18 CFR 154 Subpart E

Federal Energy Regulatory Commission
(11) Schedule H–1. Workpapers for Expense Accounts. Furnish workpapers
for the 12 months of actual experience
and claimed adjustments and analytical details as set forth in § 154.312,
Schedule H–1 (3).
(12) Schedule H–2. Depreciation, Depletion, Amortization and Negative
Salvage Expenses. Show, separately,
the gas plant depreciation, depletion,
amortization, and negative salvage expenses by functional classifications.
For each functional plant classification, show depreciation reserve associated with offshore and onshore plant
separately. The bases, methods, essential computations, and derivation of
unit rates for the calculation of depreciation, depletion, amortization, and
negative salvage expenses for actual
experience must be explained.
(13) Schedule H–3. Income Tax Allowances Computed on the Basis of the
Rate of Return Claimed. Show the
computation of allowances for Federal
and State income taxes based on the
claimed return applied to the overall
gas utility rate base.
(14) Schedule H–3 (1). This schedule is
part of the workpapers. Show the computation of an updated reconciliation
between book depreciable plant and tax
depreciable plant and accumulated provision for deferred income taxes, for
the base period or latest calendar or
fiscal year (depending on the company’s reporting period).
(15) Schedule H–4. Other Taxes. Show
the gas utility taxes, other than Federal or state income taxes in separate
columns, as follows: Tax expense per
books for the 12 months of actual experience;) adjustments, if any, to
amounts booked; and, the total adjusted taxes claimed. Provide the details of the kind and amount of taxes
paid under protest or in connection
with taxes under litigation. The taxes
must be shown by states and by kind of
taxes. Explain all adjustments.
§ 154.314 Other support for a filing.
(a) Any company filing for a rate
change is responsible for preparing
prior to filing, and maintaining,
workpapers sufficient to support the
filing.
(b) If the natural gas company has relied upon data other than those in

§ 154.401
Statements A through P in § 154.312 in
support of its general rate change, such
other data must be identified and submitted.
§ 154.315 Asset retirement obligations.
(a) A natural gas company that files
a tariff change under this part and has
recorded an asset retirement obligation
on its books must provide a schedule,
as part of the supporting workpapers,
identifying all cost components related
to the asset retirement obligations
that are included in the book balances
of all accounts reflected in the cost of
service computation supporting the
proposed rates. However, all cost components related to asset retirement obligations that would impact the calculation of rate base, such as gas plant
and related accumulated depreciation
and accumulated deferred income
taxes, may not be reflected in rates and
must be removed from the rate base
calculation through a single adjustment.
(b) A natural gas company seeking to
recover nonrate base costs related to
asset retirement obligations in rates
must provide, with its filing under
§ 154.312 or § 154.313, a detailed study
supporting the amounts proposed to be
collected in rates.
(c) A natural gas company who has
recorded asset retirement obligations
on its books but is not seeking recovery of the asset retirement costs in
rates, must remove all asset retirement obligations related cost components from the cost of service supporting its proposed rates.
[Order 631, 68 FR 19622, Apr. 21, 2003]

Subpart E—Limited Rate Changes
§ 154.400 Additional requirements.
In addition to the requirements of
subparts A, B, and C of this part, any
proposal to implement a limited rate
change must comply with this subpart.
§ 154.401 RD&D expenditures.
(a) Requirements. Upon approval by
the Commission, a natural gas company may file to recover research, development, and demonstration (RD&D)
expenditures in its rates under this
subpart.

569

VerDate Mar<15>2010

17:59 May 28, 2014

Jkt 232061

PO 00000

Frm 00579

Fmt 8010

Sfmt 8010

Q:\18\18V1.TXT

ofr150

PsN: PC150

§ 154.402

18 CFR Ch. I (4–1–14 Edition)

(b) Applications for rate treatment approval. (1) An application for advance
approval of rate treatment may be
filed by a natural gas company for
RD&D expenditures related to a project
or group of projects undertaken by the
company or as part of a project undertaken by others. When more than one
company supports an RD&D organization, the RD&D organization may submit an application that covers the organization’s RD&D program. Approval
by the Commission of such an RD&D
application and program will constitute approval of the individual companies’ contributions to the RD&D organization.
(2) An application for advance approval of rate treatment must include
a 5-year program plan and must be
filed at least 180 days prior to the commencement of the 5-year period of the
plan.
(3) A 5-year program plan must include at a minimum:
(i) A statement of the objectives for
the 5-year period that relates the objectives to the interests of ratepayers,
the public, and the industry and to the
objectives of other major research organizations.
(ii) Budget, technical, and schedule
information in sufficient detail to explain the work to be performed and
allow an assessment of the probability
of success and a comparison with other
organizations’ research plans.
(iii) The commencement date, expected termination date, and expected
annual costs for individual RD&D
projects to be initiated during the first
year of the plan.
(iv) A discussion of the RD&D efforts
and progress since the preparation of
the program plan submitted the previous year and an explanation of any
changes that have been made in objectives, priorities, or budgets since the
plan of the previous year.
(v) A statement identifying all jurisdictional natural gas companies that
will support the program and specifying the amounts of their budgeted
support.
(vi) A statement identifying those
persons involved in the development,
review, and approval of the plan and
specifying the amount of effort con-

