
[Federal Register Volume 76, Number 17 (Wednesday, January 26, 2011)]
[Rules and Regulations]
[Pages 4516-4529]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-1493]



[[Page 4516]]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 260

[Docket No. RM07-9-003; Order No. 710-B]


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

AGENCY: Federal Energy Regulatory Commission.

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, 
to include functionalized fuel data on pages 521a through 521c of those 
forms, and to include on those forms the amount of fuel waived, 
discounted or reduced as part of a negotiated rate agreement. For 
consistency, the Commission also is revising page 520. The revisions 
are designed to enhance the forms' usefulness by providing greater 
transparency as to fuel data.

DATES: Effective Date: This rule will become effective February 25, 
2011.

FOR FURTHER INFORMATION CONTACT:

Brian Holmes (Technical Information), Office of Enforcement, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426. Telephone: (202) 502-6008, e-mail: brian.holmes@ferc.gov.
Robert Sheldon (Technical Information), Office of Energy Market 
Regulation, Federal Energy Regulatory Commission, 888 First Street, 
NE., Washington, DC 20426. Telephone: (202) 502-8672, e-mail: 
robert.sheldon@ferc.gov.
Gary D. Cohen (Legal Information), Office of the General Counsel, 
Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426. Telephone: (202) 502-8321, e-mail: 
gary.cohen@ferc.gov.

SUPPLEMENTARY INFORMATION:
    Before Commissioners: Jon Wellinghoff, Chairman; Marc Spitzer, 
Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur.
    Issued January 20, 2011.
    1. 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, to include 
functionalized fuel data on pages 521a through 521c of those forms, and 
to include on those forms the amount of fuel waived, discounted or 
reduced as part of a negotiated rate agreement. In addition, the 
Commission also is revising page 520 for consistency.

I. Background

    2. In Order No. 710, the Commission revised its financial forms, 
statements, and reports for natural gas companies, contained in FERC 
Form Nos. 2, 2-A, and 3-Q, to make the information reported in these 
forms more useful by updating them to reflect current market and cost 
information relevant to interstate natural gas pipelines and their 
customers.\1\ The information provided in these forms included data on 
fuel use, but did not require these data to be functionally 
disaggregated.
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    \1\ Revisions to Forms, Statements, and Reporting Requirements 
for Natural Gas Pipelines, Order No. 710, 73 FR 19389 (Apr. 10, 
2008), FERC Stats. & Regs. ] 31,267 (2008), order on reh'g and 
clarification, Order No. 710-A, 123 FERC ] 61,278 (2008), remanded 
sub nom. American Gas Ass'n v. FERC, 593 F.3d 14 (D.C. Cir 2010) 
(D.C. Circuit Remand Order).
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    3. On rehearing, the American Gas Association (AGA) argued that the 
fuel data would be more useful if such data were broken out by 
different pipeline functions, including transportation, storage, 
gathering, and exploration/production, and should include, by function, 
the amount of fuel waived, discounted or reduced as part of a 
negotiated rate agreement. This argument originally was rejected in 
Order No. 710-A, and Chairman (then Commissioner) Wellinghoff issued a 
partial dissent arguing that AGA's proposals should have been 
adopted.\2\
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    \2\ Revisions to Forms, Statements, and Reporting Requirements 
for Natural Gas Pipelines, Order No. 710-A, 123 FERC at 62,708-9.
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    4. Subsequently, AGA filed a petition for review in the United 
States Court of Appeals for the District of Columbia Circuit arguing 
that the Commission erred by not addressing the concerns raised by 
Chairman Wellinghoff in his partial dissent to Order No. 710-A. The 
court agreed and remanded the matter back to the Commission for further 
proceedings.\3\
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    \3\ 593 F.3d at 21.
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    5. On June 17, 2010, the Commission issued a notice of proposed 
rulemaking proposing to revise pages 521a, 521b, and page 520, and 
proposing to add pages 521c and 521d to FERC Form Nos. 2, 2-A, and 3-Q 
to include functionalized fuel data, including the amount of fuel 
waived, discounted or reduced as part of a negotiated rate 
agreement.\4\
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    \4\ Revisions to Forms, Statements, and Reporting Requirements 
for Natural Gas Pipelines, Notice of Proposed Rulemaking, 75 FR 
35700 (June 23, 2010), FERC Stats. & Regs. ] 32,659 (June 17, 2010) 
(June 2010 NOPR).
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    6. In response to the June 2010 NOPR, comments were filed by eight 
commenters.\5\ Certain of the comments presented proposals that 
differed from the Commission's proposals in the June 2010 NOPR. To give 
all interested persons an opportunity to comment on these proposals 
prior to making a final decision, the Commission issued a notice 
allowing reply comments. Reply comments were filed by two 
commenters.\6\
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    \5\ These commenters and the abbreviations used to identify them 
are provided in the attached Appendix.
    \6\ INGAA and AGA.
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II. Discussion

A. Overview

    7. After consideration of the comments, the Commission will revise 
pages 521a, 521b, and page 520 of FERC Form Nos. 2, 2-A, and 3-Q, and 
will add page 521c, as proposed in the June 2010 NOPR.\7\ We make this 
determination because we find that the additional information to be 
reported on pages 521a-521c will allow the user to match the revenues 
generated by the sale of excess fuel with the functionalized costs 
reported on page 520 and will allow a user to better determine if there 
is a cross-subsidy. The revised forms will also now allow the user to 
determine where on the pipeline system fuel costs are being incurred 
and how they are being allocated. This added transparency will ensure 
that the Commission and pipeline customers have information critical to 
assessing the justness and reasonableness of pipeline rates. The 
collection and public availability of this information is consistent 
with our goal of having sufficient information reported to allow the 
Commission and pipeline customers to assess the impact on pipeline 
rates of changing fuel costs. The Commission also gave consideration to 
whether the data reported on FERC Form Nos. 2, 2-A, and 3-Q discussed 
herein should be reported on a monthly or quarterly basis. We have 
determined to require that the page 521 fuel use information should be 
reported on a monthly basis in the quarterly reports,\8\ as that 
provides greater transparency.
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    \7\ As proposed pages 521c and 521d were identical, we no longer 
see a need for a separate page 521d.
    \8\ The data reported in FERC Form Nos. 2 and 2-A on page 521 
represents fourth quarter data and is not a total of data for all 
four quarters.
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    8. These revisions to FERC Form Nos. 2, 2-A, and 3-Q do not require 
the

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reporting of previously unreported new categories of information.\9\ 
Instead, the new requirements merely require greater transparency 
through a disaggregation of existing data categories. Moreover, the 
Commission has determined that the burden on filers of reporting this 
information is small and is justified by the usefulness of the 
information.
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    \9\ As explained further below, reporting will be prospective in 
nature and data for previous periods need not be corrected and 
refiled.
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B. Support for the June 2010 NOPR Proposal

