18 CFR Part 2

Federal Energy Regulatory Commission
2.23

Use of reserved authority in hydropower licenses to ameliorate cumulative
impacts.
2.24 Project
decommissioning
at
relicensing.
2.25 Ratemaking treatment of the cost of
emissions allowances in coordination
transactions.
2.26 Policies concerning review of applications under section 203.

with the purchase or sale of electric energy or the purchase or sale of transmission services subject to the jurisdiction of the Commission,
(1) To use or employ any device,
scheme, or artifice to defraud,
(2) To make any untrue statement of
a material fact or to omit to state a
material fact necessary in order to
make the statements made, in the
light of the circumstances under which
they were made, not misleading, or
(3) To engage in any act, practice, or
course of business that operates or
would operate as a fraud or deceit upon
any entity.
(b) Nothing in this section shall be
construed to create a private right of
action.

NON-MANDATORY GUIDANCE ON SMART GRID
STANDARDS
2.27

Availability of North American Energy
Standards Board (NAESB) Smart Grid
Standards as non-mandatory guidance.

STATEMENTS OF GENERAL POLICY AND INTERPRETATIONS UNDER THE NATURAL GAS ACT
2.51
2.52
2.55

[Reserved]
Suspension of rate schedules.
Auxiliary installations and replacement facilities.
2.57 Temporary certificates—pipeline companies.
2.60 Facilities and activities during an
emergency—accounting treatment of defense-related expenditures.
2.67 Calculation of taxes for property of
pipeline companies constructed or acquired after January 1, 1970.
2.69 [Reserved]
2.76 Regulatory treatment of payments
made in lieu of take-or-pay obligations.
2.78 Utilization and conservation of natural
resources—natural gas.

PART 2—GENERAL POLICY AND
INTERPRETATIONS
STATEMENTS OF GENERAL POLICY AND
INTERPRETATIONS OF THE COMMISSION
Sec.
2.1 Initial notice; service; and information
copies of formal documents.
2.1a Public suggestions, comments, proposals on substantial prospective regulatory issues and problems.
2.1b Availability in contested cases of information acquired by staff investigation.
2.1c Policy statement on consultation with
Indian tribes in Commission proceedings.

STATEMENT OF GENERAL POLICY TO IMPLEMENT PROCEDURES FOR COMPLIANCE WITH
THE NATIONAL ENVIRONMENTAL POLICY ACT
OF 1969

STATEMENTS OF GENERAL POLICY AND INTERPRETATIONS UNDER THE FEDERAL POWER
ACT

2.80

2.2
2.4
2.7

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Pt. 2

Transmission lines.
Suspension of rate schedules.
Recreational development at licensed
projects.
2.8 [Reserved]
2.9 Conditions in preliminary permits and
licenses—list of and citations to ‘‘P—’’
and ‘‘L—’’ forms.
2.12 Calculation of taxes for property of
public utilities and licensees constructed
or acquired after January 1, 1970.
2.13 Design and construction.
2.15 Specified reasonable rate of return.
2.17 Price discrimination and anticompetitive effect (price squeeze issue).
2.18 Phased electric rate increase filings.
2.19 State and Federal comprehensive plans.
2.20 Good faith requests for transmission
services and good faith responses by
transmitting utilities.
2.21 Regional Transmission Groups.
2.22 Pricing policy for transmission services
provided under the Federal Power Act.

Detailed environmental statement.

STATEMENT OF GENERAL POLICY TO IMPLEMENT THE ECONOMIC STABILIZATION ACT OF
1970, AS AMENDED, AND EXECUTIVE ORDERS
11615 AND 11627
2.100–2.102 [Reserved]
2.103 Statement of policy respecting take or
pay provisions in gas purchase contracts.
2.104 Mechanisms for passthrough of pipeline take-or-pay buyout and buydown
costs.
2.105 Gas supply charges.
RULES OF GENERAL APPLICABILITY
2.201

[Reserved]

STATEMENTS OF GENERAL POLICY AND INTERPRETATIONS UNDER THE NATURAL GAS POLICY ACT OF 1978
2.300 Statement of policy concerning allegations of fraud, abuse, or similar grounds
under section 601(c) of the NGPA.