tributed and the degree of control exercised by each.
(c) Applications must describe the
RD&D projects in such detail as to satisfy the Commission that the RD&D
expenditures qualify as valid, justifiable, and reasonable.
(d) Within 120 days of the filing of an
application for rate treatment approval and a 5-year program plan, the
Commission will state its decision with
respect to acceptance, partial acceptance, or rejection of the plan, or, when
the complexity of issues in the plan so
requires, will set a date certain by
which a final decision will be made, or
will order the matter set for hearing.
Partial rejection of a plan by the Commission will be accompanied by a decision as to the partial level of acceptance which will be proportionally applied to all contributions listed for jurisdictional companies in the plan. Approval by the Commission of a 5-year
plan constitutes approval for rate
treatment of all projects identified as
starting during the first year of the approved plan. Continued rate treatment
will depend upon review and evaluation
of subsequent annual applications and
5-year program plans.
§ 154.402 ACA expenditures.
(a) Requirements. Upon approval by
the Commission, a natural gas pipeline
company may adjust its rates, annually, to recover from its customers annual charges assessed by the Commission under part 382 of this chapter pursuant to an annual charge adjustment
clause (ACA clause). Prior to the start
of each fiscal year, the Commission
will post on its Web site the amount of
annual charges to be flowed through
per unit of energy sold or transported
(ACA unit charge) for that fiscal year.
A company’s ACA clause must be filed
with the Commission and must incorporate by reference the ACA unit
charge for the upcoming fiscal year as
posted on the Commission’s Web site. A
company must incorporate by reference the ACA unit charge posted on
the Commission’s Web site in each of
its rate schedules applicable to sales or
transportation deliveries. The company
must apply the ACA unit charge posted
on the Commission’s Web site to the
usage component of rate schedules

570

VerDate Mar<15>2010

17:59 May 28, 2014

Jkt 232061

PO 00000

Frm 00580

Fmt 8010

Sfmt 8010

Q:\18\18V1.TXT

ofr150

PsN: PC150

Federal Energy Regulatory Commission
with two-part rates. A company may
recover annual charges through an
ACA unit charge only if its rates do
not otherwise reflect the costs of annual charges assessed by the Commission under § 382.106(a) of this chapter.
The applicable annual charge, required
by § 382.103 of this chapter, must be
paid before the company applies the
ACA unit charge. Upon payment to the
Commission of its annual charges, the
ACA unit charge for that fiscal year
will be incorporated by reference into
the company’s tariff, effective throughout that fiscal year.
(b) Application for rate treatment authorization. A company seeking authorization to use an ACA unit charge must
file with the Commission a separate
ACA tariff record containing:
(1) A statement that the company is
collecting an ACA unit charge, as calculated by the Commission, applicable
to all the pipeline’s sales and transportation rate schedules,
(2) A statement that the ACA unit
charge, as revised annually and posted
on the Commission’s Web site, is incorporated by reference into the company’s tariff,
(3) For companies with existing ACA
clauses, a proposed effective date of the
tariff change of October 1 of the fiscal
year; for companies seeking to utilize
an ACA clause after October 1 of the
fiscal year, a proposed effective date 30
days after the filing of the tariff
record, unless a shorter period is specifically requested in a waiver petition
and approved), and
(4) A statement that the pipeline will
not recover any annual charges recorded in FERC Account 928 in a proceeding under subpart D of this part.
(c) Changes to the ACA unit charge
must be filed annually, to reflect the
annual charge unit rate authorized by
the Commission each fiscal year.
[Order 582, 60 FR 52996, Oct. 11, 1995, as
amended by Order 714, 73 FR 57535, Oct. 3,
2008; Order 776, 78 FR 19412, Apr. 1, 2013]

§ 154.403

Periodic rate adjustments.