1. Commenters' Views
    9. Of the eight comments filed in response to the June 2010 NOPR, 
six support the Commission's proposals.\10\ One of the six comments 
offers suggestions for additional revisions to the forms.\11\ In 
addition, one commenter seeks clarification as to the scope of the 
reporting requirements,\12\ and another, while expressing support for 
the goals of the June 2010 NOPR, offers a counterproposal to accomplish 
these goals.\13\
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    \10\ AGA, APGA, Associations, IOGA, Kansas Commission and TVA.
    \11\ AGA.
    \12\ MidAmerican.
    \13\ INGAA.
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    10. APGA urges the Commission to adopt the proposed revisions to 
FERC Form Nos. 2, 2-A, and 3-Q.\14\ While AGA also supports the June 
2010 NOPR proposals and urges prompt action on a final rule,\15\ AGA 
requests that the Commission require monthly reporting of volume 
throughput data on page 520 and separate reporting of backhaul 
volumes.\16\ Associations add that the proposed revised reporting 
requirements would provide useful information.\17\ TVA likewise 
supports the Commission's proposal to include additional line items in 
521a and 521b to account for fuel information disaggregated by 
function.\18\ IOGA supports the proposed changes in reporting, 
particularly the inclusion of lost and unaccounted-for gas (``LAUF'') 
used in transportation, storage, gathering, and exploration/production 
in the fuel data required on FERC Form Nos. 2, 2-A, and 3-Q as a 
separate component of fuel, by function.\19\ Kansas Commission supports 
the changes proposed in the NOPR.\20\
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    \14\ APGA Comments at 1.
    \15\ AGA Comments at 1, 5-6.
    \16\ Id. at 6-9.
    \17\ Associations Comments at 3-4.
    \18\ TVA Comments at 2.
    \19\ IOGA Comments at 1-2.
    \20\ Kansas Commission Comments at 1.
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    11. MidAmerican requests clarification that the reporting of 
discounted and negotiated fuel should only contain fuel volumes related 
to agreements that contain discounted or negotiated fuel.\21\
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    \21\ MidAmerican Comments at 3-4.
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    12. While INGAA expresses support for the Commission's goal of 
enhancing FERC Form No. 2 fuel use reporting, it asserts that the 
Commission's June 2010 NOPR went beyond AGA's original proposal of 
reporting fuel by function that has been waived, discounted, or reduced 
as part of a negotiated rate agreement. INGAA offers an alternative 
reporting plan that it asserts will meet the Commission's stated 
goals.\22\
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    \22\ INGAA Comments at 1.
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2. Usefulness of Reporting Additional Details on Fuel Use
    13. The Commission's proposal in the June 2010 NOPR would 
disaggregate fuel use data into Discounted, Negotiated and Recourse 
categories. By contrast, under INGAA's proposal, companies would report 
aggregated Dths and Total dollars collected by function for Gas Used 
for Compressor Stations, for Gas Used for Other Deliveries and Other 
Operations, Gas Lost and Unaccounted for, Net Excess or (Deficiency), 
Disposition of Excess Gas, and Gas Acquired to meet Deficiency 
(eliminating the reporting of data in columns b, c, d, f, g, and h, as 
proposed in the June 2010 NOPR).
    14. The Commission's proposal would require filers to report Dths 
not collected under waived, discounted, and negotiated for Gas Used for 
Compressor Stations, for Gas Used for Other Deliveries and Other 
Operations, Gas Lost and Unaccounted for, Net Excess or (Deficiency), 
Disposition of Excess Gas, and Gas Acquired to meet Deficiency. Under 
INGAA's proposal, this reporting requirement (Dths not collected by 
function under waived and negotiated deals) would apply to shipper 
supplied gas only, including Lines 2-7 on pages 521a and 521b. This 
change would eliminate the reporting of waived, negotiated and total 
fuel for lines 9 through 64 that was proposed in the June 2010 NOPR.
    15. Six of the seven commenters that addressed this issue contend 
that the NOPR proposal reports an appropriate level of detail on fuel 
use.\23\ INGAA was the sole commenter arguing against the NOPR proposal 
in this regard.
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    \23\ MidAmerican Comments do not take a position on this issue.
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    16. INGAA urges that the Commission limit its revisions to FERC 
Form No. 2 to AGA's proposal in its response \24\ to the September 2007 
NOPR, arguing that the June 2010 NOPR went further than necessary to 
accomplish what AGA proposed, and objects to the June 2010 NOPR 
proposal as providing more information than necessary.\25\ INGAA 
demonstrates its point by referring to AGA's November 13, 2007 comments 
which referenced pages 4, 5, and 6 of Workpaper 2, and Workpaper 10 of 
the Informational Fuel Report filed by Dominion Transmission, Inc., 
(DTI) in Docket No. RP00-632-023 on June 27, 2007, as an example of 
what should be included on page 521.\26\ INGAA argues that neither the 
Commission nor AGA has made a case that the additional degree of 
reporting is required to facilitate monitoring for potential cross-
subsidies among services.\27\
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    \24\ AGA Comments filed November 13, 2007 at 4-5 to the 
September 2007 NOPR. See Revisions to Forms, Statements, and 
Reporting Requirements for Natural Gas Pipeline, Notice of Proposed 
Rulemaking, 72 FR 54860 (Sept. 27, 2007), FERC Stats. & Regs. ] 
32,623 (2007) (September 2007 NOPR).
    \25\ INGAA Comments at 3.
    \26\ Id. at 4.
    \27\ Id. at 11.
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    17. By contrast, AGA agrees that the level of detail in the 
information to be reported under the NOPR proposal is needed to 
adequately assess the justness and reasonableness of pipeline fuel 
charges, addresses the D.C. Circuit Remand Order, and the burden of 
producing such information is small and nonetheless justified.\28\
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    \28\ AGA Comments at 5-6.
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    18. APGA also states that the additional reporting requirements 
proposed in the NOPR will better ensure that pipeline customers and the 
Commission have sufficient information to identify unjust and 
unreasonable rates and services and to support potential 
complaints.\29\ APGA states that, under the Commission's current 
reporting requirements, customers and the Commission currently cannot 
match the revenues generated by the sale of excess gas with the 
reported functionalized fuel costs.\30\ Information regarding both fuel 
costs and excess gas revenues, broken-down and reported by function 
(including gathering, transmission, distribution, storage and 
production/extraction/processing), will allow customers and the 
Commission to better assess how pipeline fuel costs are incurred and 
allocated.\31\ Requiring pipelines to disaggregate their excess gas 
revenue information and report it by function will thus provide 
customers and the Commission with information

[[Page 4518]]

