hours for Major natural gas companies annually and 156 
additional hours for Nonmajor natural gas companies annually. The 
corresponding annual aggregate increase per form is: 3,922 additional 
hours annually for Form 2; 5,940 additional hours annually for Form 2-
A; 2,200 additional hours annually for Form 3-Q for Major natural gas 
companies; and 924 additional hours annually for Form 3-Q for Nonmajor 
natural gas companies. While the Final Rule increases the estimated 
total annual burden by 13,006 hours, the Rule eliminates Form 11 which 
reduces the total annual reporting burden by an estimated 888 hours. If 
this change is taken into consideration, the annual burden increase 
would be 12,118 hours. One commenter, Dominion, stated that while it 
applauds the Commission for striving to achieve a balance between the 
benefits these revisions will achieve, in assessing pipeline rates, and 
the imposition of any additional burden on the pipeline, it believes 
the estimated hours may be too low.\93\ No other commenters offered 
burden estimates. Dominion estimates that the annual report will 
require an additional 60 hours (the Commission estimates 53 hours) and 
that preparation of information for Form 3-Q would be about 23 hours 
per quarter (the Commission estimates seven hours).\94\ Dominion also 
estimates that additional time will be required in the first year to 
implement, including the required computer programming, the changes in 
reporting requirements.\95\ The Commission agrees that some time will 
be required to implement the changes, however, the Commission has 
provided the companies with the software to prepare the financial 
reports and we believe Dominion's estimates are excessive. Most of the 
data required by the Final Rule is information that is already 
collected by the pipeline company. Certain of the schedules added to 
Form 3-Q are schedules that are currently in the annual forms and 
require only that this data be reported on a quarterly basis in 
addition to the annual reports. Further, the Final Rule has modified 
some requirements that will ease considerably the reporting burden, 
that is, reinstating the $250,000 cost threshold for page 357 of Form 
2, and instating the same $250,000 threshold for new reporting on 
affiliate transactions on page 358. In addition, the Final Rule 
eliminates Form 11 which was previously filed in hard copy and 
incorporates that information into the annual and quarterly forms, 
thereby allowing the data to be submitted using Commission software. 
This, too, produces a substantial decrease in burden. We believe that 
the new, or revised, requirements strike a fair balance between the 
benefits these changes will facilitate and the imposition of any 
additional burden on the pipeline.
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    \92\ These numbers are based on the most recent filings.
    \93\ Dominion NOPR Comments at 4.
    \94\ Id.
    \95\ Id.
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    Internal Review: The Commission has conducted an internal review of 
the public reporting burden associated with this collection of 
information and has assured itself, by means of its internal review, 
that there is specific, objective support for this information burden 
estimate. Moreover, the Commission has reviewed the collection of 
information required by this rule and has determined that the 
collection of information is necessary and conforms to the Commission's 
plan, as described in this order, for the collection, efficient 
management, and use of the required information.\96\
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    \96\ See 44 U.S.C. 804(2).
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    61. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426 [Attention: Michael Miller, 
Office of the Chief Information Officer, phone: (202) 502-8415, fax: 
(202) 273-0873; e-mail: Michael.Miller@ferc.gov]. Comments concerning 
the collection of information and the associated burden estimates 
should be sent to the contact listed above and to the Office of 
Management and Budget, Office of Information and Regulatory Affairs, 
Washington, DC 20503 [Attention: Desk Officer for the Federal Energy 
Regulatory Commission, phone (202) 395-7318, fax: (202) 395-7285].

VIII. Document Availability

    62. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, NE., 
Washington, DC 20426.
    63. From the Commission's Home Page on the Internet, this document 
is available at the Commission's document management system, e-Library. 
The full text of this document is available on e-Library in PDF and 
Microsoft Word format for viewing, printing, and/or downloading. To 
access this document in e-Library, type the docket number excluding the 
last three digits of this document in the docket number field.
    63. User assistance is available for e-Library and the Commission's 
Web site during normal business hours. For assistance, please contact 
FERC Online Support at 1-866-208-3676 (toll free) or 202-502-6652 (e-
mail at FERCOn-LineSupport@ferc.gov) or the Public Reference Room at 
202-502-8371, TTY 202-502-8659 (e-mail at public.reference@ferc.gov).

IX. Effective Date and Congressional Notification

    64. This final rule will take effect April 10, 2008, and the 
revisions to the forms are applicable on January 1, 2008, as proposed 
in the NOPR, with one exception. While the rule eliminates Form 11, it 
is important that the data collected in Form 11 continue to be filed 
with the Commission. Accordingly, pipelines will be required to 
continue to collect the data and file Form 11 for the remainder of 
2008. Form 11 will be eliminated applicable as of February 28, 2009 
when information for the fourth quarter of 2008 is filed. The January 
1, 2008 applicability date will require Form 2 and 2-A filers to 
collect the revised data during 2008 and file a revised annual form in 
2009 for the 2008 reporting year. Form 3-Q filers will submit a revised 
3-Q beginning with the first quarter of 2009. The information now 
reported in Form 11 will be incorporated into Forms 2 and 3-Q beginning 
in 2009.
    65. The Commission has determined with the concurrence of the 
Administrator of the Office of Information and Regulatory Affairs of 
OMB that this final rule is not a major rule within the meaning of 
section 251 of the Small Business Regulatory Enforcement Fairness Act 
of 1996.\97\ The Commission will submit the final rule to both houses 
of Congress and the General Accounting Office.
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    \97\ 5 U.S.C. 801.
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List of Subjects

18 CFR Part 158

    Administrative practice and procedure, Natural gas, Reporting and 
recordkeeping requirements, Uniform System of Accounts.

[[Page 19399]]

18 CFR Part 260

    Natural gas, Reporting and recordkeeping requirements.

    By the Commission.
Kimberly D. Bose,
Secretary.
    In consideration of the foregoing, the Commission amends parts 158 
and 260 of Title 18 of the Code of Federal Regulations, as set forth 
below:

PART 158--ACCOUNTS, RECORDS, MEMORANDA AND DISPOSITION OF CONTESTED 
AUDIT FINDINGS AND PROPOSED REMEDIES

0
1. The authority citation for part 158 continues to read as follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7102-7352.

0
2. Section 158.11 is revised to read as follows:

Sec.  158.11  Report of certification.

    Each natural gas company not classified as Class C or Class D prior 
to January 1, 1984 must file with the Commission by May 18 of the 
following calendar year, a letter or report of the independent 
accountant certifying approval, covering the subjects and in the format 
prescribed in the General Instructions of the applicable Form No. 2 or 
Form No. 2-A. The letter or report must also identify which, if any, of 
the examined schedules do not conform to the Commission's requirements 
and must describe the discrepancies that exist. The Commission will not 
be bound by the certification of compliance made by an independent 
accountant under this paragraph.

PART 260--STATEMENTS AND REPORTS (SCHEDULES)

0
3. 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.

0
4. Section 260.3 is removed.

    Note: The following appendices will not be published in the Code 
of Federal Regulations.

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[FR Doc. E8-6495 Filed 4-9-08; 8:45 am]

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