(a) This section applies to the passthrough, on a periodic basis, of a single
cost item or revenue item for which
passthrough is not regulated under another section of this subpart, and to re-

§ 154.403
visions on a periodic basis of a gas reimbursement percentage.
(b) Where a pipeline recovers fuel use
and unaccounted-for natural gas in
kind, the fuel reimbursement percentage must be stated in the tariff either
on the tariff sheet stating the currently effective rate or on a separate
tariff sheet or section in such a way
that it is clear what amount of natural
gas must be tendered in kind for each
service rendered.
(c) A natural gas company that
passes through a cost or revenue item
or adjusts its fuel reimbursement percentage under this section, must state
within the general terms and conditions of its tariff, the methodology and
timing of any adjustments. The following must be included in the general
terms and conditions:
(1) A statement of the nature of the
revenue or costs to be flowed through
to the customer;
(2) A statement of the manner in
which the cost or revenue will be collected or returned, whether through a
surcharge, offset, or otherwise;
(3) A statement of which customers
are recipients of the revenue credit and
which rate schedules are subject to the
cost or fuel reimbursement percentage;
(4) A statement of the frequency of
the adjustment and the dates on which
the adjustment will become effective;
(5) A step-by-step description of the
manner in which the amount to be
flowed through is calculated and a
step-by-step
description
of
the
flowthrough mechanism, including how
the costs are classified and allocated.
Where the adjustment modifies a rate
established under subpart D of this
part, the methodology must be consistent with the methodology used in
the proceeding under subpart D of this
part;
(6) Where costs or revenue credits are
accumulated over a past period for
periodic recovery or return, the past
period must be defined and the mechanism for the recovery or return must
be detailed on a step-by-step basis.
Where the natural gas company proposes to use a surcharge to clear an account in which the difference between
costs or revenues, recovered through
rates, and actual costs and revenues

571

VerDate Mar<15>2010

17:59 May 28, 2014

Jkt 232061

PO 00000

Frm 00581

Fmt 8010

Sfmt 8010

Q:\18\18V1.TXT

ofr150

PsN: PC150

§ 154.403

18 CFR Ch. I (4–1–14 Edition)

accumulate, a statement must be included detailing, on a step-by-step
basis, the mechanism for calculating
the entries to the account and for passing through the account balance.
(7) Where carrying charges are computed, the calculations must be consistent with the methodology and reporting requirements set forth in
§ 154.501 using the carrying charge rate
required by that section. A natural gas
company must normalize all income
tax timing differences which are the
result of differences between the period
in which expense or revenue enters into
the determination of taxable income
and the period in which the expense or
revenue enters into the determination
of pre-tax book income. Any balance
upon which the natural gas company
calculates carrying charges must be
adjusted for any recorded deferred income taxes.
(8) Where the natural gas company
discounts the rate component calculated pursuant to this section, explain on a step-by-step basis how the
natural gas company will adjust for
rate discounts in its methodology to
reflect changes in costs under this section.
(9) If the costs passed through under
a mechanism approved under this section are billed by an upstream natural
gas company, explain how refunds received from upstream natural gas companies will be passed through to the
natural gas company’s customers, including the allocation and classification of such refunds;
(10) A step-by-step explanation of the
methodology used to reflect changes in
the fuel reimbursement percentage, including the allocation and classification of the fuel use and unaccountedfor natural gas. Where the adjustment
modifies a fuel reimbursement percentage established under subpart D of this
part, the methodology must be consistent with the methodology used in
the proceeding under subpart D of this
part;
(11) A statement of whether the difference between quantities actually
used or lost and the quantities retained
from the customers for fuel use and
loss will be recovered or returned in a
future surcharge. Include a step-bystep explanation of the methodology

used to calculate such surcharge. Any
period during which these differences
accumulate must be defined.
(d) Filing requirements. (1) Filings
under this section must include:
(i) A summary statement showing
the rate component added to each rate
schedule with workpapers showing all
mathematical calculations.
(ii) If the filing establishes a new fuel
reimbursement percentage or surcharge, include computations for each
fuel reimbursement or surcharge calculated, broken out by service, classification, area, zone, or other subcategory.
(iii) Workpapers showing the allocation of costs or revenue credits by rate
schedule and step-by-step computations supporting the allocation, segregated into reservation and usage
amounts, where appropriate.
(iv) Where the costs, revenues, rates,
quantities, indices, load factors, percentages, or other numbers used in the
calculations are publicly available, include references by source.
(v) Where a rate or quantity underlying the costs or revenue credits is
supported by publicly available data
(such as another natural gas company’s
tariff or EBB), the source must be referenced to allow the Commission and
interested parties to review the source.
If the rate or quantity does not match
the rate or quantity from the source
referenced, provide step-by-step instructions to tie the rate in the referenced source to the rate in the filing.
(vi) Where a number is derived from
another number by applying a load factor, percentage, or other adjusting factor not referenced in paragraph (d)(1)(i)
of this section, include workpapers and
a narrative to explain the calculation
of the adjusting factor.
(2) If the natural gas company is adjusting its rates to reflect changes in
transportation and compression costs
paid to others:
(i) The changes in transportation and
compression costs must be based on the
rate on file with the Commission. If the
rate is not on file with the Commission
or a discounted rate is paid, the rate
reflected in the filing must be the rate
the natural gas company is contractually obligated to pay;