necessary to better determine the reasonableness of pipeline fuel 
rates.\32\
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    \29\ APGA Comments at 2.
    \30\ Id. at 3.
    \31\ Id.
    \32\ Id.
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    19. APGA also supports the Commission's proposal to require 
pipelines to report the amount of fuel by function that has been 
waived, discounted or reduced in negotiated rate agreements.\33\ It 
states that, under the Commission's policy, existing shippers are 
protected from subsidizing pipeline customers who have negotiated 
rates.\34\ It adds that the Commission's proposal to require pipelines 
to report fuel costs and revenues associated with each type of rate 
structure (i.e., negotiated, discounted, or recourse) by function will 
aid customers and the Commission in identifying inappropriate cross-
subsidization.\35\
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    \33\ Id. at 3.
    \34\ Id.
    \35\ Id.
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    20. Associations assert that the revised reporting requirements 
will improve the reporting of fuel data in FERC Form No. 2.\36\ 
Associations maintain that pipeline fuel revenues can constitute a 
substantial percentage of a pipeline's total system revenues, and 
therefore, ensuring that shippers are not paying excessive fuel rates 
or percentages is extremely important.\37\
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    \36\ Associations Comments at 3.
    \37\ Id. at 3.
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    21. Associations comment that shippers will benefit from having 
functionalized fuel data reported on FERC Form No. 2 because this will 
allow shippers: (1) To ensure that rates are just and reasonable, as 
the greater level of detail will allow them to better assess whether 
pipelines are substantially over recovering fuel from their shippers 
\38\ and (2) to assess whether they are subsidizing other shippers.\39\ 
In this regard, Associations state that functionalized reporting will 
show the sources and uses of a pipeline's fuel by service type on FERC 
Form No. 2. Associations state that functionalized fuel reporting, for 
example, will show a pipeline's shippers the amount of fuel that 
storage users provided to the pipeline, as well as how much of that 
fuel the pipeline actually used for storage services.\40\ If storage 
users in this example provided less fuel than the pipeline used for 
storage services, shippers using other pipeline services might want to 
take a closer look at the pipeline's fuel to determine whether they are 
subsidizing the storage shippers' fuel.\41\ Thus, Associations assert 
that functionalized fuel data will allow shippers to confirm that they 
are providing the appropriate amount of fuel to the pipeline and are 
not subsidizing other shippers.\42\
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    \38\ Id. at 4.
    \39\ Id.
    \40\ Id.
    \41\ Id.
    \42\ Id. at 5.
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    22. Associations also support breaking out fuel volumes and 
revenues into rate types--discounted rates, negotiated rates or 
recourse rates--and maintain that this level of detail will provide 
shippers and the Commission with information that will be useful in 
assessing fuel rates.\43\ Associations maintain that reporting fuel 
volumes and revenues by rate type will help shippers ensure: (1) The 
prevention of inappropriate subsidization; (2) the accuracy of pipeline 
fuel trackers; and (3) the compliance of pipelines with the 
Commission's fuel discounting policies.\44\
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    \43\ Id.
    \44\ Id.
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    23. Associations also state that requiring pipelines to report fuel 
data by rate type would prevent subsidization of some shippers by 
allowing the Commission and shippers to distinguish between those fuel 
discounts that are eligible for a discount adjustment in a rate case 
and those that are not.\45\ Associations add that, as the new FERC Form 
No. 2 will require pipelines to identify discounted fuel volumes and 
revenues as either ``discounted,'' ``negotiated,'' or ``recourse,'' 
shippers could use these data to distinguish between those fuel 
discounts that are appropriately included as adjustments in a rate case 
(e.g., backhauls) and those that are not (e.g., discounts that are part 
of a negotiated rate).\46\ Moreover, Associations assert that this 
detail gives shippers a better indication of what appropriate fuel 
rates should be, allowing the shippers to determine if fuel rate 
changes are warranted.\47\
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    \45\ Id.
    \46\ Id. at 5-6.
    \47\ Id. at 6.
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    24. Finally, Associations argue that reporting fuel data by rate 
type could provide an added check on fuel tracker calculations and on 
pipelines' compliance with fuel discounting policies.\48\
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    \48\ Id.
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    25. IOGA maintains that it is critical to include and break out 
LAUF, which it asserts, has been far in excess of actual fuel use on 
certain Appalachian pipelines.\49\ In this regard, IOGA posits that 
requiring interstate pipelines to break out fuel and LAUF by function 
in FERC Form Nos. 2, 2-A, and 3-Q would be helpful to IOGA's efforts to 
limit fuel and LAUF assessed to shippers and ultimately netted back to 
Appalachian producers.\50\ Because the Appalachian pipelines are part 
of integrated energy companies engaged in exploration, production, 
gathering, storage and transportation of natural gas, IOGA asserts that 
it has long been concerned that unmetered gas flow allocable to 
affiliated exploration and production affiliates or farm tap customers 
of affiliated LDCs becomes LAUF charged to other shippers, instead.\51\ 
It states that increasing the transparency of FERC Form Nos. 2, 2-A, 
and 3-Q could help alleviate those concerns.\52\
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    \49\ IOGA Comments at 2.
    \50\ Id. at 2-3.
    \51\ Id. at 3.
    \52\ Id.
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    26. IOGA also argues that requiring the filing of more transparent 
fuel and LAUF data will allow the Commission and interested market 
participants to better analyze allegedly extraordinary fuel and LAUF 
experienced by certain interstate pipelines.\53\ For example, IOGA 
notes that one interstate pipeline serving the Appalachian basin 
recently made a filing with the Commission claiming that its actual 
gathering fuel and LAUF during a 12-month period was in excess of 11 
percent.\54\ IOGA asserts that pipeline recovery of fuel and LAUF 
should be minimized to the extent possible. If gas is disappearing 
between the wellhead and the interconnection between a pipeline's 
gathering and transmission facilities, IOGA argues that producers and 
shippers deserve to know why.\55\ IOGA further argues that, by 
increasing its ability to compare fuel and LAUF experienced among 
pipelines, the Commission will be better equipped to determine whether 
a given level of fuel and LAUF is unjust and unreasonable and whether 
the cost should be borne by the pipeline rather than by its 
customers.\56\
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    \53\ Id.
    \54\ Id.
    \55\ Id.
    \56\ Id.
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    27. Kansas Commission asserts that the information submitted on the 
Commission's financial forms is critical to the ability of shippers and 
other interested parties to assess pipeline rates, and as such should 
be as complete and detailed as practical.\57\
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    \57\ Kansas Commission Comments at 1.
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    28. TVA agrees with the June 2010 NOPR assertion that breaking down 
fuel costs and revenues associated with negotiated, discounted, or 
recourse rate structures by function will provide greater clarity on 
the justness and reasonableness of rates.\58\ In addition, TVA agrees 
that reporting the amount of

[[Page 4519]]

fuel by function that has been waived, discounted, or reduced as part 
of a negotiated rate agreement will allow for the determination of 
whether cross-subsidization is occurring, and thus, is critical to 
assessing the justness and reasonableness of the pipeline's fuel rates 
in the absence of mandated rate cases.\59\
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    \58\ TVA Comments at 2-3.
    \59\ Id. at 3.
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    29. Further, TVA hopes that the added transparency will encourage 
support for pipelines to develop, and customers to support, incentive 
fuel initiatives, as tracking mechanisms with a true-up process do 
little to promote capital investment for energy efficiency.\60\ In 
addition, it states that the proposed changes will add detail and 
promote transparency when considering the unknown impact of cost-
recovery resulting from potential carbon legislation requirements 
associated with monitoring and/or reporting greenhouse gas 
emissions.\61\
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    \60\ Id.
    \61\ Id.
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    30. INGAA, by contrast, would have the pipelines aggregate fuel use 
data by function along with the volume of fuel ``not collected.'' \62\ 
INGAA asserts that this approach has the benefit of focusing the 
additional fuel use reporting on the areas that gave rise to AGA's 
original concerns of fuel waivers and negotiated rate contracts that 
could present cross subsidy concerns.\63\
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    \62\ INGAA Comments at 2.
    \63\ Id. at 6. INGAA provides its recommended revisions for a 
revised page 521a in Appendix A to its comments.
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    31. Specifically, INGAA suggests the following revisions to page 
521a and b:

    (1) Lines 1-7: Total volume and the dollar value of shipper-
supplied fuel gas, by function, with volumes ``not collected'' 
because the otherwise applicable fuel rate was waived (column (d)) 
or because a negotiated fuel rate was less than the recourse rate 
(column (e)), along with the pertinent account(s) under the Uniform 
System of Accounts.
    (2) Lines 8-14: Total volume and dollar value of gas used in 
compressor stations, by function.
    (3) Lines 15-22: Same data for miscellaneous ``other 
deliveries'' and ``other operations.''
    (4) Lines 23-30: Same data for LAUF.
    (5) Lines 31-37: A calculation of the excess or deficiency by 
function.
    (6) Lines 38-51 and 52-65: Disposition of the excess or source 
of gas acquired to meet a deficiency.\64\
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    \64\ Id. at 7.