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§ 2.1

18 CFR Ch. I (4–1–18 Edition)

STATEMENT OF INTERPRETATION UNDER THE
PUBLIC UTILITY REGULATORY POLICIES ACT
OF 1978

(B) Changes in rates proposed by natural gas pipeline companies for field
sales.
(C)–(D) [Reserved]
(E) Tracking rate schedule or tariff
filings made pursuant to settlement
agreements.
(F) Rate schedule or tariff filings
made by natural gas pipeline companies or public utilities in compliance
with Commission orders.
(G) Reports of refunds by natural gas
pipeline companies and public utilities.
(H) [Reserved]
(I) Complaints against natural gas
pipeline companies and public utilities,
unless otherwise directed.
(ii) Interconnections, service and exportation pursuant to the Federal Power Act.
(A) Applications for interconnection
and service under section 202(b).
(B)–(C) [Reserved]
(D) Applications pursuant to section
207.
(E) [Reserved]
(iii) Hydroelectric, Federal Power Act.
(A) Applications for preliminary permits pursuant to section 4(f).
(B) Applications for licenses for constructed or unconstructed projects, or
notice of declaration of intention, sections 4(e), 23(a)(b).
(C) Applications for amendment of license, unless otherwise directed.
(D) Application for relicenses or
nonpower licenses, or a recommendation for takeover, sections 14 and 15.
(E) Applications for transfer of license, section 8.
(F) Applications for surrender of license, section 6.
(G) Proceeding for revocation or termination of license, sections 6, 13, 26.
(H) Issuance of annual licenses, section 15.
(I) Lands withdrawn pursuant to an
application for preliminary permit or
license, and the vacation of such land
withdrawals, section 24.
(J) Complaints against licensees, unless otherwise directed.
(iv) Corporate electric. (A) Applications pursuant to sections 203, 204, of
the Federal Power Act, and applications or complaints pursuant to section
305 of the Federal Power Act.
(v) Accounting, gas and electric. (A)
Applications pursuant to sections 4, 23,
301, and 302 of the Federal Power Act.

2.400 Statement of interpretation of waste
concerning natural gas as the primary
energy source for qualifying small power
production facilities.
STATEMENT OF PENALTY REDUCTION/WAIVER
POLICY TO COMPLY WITH THE SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS
ACT OF 1996
2.500 Penalty reduction/waiver policy for
small entities.
APPENDIX A TO PART 2—GUIDANCE FOR DETERMINING THE ACCEPTABLE CONSTRUCTION AREA FOR AUXILIARY AND REPLACEMENT FACILITIES
APPENDIX B TO PART 2 [RESERVED]
APPENDIX C TO PART 2—NATIONWIDE PROCEEDING COMPUTATION OF FEDERAL INCOME TAX ALLOWANCE INDEPENDENT PRODUCERS, PIPELINE AFFILIATES AND PIPELINE PRODUCERS CONTINENTAL U.S.
AUTHORITY: 5 U.S.C. 601; 15 U.S.C. 717–717z,
3301–3432; 16 U.S.C. 792–828c, 2601–2645; 42
U.S.C. 4321–4370h, 7101–7352.

STATEMENTS OF GENERAL POLICY AND
INTERPRETATIONS OF THE COMMISSION

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§ 2.1 Initial notice; service; and information copies of formal documents.
(a) Whenever appropriate, publication of an initial notice or order in the
FEDERAL REGISTER shall be the primary means of informing interested
persons and the general public that the
proceeding to which the notice or order
relates has been instituted before the
Commission. The mailing or e-mailing
of individual copies shall be confined to
that which is required by law, by the
Commission’s rules and regulations, or
by other considerations deemed valid
by the Secretary in specific instances.
(1) It is the policy of the Commission
to publish notice in the FEDERAL REGISTER upon the institution of the following proceedings before the Commission:
(i) Natural gas pipeline companies and
public utility rate schedules and tariffs.
(A) Initial rate schedule filings and
changes in rates schedules proposed by
public utilities and changes in rate
schedules or tariffs proposed by natural
gas pipeline companies, including purchased gas adjustment clauses.

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Federal Energy Regulatory Commission

§ 2.1a
(J) Notices of conferences in docketed rulemaking proceedings.
(K) Proposed penalties under section
31 of the Federal Power Act.
(L) Such other notices or orders as
may be submitted by the Secretary for
publication.
(2) Otherwise directed, as referred to
above, shall be interpreted to mean notice given by the discretion of the Secretary.
(b) After notice has been given, the
service of formal documents issued in a
proceeding shall be confined to the parties of record or their attorneys, and
the mailing or e-mailing of information copies shall be confined to that
which is required by the Commission’s
rules and regulations, by courtesy in
response to written requests for copies,
or by other considerations deemed
valid by the Secretary in specific instances.