572

VerDate Mar<15>2010

17:59 May 28, 2014

Jkt 232061

PO 00000

Frm 00582

Fmt 8010

Sfmt 8010

Q:\18\18V1.TXT

ofr150

PsN: PC150

Federal Energy Regulatory Commission
(ii) The filing must include appropriate credits for capacity released
under § 284.243 of this chapter with
workpapers showing the quantity released, the revenues received from the
release, the time period of the release,
and the natural gas pipeline on which
the release took place; and,
(iii) The filing must include a statement of the refunds received from each
upstream natural gas company which
are included in the rate adjustment.
The statement must conform to the requirements set forth in § 154.501.
(3) If the natural gas company is reflecting changes in its fuel reimbursement percentage, the filing must include:
(i) A summary statement of actual
gas inflows and outflows for each
month used to calculate the fuel reimbursement percentage or surcharge.
For purposes of establishing the surcharge, the summary statement must
be included for each month of the period over which the differences defined
in paragraph (c) of this section accumulate.
(ii) Where the fuel reimbursement
percentage is calculated based on estimated activity over a future period,
the period must be defined and the estimates used in the calculation must be
justified. If any of the estimates are
publicly available, include a reference
to the source.
(4) The natural gas company must
not recover costs and is not obligated
to return revenues which are applicable
to the period pre-dating the effectiveness of the tariff language setting forth
the periodic rate change mechanism,
unless permitted or required to do so
by the Commission.
[Order 582, 60 FR 52996, Oct. 11, 1995, as
amended by Order 714, 73 FR 57535, Oct. 3,
2008]

Subpart F—Refunds and Reports
§ 154.501 Refunds.
(a) Refund Obligation. (1) Any natural
gas company that collects rates or
charges pursuant to this chapter must
refund that portion of any increased
rates or charges either found by the
Commission not to be justified, or approved for refund by the Commission as
part of a settlement, together with in-

§ 154.501
terest as required in paragraph (d) of
this section. The refund plus interest
must be distributed as specified in the
Commission order requiring or approving the refund, or if no date is specified, within 60 days of a final order. For
purposes of this paragraph, a final
order is an order no longer subject to
rehearing. The pipeline is not required
to make any refund until it has collected the refundable money through
its rates.
(2) Any natural gas company must
refund to its jurisdictional customers
the jurisdictional portion of any refund
it receives which is required by prior
Commission order to be flowed through
to its jurisdictional customers or represents the refund of an amount previously included in a filing under
§ 154.403 and charged and collected from
jurisdictional customers within thirty
days of receipt or other time period established by the Commission or as established in the pipeline’s tariff.
(b) Costs of Refunding. Any natural
gas company required to make refunds
pursuant to this section must bear all
costs of such refunding.
(c) Supplier Refunds. The jurisdictional portion of supplier refunds (including interest received), applicable
to periods in which a purchased gas adjustment clause was in effect, must be
flowed through to the natural gas company’s jurisdictional gas sales customers during that period with interest
as computed in paragraph (d) of this
section.
(d) Interest on Refunds. Interest on
the refund balance must be computed
from the date of collection from the
customer until the date refunds are
made as follows:
(1) At an average prime rate for each
calendar quarter on all excessive rates
or charges held (including all interest
applicable to such rates and charges)
on or after October 1, 1979. The applicable average prime rate for each calendar quarter must be the arithmetic
mean, to the nearest one-hundredth of
one percent, of the prime rate values
published in the Federal Reserve Bulletin, or in the Federal Reserve’s ‘‘Selected Interest Rates’’ (Statistical Release G, 13), for the fourth, third, and
second months preceding the first
month of the calendar quarter.

573

VerDate Mar<15>2010

17:59 May 28, 2014

Jkt 232061

PO 00000

Frm 00583

Fmt 8010

Sfmt 8010

Q:\18\18V1.TXT

ofr150

PsN: PC150