    32. INGAA also suggests that the Commission not include a separate 
reporting category for discounted rates because pipelines cannot 
discount the fuel use component of a discounted rate because it is a 
non-discountable variable cost.\65\
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    \65\ Id.
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    33. AGA responds that, as recognized in the June 2010 NOPR, the 
Commission has a policy against existing shippers subsidizing the 
negotiated rate program, and it notes that the June 2010 NOPR properly 
concluded that the information proposed to be required could be useful 
in identifying potential violations of that policy.\66\ AGA objects to 
INGAA's counterproposal, arguing that the NOPR proposal would increase 
the ability of the Commission and interested parties to assess whether 
a pipeline's existing shippers are subsidizing the pipeline's 
negotiated rate program, while INGAA's counterproposal would 
effectively delete much of the information sought in the June 2010 
NOPR.\67\
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    \66\ AGA Reply Comments at 2.
    \67\ Id.
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    34. AGA notes that INGAA argued in its comments that reporting fuel 
use data by customer contract would require pipelines to establish 
mechanisms for allocating fuel use among the types of contracts 
(negotiated, discounted, or recourse).\68\ AGA believes that it would 
be appropriate for pipelines to make those allocations transparent 
through the reporting requirements proposed in the NOPR.\69\
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    \68\ Id.
    \69\ Id.
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    35. Unless the pipeline itself provides its allocation methods on 
its financial forms, AGA argues that customers cannot adequately assess 
the costs and revenues associated with fuel charges to discounted and 
negotiated rate customers.\70\ Commission staff and interested parties 
cannot be expected to estimate or otherwise discern a pipeline's 
allocation scheme in the absence of information from the pipeline 
itself. Accordingly, AGA urges the Commission to require pipelines to 
report fuel costs and revenues by rate structure (discounted, 
negotiated, recourse) broken down by function as proposed in the June 
2010 NOPR.\71\ Thus, AGA supports the June 2010 NOPR proposal and urges 
the Commission to reject the proposals advanced by INGAA.\72\
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    \70\ Id.
    \71\ Id.
    \72\ Id.
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3. Commission Determination
    36. In Order No. 710-A, the Commission found that the detail sought 
by AGA might provide additional clarity with respect to fuel costs, but 
decided not to require the reporting of this information based on 
concerns over the burden associated with compliance with such a 
requirement.\73\ The Commission also declined to accept AGA's proposal 
to require natural gas pipelines to report details about the amount of 
fuel that they waived, discounted or reduced as part of a negotiated 
rate agreement based on concerns that this information might not be 
significant and might not be readily available, as many pipelines do 
not periodically file to adjust fuel rates and may not keep records of 
this type of information.\74\
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    \73\ Revisions to Forms, Statements, and Requirements for 
Natural Gas Pipelines Order No. 710-A, 123 FERC ] 61,278 at P 10.
    \74\ Id. P 11.
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    37. After consideration of the comments and reply comments to the 
June 2010 NOPR, the Commission finds that the additional information to 
be reported on pages 521a and 521b will allow users to match the 
revenues generated by the sale of excess fuel with the functionalized 
costs reported on page 520 and will allow users to better determine if 
there is a cross-subsidy, which is critical to assessing the justness 
and reasonableness of the pipeline's fuel rates particularly in the 
context of pipelines' negotiated rate program. We find that requiring 
the reporting of fuel costs and revenues by rate structure broken down 
by function will increase the ability of the Commission and interested 
parties to assess whether a pipeline's existing shippers are 
subsidizing the pipeline's negotiated rate program. Thus, we find that 
INGAA's proposal would effectively delete much of the valuable 
information sought in the June 2010 NOPR.
    38. The revised forms also will now allow the user to better 
determine where on the pipeline system fuel costs are being incurred 
and how they are being allocated. This added transparency, which is 
supported by the majority of the commenters, will ensure that the 
Commission and pipeline customers have sufficient information to be 
able to assess the justness and reasonableness of pipeline rates. The 
collection and public availability of this information is consistent 
with our goal of having sufficient information to allow the Commission 
and pipeline customers to assess the impact on pipeline rates of 
changing fuel costs.
    39. By contrast, if we adopted INGAA's suggestion to limit the 
revisions to FERC Form No. 2 to those originally proposed by AGA, then 
the benefits of increased transparency of rates, particularly within 
the negotiated rate program, which are described in the two preceding 
paragraphs, would not be

[[Page 4520]]

fully realized. The Commission's proposal better captures important 
information about a company's fuel use. The fact that this is not 
identical to that proposed by AGA to the September 2007 NOPR in no way 
refutes the usefulness of these data being reported and made available 
to the Commission and the public.
    40. Moreover, requiring the reporting by function of the amount of 
fuel waived, discounted or reduced as part of a negotiated rate 
agreement will enable pipeline customers to better determine if 
inappropriate cross-subsidization is occurring. The Commission has a 
policy that existing shippers must not subsidize the negotiated rate 
program; this additional information would be useful in identifying 
potential violations of that policy.\75\ The revised schedules adopted 
in this Final Rule will functionally disaggregate the fuel costs and 
revenues associated with each type of rate structure (i.e., negotiated, 
discounted, or recourse) to provide users with better information to 
assess the justness and reasonableness of a pipeline's fuel rates.
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    \75\ See Alternative to Traditional Cost-of-Service Ratemaking 
for Natural Gas Pipelines; Regulations of Negotiated Transportation 
Services of Natural Gas Pipeline (Alternative Rate Policy 
Statement), 74 FERC ] 61,076, at 61,242 (1996), order granting 
clarification, 74 FERC ] 61,194 (1996), and NorAm Gas Transmission 
Company, 77 FERC ] 61,011 (1996).
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    41. In this Final Rule, therefore, the Commission is revising the 
financial reporting forms required to be filed by natural gas companies 
(FERC Form Nos. 2, 2-A, and 3-Q) to include functionalized fuel data on 
pages 521a, 521b, and 521c of those forms, and to include on such forms 
the amount of fuel waived, discounted or reduced as part of a 
negotiated rate agreement. Specifically, the Commission is revising 
pages 521a and 521b in the following manner:

    (1) Expanding line 1 to separately reflect shipper supplied fuel 
by function (now shown on lines 1-7 on page 521a), i.e., production/
extraction/processing, gathering, transmission, distribution, and 
storage;
    (2) Expanding lines 2, 3, and 4 to separately list the volumes 
for each of these functions (now shown on lines 8-30 on page 
521a);\76\
---------------------------------------------------------------------------

    \76\ Lines 2-4 previously consisted of: (2) Less gas used in 
compressors; (3) Less gas used for other operational purposes 
(footnote); and (4) Less gas lost and unaccounted for.
---------------------------------------------------------------------------

    (3) Expanding the listing of volumes in columns (b), (c), and 
(d) to include discounted, negotiated and recourse rates;
    (4) Expanding line 6, net excess or deficiency, to separately 
list the volumes for each of these functions (now shown on lines 31-
37 on page 521b);
    (5) Expanding the reporting of dollar amounts in columns (f) 
through (i) to include amounts collected under discounted, 
negotiated and recourse rates;
    (6) Requiring the reporting of volumes of gas (in dekatherms) in 
columns (j) through (m) not collected where the request for that gas 
has been waived or reduced under discounted or negotiated rates; and
    (7) Directing filers (if the pipeline does not use a particular 
function) to enter a zero for that field.

    42. FERC Form Nos. 2, 2-A, and 3-Q involve estimates and 
allocations and the methods for making these allocations are to be 
documented in FERC Form Nos. 2, 2-A, and 3-Q. Thus, we will add an 
instruction to page 521a to require that companies disclose their fuel 
use allocation method(s) in a note to these financial forms.

C. Separate Reporting of Forwardhaul and Backhaul Throughput Volumes

1. Comments
    43. AGA favors further revisions to the forms to require interstate 
pipelines to separately report forwardhaul and backhaul throughput 
volumes associated with detailed fuel use, LAUF, and fuel collections 
data reported on the revised FERC Form No. 2.\77\ AGA cites a recent 
case involving the calculation of retention percentages for fuel use 
and LAUF where, it asserts, the Commission determined that additional 
data were required regarding forwardhaul and backhaul deliveries in 
order to properly determine a pipeline's level of fuel use.\78\
---------------------------------------------------------------------------

    \77\ AGA Comments at 1, 7-9.
    \78\ (Citing Columbia Gulf Transmission Co., 132 FERC ] 61,009, 
at P 38 (2010) (Columbia Gulf)).
---------------------------------------------------------------------------

    44. AGA argues that in Columbia Gulf the Commission stated that it 
was unable to determine whether the throughput figures set forth on 
page 305 of the pipeline's FERC Form No. 2 filings included or excluded 
backhaul volumes and that the Commission accordingly directed the 
pipeline to provide ``[f]orward haul and backhaul deliveries stated 
separately for the mainline, onshore, and offshore zones for each 
month'' for a specified period of time.\79\ AGA asserts that the 
Commission recognized in that case that accurate forwardhaul and 
backhaul throughput data are important for the Commission and shippers 
to properly assess fuel use and LAUF, and that the current FERC Form 
No. 2 is not adequate to collect the separate forwardhaul and backhaul 
throughput data needed to conduct a proper analysis of fuel use and 
lost and unaccounted for fuel costs.\80\
---------------------------------------------------------------------------

    \79\ AGA Comments at 8.
    \80\ Id.
---------------------------------------------------------------------------

    45. AGA maintains that the current rulemaking is the proper 
proceeding in which to consider this revision, even though it was not 
raised earlier, because the purpose of this proceeding is to revise the 
financial forms for interstate pipelines ``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.'' \81\
---------------------------------------------------------------------------

    \81\ Id. Revisions to Forms, Statements, and Reporting 
Requirements for Natural Gas Pipelines, citing Order No. 710, FERC 
Stats. & Regs. ] 31,267 at P 1.
---------------------------------------------------------------------------