(B) Applications pursuant to sections
8 and 9 of the Natural Gas Act.
(vi) Federal rates. (A) Application for
confirmation and approval of rate
schedules for Federal hydroelectric
projects.
(vii) Natural gas pipeline certificates,
exportations, and importations, Natural
Gas Act. (A) Applications for exemption
under section 1(c).
(B) Applications for authorization to
import and export gas under section 3.
(C) Applications for orders directing
physical connection of facilities and
sale of natural gas under section 7(a).
(D) Applications for permission and
approval to abandon under section 7(b).
(E) Applications for permanent certificates under section 7(c).
(F) [Reserved]
(G) Complaints against natural gas
pipeline companies, filed by individuals
and companies, unless otherwise directed.
(viii)–(ix) [Reserved]
(x) Environmental statements. (A) Notice to be published pursuant to Order
series 415.
(xi) Miscellaneous, gas and electric. (A)
Order instituting an investigation in
which hearings are fixed or in which an
opportunity is given for filing comments or petitions to intervene.
(B) Show cause order, in which hearings are fixed or in which an opportunity is given for filing comments or
petitions to intervene.
(C) Order or notice consolidating proceedings for hearing purposes or severing a proceeding formerly consolidated for hearing purposes.
(D) Applications for declaratory
order, disclaimers of jurisdiction, or
waiver of Commission regulations, unless otherwise directed.
(E) Requests for redesignation, unless
otherwise directed.
(F) Requests for extension of time
pursuant to § 385.2008 of this chapter,
unless otherwise directed.
(G) Consolidations and severance pursuant to § 375.302(f) of this chapter, unless otherwise directed.
(H) Notice of correction of a document in any of the above categories.
(I) Notice of meetings of advisory
committees established by the Commission.

(Secs. 308, 309; 49 Stat. 858; 16 U.S.C. 825g,
825h; secs. 15, 16; 52 Stat. 829, 830; 15 U.S.C.
717n, 717o)
[Order 211, 24 FR 1345, Feb. 21, 1959, as
amended by Order 463, 37 FR 28054, Dec. 20,
1972; 38 FR 3192, Feb. 2, 1973; 44 FR 34941,
June 18, 1979; 45 FR 21224, Apr. 1, 1980; Order
541, 57 FR 21733, May 22, 1992; Order 603, 64 FR
26603, May 14, 1999; Order 2002, 68 FR 51115,
Aug. 25, 2003; Order 737, 75 FR 43402, July 26,
2010; Order 756, 77 FR 4893, Feb. 1, 2012]

§ 2.1a Public suggestions, comments,
proposals on substantial prospective regulatory issues and problems.
(a) The Commission by this policy
statement explicitly encourages the
public, including those persons subject
to regulation by the Commission, to
submit suggestions, comments, or proposals concerning substantial prospective regulatory policy issues and problems, the resolution of which will have
a substantial impact upon those regulated by the Commission or others affected by the Commission’s activities.
This policy is intended to serve as a
means of advising the Commission on a
timely basis of potential significant
issues and problems which may come
before it in the course of its activities
and to permit the Commission an early
opportunity to consider argument regarding policy questions and administrative reforms in a general context

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§ 2.1b

18 CFR Ch. I (4–1–18 Edition)

rather than in the course of individual
proceedings.
(b) Upon receipt of suggestions, comments, or proposals pursuant to paragraph (a) of this section, the Commission shall review the matters raised
and take whatever action is deemed
necessary with respect to the filing, including, but not limited to, requesting
further information from the filing
party, the public, or the staff, or prescribing an informal public conference
for initial discussion and consultation
with the Commission, a Commissioner,
or the Staff, concerning the matter(s)
raised. In the absence of a notice of
proposed rulemaking, any conferences
or procedures undertaken pursuant to
this section shall not be deemed by the
Commission as meeting the requirements of the Administrative Procedure
Act with respect to notice of
rulemakings, but are to be utilized by
the Commission as initial discussions
for advice as a means of determining
the need for Commission action, investigation or study prior to the issuance
of a notice of proposed rulemaking to
the extent required by the Administrative Procedure Act, 5 U.S.C. 553.
(c) [Reserved]
(d) A person may not invoke this policy as a means of advocating ex parte
before the Commission a position in a
proceeding pending at the Commission
and any such filing will be rejected.
Comments must relate to general conditions in industry or the public or
policies or practices of the Commission
which may need reform, review, or initial consideration by the Commission.

quired by Commission staff, including
workpapers pursuant to any staff investigation conducted under sections 8,
10, or 14 of the Natural Gas Act, and
sections 301, 304 or 307 of the Federal
Power Act, shall, without further order
of the Commission, be free from the restraints of said subsection (b) of section 8 of the Natural Gas Act, and subsection (b) of section 301 of the Federal
Power Act, regarding the divulgence of
information, with respect to any matter hereafter set for formal hearing.
[58 FR 38292, July 16, 1993]

