FERC considers revising gas pipeline reporting rules

Nick Snow
Washington Correspondent

WASHINGTON, DC, Sept. 24 -- The US Federal Energy Regulatory Commission has proposed revisions to financial forms, statements, and reports it requires interstate natural gas pipelines to submit. The proposals are designed to better reflect current market and cost information and to strengthen shippers' ability to file complaints by providing better access to public information, FERC said on Sept. 20.

FERC also issued a notice of inquiry seeking comments on several proposals for gas pipeline rate recovery of fuel, lost and unaccounted-for gas. While a proposed rule would update financial forms, FERC also is interested in views of its policy regarding pipelines' costs recovery method and whether the policy should change to prescribe a uniform approach.

"We have seen a fall in the number of general rate cases since we eliminated the triennial restatement rates in Order No. 636, and in some cases, pipeline rates have not been reviewed for more than a decade. These changes will provide more detail so the commission and the public can assess whether pipeline rates are just and reasonable," FERC Chairman Joseph T. Kelliher said.

Among other things, the proposed rule, which would take effect Jan. 1, 2008, would require interstate gas pipelines to submit additional revenue information, including revenue from shipper-supplied gas; identify the costs associated with affiliate transactions; and provide additional information on incremental facilities and discounted and negotiated rates.

Companies subject to the new requirements would file revised Form 3-Q quarterly reports beginning with first-quarter 2009, while the revised Forms 2 and 2-A for calendar year 2008 would be filed by April 30, 2009, FERC said.

Inquiry applauded
OGJ was unable to obtain a comment on Sept. 21 from the Interstate Natural Gas Association of America, which represents interstate gas pipelines, on either FERC action. In a joint statement, however, the Independent Petroleum Association of America and the Process Gas Consumers applauded the gas cost recovery notice of inquiry.

"Without periodic rate review, many pipeline fuel retention rates have been in effect for years. While pipelines should be compensated fairly for the fuel used in transporting natural gas, some pipelines appear to be benefiting from large over-recoveries," IPAA Chairman Mike Linn said. FERC's notice will prompt an assessment of the way in which pipelines recover fuel costs, he added.

"As FERC has previously held, fuel should not serve as a pipeline profit center. We are anxious to work with FERC to make sure this principle is followed throughout the pipeline grid," said PGC General Counsel Dena Wiggins. She noted that the organization has been working with IPAA on the issue, the two groups have retained an outside consultant to study the situation, and they plan to submit results of that study to FERC.

Kelliher said the proposal to revise financial reporting procedures for pipelines resulted from 5 outreach sessions held by FERC's enforcement office in 2006 and the experience gained from 2 complaints the commission received based, in part, on data from Form No. 2 which pipelines argued did not provide an adequate basis for the complaints.

"In my view, it is essential that public information suffice as a foundation for a [Natural Gas Act] Section 5 complaint. Otherwise, the ability of shippers to file complaints will be significantly curtailed," the FERC chairman said.

Commissioner Marc Spitzer said federal courts have reminded FERC on several occasions that its orders must be based on a full record with substantial evidence. He added that FERC should not impose new reporting requirements on regulated entities for information outside its jurisdiction or which does not advance its regulatory mission.

But Commissioner Jon Wellinghoff said the adequacy of data collected in Forms 2, 2-A and 3-Q had been questioned for years and that the proposals should correct many deficiencies in the forms. "Most of the information requested is data that is maintained by the pipeline and can readily be transferred to existing and new schedules. Consequently, I do not believe we have blurred the distinctions between NGA Sections 4 and 5, a concern expressed by some commenters" during the notice of inquiry leading to the proposals, he said.

Contact Nick Snow at nsnow@cox.net.

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