    46. In its reply comments INGAA disagrees with AGA's proposal for 
an additional breakout of forwardhaul and backhaul data, arguing that 
this is neither practical nor necessary to achieve the Commission's 
FERC Form No. 2 reporting goals.\82\ In INGAA's view, the fact that 
this information was deemed important by the Commission in Columbia 
Gulf does not warrant a general requirement that it be reported across 
the industry on an ongoing basis.\83\ INGAA also notes that ``typically 
no fuel is used for backhaul volumes, although the Commission requires 
an allocation of LAUF gas [to] be attributed to backhauls.'' \84\
---------------------------------------------------------------------------

    \82\ INGAA Reply Comments at 2.
    \83\ Id.
    \84\ Id. at n.1.
---------------------------------------------------------------------------

    47. INGAA cautions that if the proposal involves the reporting of 
fuel retained and fuel used on backhaul volumes, this would present 
practical difficulties with respect to backhauls that use no compressor 
fuel (citing Mississippi River Transmission Corp., 98 FERC ] 61,119 at 
61,353 (2002) in this regard). However, INGAA agrees that these 
problems would not be present if the proposal only requires the 
reporting of forwardhaul and backhaul throughput volumes, which is all 
that is being required in this Final Rule.
    48. INGAA comments that, particularly on a reticulated pipeline, 
gas flows in each direction, depending on demand and storage 
operations, and there may be no specific or designated transportation 
path for many services, which makes reporting problematic or 
impossible.\85\ INGAA argues that the current gas system does not 
provide shippers with a set capacity path and that gas flows in each 
direction, depending on demand and storage, and this is why the 
Commission declined to adopt a generic requirement to establish

[[Page 4521]]

a path priority system in Order No. 637.\86\
---------------------------------------------------------------------------

    \85\ Id. at 3.
    \86\ Id. at 4.
---------------------------------------------------------------------------

    49. In addition, INGAA argues that a single transportation service 
can involve a combination of forwardhauls or backhauls; thus, 
classifying each dekatherm of transportation as forwardhaul or backhaul 
is impossible.\87\
---------------------------------------------------------------------------

    \87\ Id. at 4-5.
---------------------------------------------------------------------------

2. Commission Determination
    50. Currently FERC Form No. 2 does not require a distinction 
between forwardhaul and backhaul volumes. Since compressor fuel use is 
not assessed to backhaul volumes, it is inaccurate to include backhaul 
volumes for throughput.
    51. After consideration of all the arguments on this issue, we find 
that it would be informative and useful for pipelines to separately 
report their forwardhaul and backhaul volumes, because this would allow 
the Commission and customers to determine whether the fuel use being 
assigned to customers in their bills contain any cross-subsidies, based 
on the inclusion of backhaul volumes in their gas purchases, and thus 
help ensure that rates are just and reasonable. We also find that the 
benefits arising from this reporting, providing the opportunity to 
track fuel costs and examine cross-subsidies, outweigh the burden of 
reporting such data.
    52. As to INGAA's argument that it would not be possible, even for 
the services that are pathed, to classify each dekatherm of 
transportation as either forwardhaul or backhaul, we conclude that, for 
a majority of pipelines, this is not a significant problem. Many 
pipelines offer clearly defined backhaul services that are defined in 
their tariffs. In order to offer and, ultimately, provide that service, 
those pipelines must be able to determine the volumes for which the 
service is provided. However, some pipelines do not offer backhaul 
service, and for these pipelines it is reasonable to expect that 
backhaul volumes may not be able to be tracked. Therefore, the 
Commission will require reporting on this matter depending on the 
service identified in the tariff. If backhaul service is not offered 
under the tariff, the reporting pipeline may report as if the service 
it offers is entirely forwardhaul. The reporting pipeline must 
separately identify backhaul volumes only if it offers backhaul service 
in its tariff and provides this service to customers.

D. Clarification of Whether Additional Details on Fuel Use Only Apply 
in Instances Where Contract Provides for Discounted or Negotiated Fuel 
Rates

1. Comments
    53. MidAmerican comments that, to its knowledge, very few 
discounted and negotiated rate agreements include a provision for 
discounted or negotiated fuel.\88\ Thus, MidAmerican suggests that the 
Commission clarify that columns (b) and (c) of pages 521a and 521b and 
columns (f) and (g) of pages 521c and 521d include only contracts with 
discounted or negotiated fuel rates, and the column headings be revised 
to read ``Discounted Fuel Rate'' and ``Negotiated Fuel Rate.'' \89\
---------------------------------------------------------------------------

    \88\ MidAmerican Comments at 3.
    \89\ Id.
---------------------------------------------------------------------------

    54. MidAmerican further argues that the columns should only contain 
volumes related to agreements with discounted or negotiated fuel, not 
fuel volumes related to all discounted or negotiated agreements, if the 
purpose of the information is to determine if there is a cross 
subsidy.\90\
---------------------------------------------------------------------------

    \90\ Id.
---------------------------------------------------------------------------

2. Commission Determination
    55. In this Final Rule, we are requiring pipelines to report fuel 
use by function for all contracts involving discounted rates, 
negotiated rates, or recourse rates. We reject MidAmerican's proposal 
to only require the reporting of fuel costs in contracts where the fuel 
rate is discounted. Under MidAmerican's proposal, how a contract is 
structured would dictate whether it would be within the scope of the 
reporting requirements of this Final Rule and MidAmerican states that 
very few discounted and negotiated rate agreements include a provision 
for discounted or negotiated fuel. If this is so, or if future 
contracts are specifically written to make it so, then, under 
MidAmerican's proposal, many contracts that otherwise would be included 
in the reporting requirements would not be reported. This would have 
the consequence of diminishing the benefits of enhanced transparency 
that we hope to achieve with this Final Rule and thus we reject 
MidAmerican's suggestion.
    56. As to MidAmerican's suggestion that columns (b) and (c) on 
pages 521a and 521b, and columns (f) and (g) on pages 521c and 521d, 
should only contain volumes and dollars related to agreements with 
discounted or negotiated fuel, not fuel volumes or dollars related to 
discounted or negotiated agreements, for the reasons stated, we clarify 
that the amounts reported on pages 521a and 521b in columns (b) and (c) 
and on page 521c at columns (f) and (g) reflect shipper supplied gas 
collected under all discounted or negotiated rate agreements.\91\
---------------------------------------------------------------------------

    \91\ As discussed above, the revised forms we are adopting in 
this Final Rule do not include page 521d.
---------------------------------------------------------------------------

E. Monthly v. Quarterly Reporting

    57. As mentioned above, FERC Form Nos. 2 and 2-A are annual reports 
and FERC Form 3-Q is a quarterly report. In the June 2010 NOPR, the 
Commission invited comments on whether the data reported on FERC Form 
Nos. 2, 2-A, and 3-Q should be reported on a monthly or quarterly basis 
(i.e., whether the data should provide separate entries for each month, 
or one entry covering the entire quarter).
1. Comments
    58. AGA favors continuation of the requirement for monthly 
reporting of fuel use on page 521, asserting that important seasonal 
changes would be obscured by quarterly reporting.\92\ AGA states that 
the consumption of natural gas in the United States varies 
significantly from one month to the next and, while demand in the 
industrial sector is largely constant, demand in the residential and 
commercial sector is weather-driven and has a dramatic seasonal shape 
with a winter peak.\93\AGA also notes that demand in the power 
generation sector is weather sensitive with a summer peak, or in some 
cases bi-modal with both winter and summer peaks.\94\ AGA states that, 
because fuel is a variable cost and varies with consumption, the amount 
of fuel costs and revenues experienced by interstate pipelines varies 
by month and the fuel cost and revenue data of interstate pipelines 
does not fit neatly into calendar quarters. Consequently, significant 
variations in fuel data would be masked by fuel reporting only on a 
quarterly basis.\95\
---------------------------------------------------------------------------

    \92\ AGA Comments at 1, 6-7.
    \93\ Id. at 6.
    \94\ Id.
    \95\ Id.
---------------------------------------------------------------------------

    59. AGA further recommends that the fuel information on page 520 be 
reported on a monthly basis.\96\ AGA argues that, as the Commission 
noted in the June 2010 NOPR, the fuel information reported on page 520 
works in tandem with the information reported on page 521 and should 
allow a shipper to match the functionalized costs on page 520 with the 
functionalized

[[Page 4522]]

revenues on page 521.\97\ Having only quarterly information reported on 
page 520 would impede the ability of shippers and the Commission to 
match costs and revenues with the monthly information reported on page 
521.\98\ Therefore, AGA requests that page 520 of the financial reports 
be revised to add the appropriate columns to reflect the reporting of 
the information on that page on a monthly basis.\99\
---------------------------------------------------------------------------

    \96\ Id. at 7, AGA Reply Comments at 5, and AGA Further Reply 
Comments at 4.
    \97\ AGA Comments at 7.
    \98\ Id.
    \99\ Id.
---------------------------------------------------------------------------

    60. Associations also argue that providing shippers with access to 
detailed fuel information on a monthly basis, such as functionalized 
fuel data by rate type on FERC Form No. 2, would allow the Commission 
and shippers to ensure that fuel rates remain just and reasonable.\100\ 
Associations state that better information would also help the 
Commission and shippers to develop a Natural Gas Act (NGA), section 5 
complaint proceeding case and, further, would allow parties to confirm 
fuel tracker reports.\101\
---------------------------------------------------------------------------

    \100\ Associations Comments at 4.
    \101\ Id.
---------------------------------------------------------------------------

    61. IOGA urges the Commission to retain the requirement for the 
monthly filing of fuel data.\102\ In IOGA's experience, fuel and LAUF 
can vary significantly from month to month. Monthly breakdowns in FERC 
Form Nos. 2, 2-A, and 3-Q could provide valuable data that might be 
masked by aggregated quarterly data.\103\ IOGA notes that pipelines 
already report transportation and gathering quantities by month, and 
contends that quarterly reporting of fuel and LAUF as proposed by INGAA 
will foreclose accurate comparative analysis of the relationship 
between quantities shipped and fuel and LAUF on a monthly basis.\104\
---------------------------------------------------------------------------

    \102\ IOGA Comments at 3.
    \103\ Id.
    \104\ Id. at 4.
---------------------------------------------------------------------------

    62. IOGA further argues that, as pipelines track throughput, fuel 
and LAUF data monthly for invoicing and other purposes, a requirement 
to report fuel and LAUF by month will not pose additional 
administrative burden or expense.\105\
---------------------------------------------------------------------------

    \105\ Id.
---------------------------------------------------------------------------

    63. Kansas Commission believes that monthly reporting of this 
information is not necessary to provide the information required to 
effectively evaluate a pipeline's rates. Therefore, Kansas Commission 
supports INGAA's suggestion to change the reporting requirements to 
quarterly.\106\
---------------------------------------------------------------------------

    \106\ Kansas Commission Comments at 2.
---------------------------------------------------------------------------

    64. INGAA argues that the reporting requirements should be 
quarterly.\107\ INGAA comments that, because of weather events and 
anomalous events in the data, monthly data cannot provide an accurate 
picture or trend.\108\ INGAA also asserts that pipelines with storage 
assets or significant line pack do not need to dispose of excess fuel, 
so monthly data would not provide an accurate picture of fuel use.\109\
---------------------------------------------------------------------------

    \107\ INGAA Comments at 3.
    \108\ Id.
    \109\ Id. at 11.
---------------------------------------------------------------------------

    65. In response to INGAA, AGA argues that monthly reporting is 
preferable, because significant variations in fuel data can be masked 
by fuel reporting on a quarterly basis,\110\ and quarterly data cannot 
be disaggregated to obtain monthly information to determine what costs 
or revenues were experienced and by what functions. Only monthly fuel 
information will provide sufficient transparency to allow the 
Commission and interested parties to assess the justness and 
reasonableness of interstate pipeline fuel charges.\111\ AGA also notes 
that INGAA did not contradict AGA's observation that weather variations 
and the location of shipper-scheduled volumes on the pipeline from 
month to month have a substantial effect on fuel consumption.\112\
---------------------------------------------------------------------------

    \110\ AGA Reply Comments at 3.
    \111\ Id.
    \112\ Id.
---------------------------------------------------------------------------

2. Commission Determination
    66. In Order No. 710, the Commission eliminated FERC Form No. 11, 
the Natural Gas Pipeline Company Quarterly Statement of Monthly Data, 
and shifted the reporting of that information to FERC Form Nos. 2 and 
3-Q.\113\ We found that this fuel use information provides critical 
data for detecting trends, determining seasonal variation of fuel use, 
and testing the reasonableness of a pipeline's fuel costs. Upon further 
consideration of this issue in the instant docket, the Commission finds 
that monthly reporting provides greater transparency and provides more 
representative information about a pipeline's fuel use than quarterly 
reporting and we will retain this requirement.
---------------------------------------------------------------------------

    \113\  Revisions to Forms, Statements, and Reporting 
Requirements for Natural Gas Pipelines, Order No. 710, FERC Stats. & 
Regs. ] 31,267 at P 51, Order No. 710-A, 123 FERC ] 61,278 at P 3.
---------------------------------------------------------------------------

    67. Reporting data on a monthly basis provides more accurate 
accounting of fuel use, allowing for a better understanding of pipeline 
operations, and provides critical detail to understand how the pipeline 
treats its fuel. It would not be unexpected that a pipeline's operating 
parameters would change from January to March, from April to June, from 
July to September, or from October to December. It would seem counter 
to the interest of increased transparency to reduce the granularity of 
fuel use data over these periods. The monthly data are more 
representative of the pipeline's varying operations, enabling the 
transparency required by Order No. 710 to more fully evaluate a 
pipeline's fuel use and address the concerns of the remand. We conclude 
that moving to quarterly reporting would gloss over natural gas monthly 
fluctuations, thus distorting what actually occurred during the 
reporting period. Thus, we find that fuel use data should continue to 
be reported on a monthly basis, and not on a quarterly basis.
    68. As to AGA's proposal to modify page 520 to have respondent 
companies report transmission throughput volumes on a monthly basis, we 
note that AGA did not provide specific reasons supporting the 
imposition of this requirement. Currently, page 520 only requires that 
transmission volumes be reported on a quarter and year to date basis 
and we see no need to revise this requirement. The reporting of 
transmission volume throughput and the reporting of fuel data are 
separate matters and the additional information to be provided on fuel 
use does not provide a reason to further break down transportation 
volume throughput. Thus, we find that the quarterly separation of that 
data is sufficient and we will not impose the additional burden on 
filers to break down these data in the absence of demonstrated 
benefits.

F. Burden

1. Comments
    69. AGA, APGA, and Kansas Commission comment that the burden of 
producing and reporting the additional details on fuel use proposed in 
the June 2010 NOPR is both small and justified.\114\ By contrast, INGAA 
finds the June 2010 NOPR proposal unduly burdensome.\115\
---------------------------------------------------------------------------

    \114\ See, e.g., AGA Comments at 5.
    \115\ INGAA Comments at 3.
---------------------------------------------------------------------------

    70. Specifically, APGA comments that pipelines should have this 
information readily available because they maintain it for their own 
purposes.\116\ Given the potential benefit of the information and the 
relatively low compliance burden on pipelines, APGA supports the 
Commission's proposal to require pipelines to report the amount of fuel

[[Page 4523]]

waived, discounted or reduced as part of negotiated rate 
agreements.\117\
---------------------------------------------------------------------------

    \116\ APGA Comments at 3.
    \117\ Id. at 4.
---------------------------------------------------------------------------

    71. Kansas Commission states that the benefits of the additional 
reporting outweigh any burden that might be placed on the reporting 
pipelines.\118\ Given that pipelines already functionalize this data 
for ratemaking purposes, Kansas Commission concludes that the burden on 
pipelines will be minimal.\119\
---------------------------------------------------------------------------

    \118\ Kansas Commission Comments at 1.
    \119\ Id.
---------------------------------------------------------------------------

    72. Kansas Commission further argues that, in the absence of a 
mandatory requirement for pipelines to periodically restate their base 
tariff rates, the Commission must rely on section 5 of the NGA to 
police pipeline rates. Under these circumstances, the need for 
functionalized data is heightened.\120\ Without functionalized data, 
shippers and other interested parties cannot determine whether a 
pipeline is cross-subsidizing service, and the efficacy of the NGA 
section 5 complaint process is undermined.\121\ Accordingly, the Kansas 
Commission supports the Commission's proposal to require functionalized 
fuel data to be included on pages 521a and 521b of FERC Form No. 
2.\122\ Kansas Commission also supports the Commission's proposal to 
require pipelines to report the amount of fuel waived, discounted or 
reduced as part of a negotiated rate agreement.\123\
---------------------------------------------------------------------------

    \120\ Id. at 2.
    \121\ Id.
    \122\ Id.
    \123\ Id.
---------------------------------------------------------------------------

    73. INGAA maintains that the Commission's proposal is unnecessarily 
burdensome.\124\ First, INGAA maintains that it is difficult for 
pipelines to track fuel use by individual contract or contract type 
because pipelines operate on an integrated basis.\125\ Second, INGAA 
asserts that it would require substantially more information than would 
be provided under this proposal to enable FERC Form No. 2 users to 
monitor potential cross-subsidy concerns.\126\ Third, INGAA comments 
that pipelines will have to establish a mechanism for allocating fuel 
use between or among services and contracts.\127\
---------------------------------------------------------------------------

    \124\ INGAA Comments at 2.
    \125\ Id. at 2.
    \126\ Id.
    \127\ Id.
---------------------------------------------------------------------------

2. Commission Determination
    74. The Commission finds that fuel use data on a functionalized 
basis is needed to obtain the transparency necessary to ensure just and 
reasonable rates. Additionally, we find that this reporting requirement 
is not unnecessarily burdensome. Currently, pipelines that file annual 
fuel use trackers assign fuel to their individual shippers. In this 
Final Rule, the Commission is not imposing any additional reporting 
requirements that change how those pipelines track fuel. Pipeline 
billings are provided on an integrated basis, accounting for sales 
based on whether the volumes are negotiated, recourse, or discounted. 
Moreover, contrary to INGAA's assertions, the Commission is not 
requiring pipelines to track fuel by individual contracts, but merely 
continuing the current practice of requiring the assignment of fuel 
based on an allocation of throughput or stated fuel rate. The revisions 
to page 521a through 521c require the same accounting mechanism for 
fuel, enabling parties to better understand how fuel use costs are 
assigned.
    75. The Commission in the June 2010 NOPR estimated the annual 
burden to comply with the requirements established in Docket No. RM07-
9-003 while inviting comments on the cost to comply with the proposed 
requirements. We estimated that the additional collection costs would 
not be overly burdensome.\128\ The Commission provided its best 
estimate of the time required to complete page 521a through 521d. No 
party presented data contradicting the Commission's estimate. While 
INGAA contends that the proposal is burdensome, INGAA did not identify 
any inaccuracies in the Commission's estimate, did not quantify its own 
estimate of the impact of reporting fuel on a functionalized basis, and 
did not provide any support for its contention that functionalizing 
fuel would be burdensome to the pipelines. In this Final Rule, as 
discussed above, we are adding a requirement to report information on 
forwardhauls and backhauls and we are revising our burden estimate to 
account for this requirement. The Commission finds that, even with this 
minor additional reporting requirement, the benefits of enhanced 
transparency provided by the additional reporting proposed in the June 
2010 NOPR outweigh the burden placed on the pipelines. Further, we find 
that our estimated burden hours (as adjusted) are small and reasonable, 
and we will continue to require fuel to be reported on a functionalized 
basis.
---------------------------------------------------------------------------

    \128\ June 2010 NOPR, FERC Stats. & Regs. ] 32,659 at P 19.
---------------------------------------------------------------------------

G. Implementation Date

1. Comments
    76. AGA contends that the new rules should apply to the financial 
forms that are required to be filed beginning in calendar year 
2011.\129\ AGA states that the annual financial reports (FERC Form Nos. 
2 and 2-A) showing data for calendar year 2010 would be required to be 
filed on April 18, 2011. Quarterly financial reports (FERC Form No. 3-
Q) would be required to be filed 60 days (for major pipelines) or 70 
days (for non-major pipelines) after the end of the reporting quarter. 
Thus, the first quarterly financial reports in 2011 would be due March 
1, 2011 (for majors) and March 10, 2011 (for non-majors), based on 
fourth quarter 2010 data.\130\
---------------------------------------------------------------------------

    \129\ AGA Comments at 5-6.
    \130\ Id. at 6.
---------------------------------------------------------------------------

    77. INGAA comments that changes to FERC Form No. 2 should be 
prospective.\131\ It states that this approach will provide pipelines 
adequate time to put data collection software in place.\132\ In 
addition, it states that implementing the changes prospectively will 
allow time for pipelines to complete any engineering or other 
operational studies that might be needed for pipelines that do not 
already have accounting systems in place to make reasonably accurate 
estimates.\133\ INGAA urges that pipelines be permitted to collect any 
additional data the Commission may require in 2011, with reporting to 
begin in 2012.\134\
---------------------------------------------------------------------------

    \131\ INGAA Comments at 3.
    \132\ Id. at 12.
    \133\ Id.
    \134\ INGAA Reply Comments at 2.
---------------------------------------------------------------------------

2. Commission Determination
    78. We conclude that the information to be reported under this 
Final Rule may require some companies to revise accounting systems to 
accurately allocate fuel use. While this is already reflected in the 
burden estimate, we nonetheless will revise the implementation schedule 
that we proposed in the June 2010 NOPR to address this concern. 
Additionally, we are not requiring companies subject to this Final Rule 
to refile the FERC Form Nos. 2, 2-A, and 3-Q that they have already 
filed.
    79. Companies subject to these new requirements must begin 
collecting the more detailed data starting on July 1, 2011, and must 
use that data in completing their FERC Form Nos. 2, 2-A, and 3-Q 
thereafter. The revised data requirements would first be reflected in 
the FERC Form No. 3-Q filings for the

[[Page 4524]]

period July 1 through September 30, 2011, which must be filed within 60 
days of the end of the reporting quarter for majors and within 70 days 
of the end of the reporting quarter for non-majors (i.e., by November 
29, 2011 for majors and December 9, 2011 for non-majors) and in the 
FERC Form Nos. 2 and 2-A filings for 2011, which must be filed by April 
18, 2012.\135\
---------------------------------------------------------------------------

    \135\ See 18 CFR 260.300(b)(2)(vii), 18 CFR 260.1(b)(2), and 18 
CFR 260.2(b)(2).
---------------------------------------------------------------------------

    80. As noted above,\136\ page 521 only reports fourth quarter data 
and not yearly data. By contrast, page 520 gives yearly totals. 
However, while page 520 currently breaks down LAUF into several 
subcategories, the revised page 520 adopted in this Final Rule combines 
these subcategories into a single total that is reported on line 32 of 
the revised page 520. Thus, the FERC Form Nos. 2 and 2-A, filings for 
2011, which must be filed by April 18, 2012, should report LAUF as a 
single line item on line 32, and should not report the breakdowns of 
these data for the first six months of the reporting year.
---------------------------------------------------------------------------

    \136\ See n.8, supra.
---------------------------------------------------------------------------

III. Information Collection Statement

    81. The Office of Management and Budget's (OMB) regulations require 
approval of certain information collection requirements imposed by 
agency rules.\137\ Previously, the Commission submitted to OMB the 
information collection requirements arising from Order No. 710 and OMB 
approved those requirements.\138\ The revisions to FERC Form Nos. 2, 2-
A, and 3-Q adopted in this Final Rule consist of giving additional 
details about certain fuel cost data that the Commission already 
required to be reported in less detail in Order No. 710.
---------------------------------------------------------------------------

    \137\ 5 CFR 1320.11.
    \138\ OMB approved the information collections prescribed in 
Order No. 710 on June 27, 2008 for FERC Form No. 2 (OMB Control No. 
1902-0028, ICR 200804-1902-005) and FERC Form No. 2-A (OMB 
Control No. 1902-0030, ICR 200804-1902-007) and on Oct. 8, 
2008 for FERC Form No. 3-Q (OMB Control No. 1902-0205, ICR 
200804-1902-008).
---------------------------------------------------------------------------

    82. The Commission is submitting the information collection 
requirements imposed in this Final Rule to OMB for review and approval 
under section 3507(d) of the Paperwork Reduction Act of 1995.\139\ 
Comments are solicited on the Commission's need for this information, 
whether the information will have practical utility, the accuracy of 
the burden estimates, ways to enhance the quality, utility, and clarity 
of the information to be collected, and any suggested methods of 
minimizing respondent's burden, including the use of automated 
information techniques.
---------------------------------------------------------------------------

    \139\ 44 U.S.C. 3507(d).
---------------------------------------------------------------------------

    83. This Final Rule affects the following existing data 
collections:
    Title: FERC Form No. 2, ``Annual Report for Major Natural Gas 
Companies''; FERC Form No. 2-A, ``Annual Report for Nonmajor Natural 
Gas Companies''; FERC Form No. 3-Q, ``Quarterly Financial Report of 
Electric Utilities, Licensees, and Natural Gas Companies.''
    Action: Proposed information collection.
    OMB Control Nos. 1902-0028 (FERC Form No. 2); 1902-0030 (FERC Form 
No. 2-A); and 1902-0205 (FERC Form No. 3-Q).
    Respondents: Businesses or other for profit.
    Frequency of responses: Annually (FERC Form Nos. 2 and 2-A) and 
quarterly (FERC Form No. 3-Q).
    Necessity of the information: The information maintained and 
collected under the requirements of 18 CFR 260.1, 18 CFR 260.2, and 18 
CFR 260.300 is essential to the Commission's oversight duties. The data 
now reported in the forms does not provide sufficient information to 
the Commission and the public to permit an evaluation of the filers' 
jurisdictional rates. Since the triennial restatement of rates 
requirement was abolished and pipelines are no longer required to 
submit this information, the need for current and relevant data is 
greater than in the past. The information collection required by this 
Final Rule will increase the forms' usefulness to both the public and 
the Commission.
    84. Without this information, it is difficult for the Commission 
and the public to perform an assessment of pipeline costs, and thereby 
help to ensure that rates are just and reasonable. The pipelines should 
already have this information readily available for their own use in 
developing separately stated fuel rates in their tariffs. In any event, 
we believe this additional information will allow the Commission and 
form users to better analyze pipeline fuel costs, an important 
component in assessing the justness and reasonableness of pipelines' 
rates.
    Burden Statement: The Commission estimates that on average it will 
take each respondent six additional hours per collection to comply with 
the proposed requirements.\140\ Most of the additional information 
required to be reported is already compiled and maintained by the 
pipelines. This proposal will increase the burden hours as follows:
---------------------------------------------------------------------------

    \140\ We revised this number from five hours to six hours to 
reflect our additional requirement to report information on 
forwardhauls and backhauls.

----------------------------------------------------------------------------------------------------------------
                                                                                                  Change in the
                                              Number of       Change in the                       total annual
          Data collection form               respondents     number of hours  Filings per year   hours for this
                                                             per respondent                           form
----------------------------------------------------------------------------------------------------------------
FERC Form No. 2.........................                84                 6                 1               504
FERC Form No. 2-A.......................                44                 6                 1               264
FERC Form No. 3-Q.......................               128                 6                 3              2304
                                         -----------------------------------------------------------------------
    Totals..............................  ................  ................  ................              3072
----------------------------------------------------------------------------------------------------------------

    Information Collection Costs: 3072 hours at $120/hour = $368,640.
    85. Given that none of the commenters identified any errors or 
inaccuracies in the estimates we used in the June 2010 NOPR, we will 
adopt these same estimates in this Final Rule, with the exception that 
we are adjusting our estimate to account for our requirement to report 
on forwardhauls and backhauls. At paragraphs 73-74 above, we address 
and reject INGAA's contention that certain parts of our proposal would 
be burdensome.
    86 Internal Review: The Commission has reviewed the proposed 
changes and has determined that the changes are necessary. These 
requirements conform to the Commission's need for efficient information 
collection, communication, and management within the energy industry. 
The Commission has assured itself, by means of internal review, that 
there is specific, objective support associated with the information 
requirements.

[[Page 4525]]

    87. Interested persons may obtain information on the reporting 
requirements by contacting: Federal Energy Regulatory Commission, 888 
First Street, NE., Washington, DC 20426 [Attention: Ellen Brown, Office 
of the Executive Director, phone (202) 502-8663, fax: (202) 273-0873, 
e-mail: DataClearance@ferc.gov. For submitting comments concerning the 
collections of information and the associated burden estimates, please 
send your comments to the contact listed above and to the Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
725 17th Street, NW., Washington, DC 20503 [Attention: Desk Officer for 
the Federal Energy Regulatory Commission, phone: (202) 395-4638, fax: 
(202) 395-7285]. Due to security concerns, comments should be sent 
electronically to the following e-mail address: oira_submission@omb.eop.gov. Please refer to OMB Control Nos. 1902-0028 
(FERC Form No. 2), 1902-0030 (FERC Form No. 2-A), and 1902-0205 (FERC 
Form No. 3-Q), and the docket number of this Final Rule in your 
submission.

IV. Environmental Analysis

    88. 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.\141\ 
However, in 18 CFR 380.4(a)(5), we categorically excluded the type of 
information gathering required in this Final Rule from the requirement 
to prepare an environmental impact statement. Thus, we affirm the 
finding we made in the June 2010 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.
---------------------------------------------------------------------------

    \141\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, FERC Stats. & Regs., Regulations Preambles 1986-
1990 ] 30,783 (1987).
---------------------------------------------------------------------------

V. Regulatory Flexibility Act

    89. The Regulatory Flexibility Act of 1980 (RFA) \142\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small 
entities.\143\ 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.
---------------------------------------------------------------------------

    \142\ 5 U.S.C. 601-612.
    \143\ 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 parts 121, 201.
---------------------------------------------------------------------------

    90. The Commission estimates that there are 84 Major natural gas 
pipeline companies and 44 Non-major companies that will be affected by 
the Final Rule.\144\ As we stated in the June 2010 NOPR, this Final 
Rule will apply to all interstate natural gas companies subject to the 
Commission's jurisdiction. While we do not foresee that this Final 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. Moreover, our 
most recent information shows that only six natural gas companies not 
affiliated with a large natural gas company fall within the definition 
of a small entity and these six entities constitute only 4.7 percent of 
the 128 total companies.
---------------------------------------------------------------------------

    \144\ These numbers are based on the most recent filings.
---------------------------------------------------------------------------

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

VI. Document Availability

    92. 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 FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    93. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field.
    94. User assistance is available for eLibrary and the FERC's Web 
site during normal business hours from FERC Online Support at 202-502-
6652 (toll free at 1-866-208-3676) or e-mail at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. E-mail the Public Reference Room at 
public.referenceroom@ferc.gov.

VII. Effective Date and Congressional Notification

    95. These regulations are effective February 25, 2011. Companies 
subject to the requirements of this Final Rule must comply with the 
requirements of this rule in accordance with the implementation 
timeline prescribed in this preamble. The Commission has determined 
(with the concurrence of the Administrator of the Office of Information 
and Regulatory Affairs of OMB) that this rule is not a ``major rule'' 
as defined in section 351 of the Small Business Regulatory Enforcement 
Fairness Act of 1996.

List of Subjects in 18 CFR Part 260

    Natural gas, Reporting and recordkeeping requirements.

    By the Commission.
Nathaniel J. Davis, Sr.,
Deputy Secretary.

Appendix--

List of Commenters on June 2010 NOPR

(And Abbreviations Used To Identify Them)

Comments

American Gas Association (AGA)
American Public Gas Association (APGA)
Independent Oil & Gas Association of West Virginia (IOGA)
Interstate Natural Gas Association of America (INGAA)
Kansas Corporation Commission (Kansas Commission)
Natural Gas Supply Association, Independent Petroleum Association of 
America, Electric Power Supply Association and Process Gas Consumers 
Group (collectively, Associations)
Northern Natural Gas Company and Kern Gas Transmission Company 
(collectively, MidAmerican)
Tennessee Valley Authority (TVA)

Reply Comments

AGA
INGAA
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