§ 2.1c Policy statement on consultation
with Indian tribes in Commission
proceedings.
(a) The Commission recognizes the
unique relationship between the United
States and Indian tribes as defined by
treaties, statutes, and judicial decisions. Indian tribes have various sovereign authorities, including the power
to make and enforce laws, administer
justice, and manage and control their
lands and resources. Through several
Executive Orders and a Presidential
Memorandum, departments and agencies of the Executive Branch have been
urged to consult with federally-recognized Indian tribes in a manner that
recognizes the government-to-government relationship between these agencies and tribes. In essence, this means
that consultation should involve direct
contact between agencies and tribes
and should recognize the status of the
tribes as governmental sovereigns.
(b) The Commission acknowledges
that, as an independent agency of the
federal government, it has a trust responsibility to Indian tribes and this
historic relationship requires it to adhere to certain fiduciary standards in
its dealings with Indian tribes.
(c) The Commission will endeavor to
work with Indian tribes on a government-to-government basis, and will
seek to address the effects of proposed
projects on tribal rights and resources
through consultation pursuant to the
Commission’s trust responsibility, the
Federal Power Act, the Natural Gas
Act, the Public Utility Regulatory
Policies Act, section 32 of the Public
Utility Holding Company Act, the
Interstate Commerce Act, the Outer
Continental Shelf Lands Act, section

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[Order 547, 41 FR 15004, Apr. 9, 1976, as
amended by Order 225, 47 FR 19054, May 3,
1982]

§ 2.1b Availability in contested cases of
information acquired by staff investigation.
Pursuant to the Commission’s authority under the Natural Gas Act, particularly subsection (b) of section 8
thereof, and under the Federal Power
Act, particularly subsection (b) of section 301 thereof, upon request by a
party to the proceedings, or as required
in conjunction with the presentation of
a Commission staff case of staff’s crossexamination of any other presentation
therein, all relevant information ac-

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Federal Energy Regulatory Commission
106 of the National Historic Preservation Act, and in the Commission’s environmental and decisional documents.
(d) As an independent regulatory
agency, the Commission functions as a
neutral, quasi-judicial body, rendering
decisions on applications filed with it,
and resolving issues among parties appearing before it, including Indian
tribes. Therefore, the provisions of the
Administrative Procedure Act and the
Commission’s rules concerning off-therecord communications, as well as the
nature of the Commission’s licensing
and certificating processes and of the
Commission’s review of jurisdictional
rates, terms and conditions, place some
limitations on the nature and type of
consultation that the Commission may
engage in with any party in a contested case. Nevertheless, the Commission will endeavor, to the extent authorized by law, to reduce procedural
impediments to working directly and
effectively with tribal governments.
(e) The Commission, in keeping with
its trust responsibility, will assure
that tribal concerns and interests are
considered whenever the Commission’s
actions or decisions have the potential
to adversely affect Indian tribes or Indian trust resources.
(f) The Commission will seek to engage tribes in high-level meetings to
discuss general matters of importance,
such as those that uniquely affect the
tribes. Where appropriate, these meetings may be arranged for particular
tribes, by region, or in some proceedings
involving
hydroelectric
projects, by river basins.
(g) The Commission will strive to develop working relationships with tribes
and will seek to establish procedures to
educate Commission staff about tribal
governments and cultures and to educate tribes about the Commission’s
various statutory functions and programs. To assist in this effort, the
Commission is establishing the position of tribal liaison. The tribal liaison
will provide a point of contact and a resource for tribes for any proceeding at
the Commission.
(h) Concurrently with this policy
statement, the Commission is issuing
certain new regulations regarding the
licensing of hydroelectric projects. In
this connection, the Commission sets

§ 2.2
forth the following additional policies
for the hydroelectric licensing process.
(i) The Commission believes that the
hydroelectric licensing process will
benefit by more direct and substantial
consultation between the Commission
staff and Indian tribes. Because of the
unique status of Indian tribes in relation to the Federal government, the
Commission will endeavor to increase
direct communications with tribal representatives
in
appropriate
circumstances, recognizing that different
issues and stages of a proceeding may
call for different approaches, and there
are some limitations that must be observed.
(j) The Commission will seek to notify potentially-affected tribes about
upcoming hydroelectric licensing processes, to discuss the consultation process and the importance of tribal participation, to learn more about each
tribe’s culture, and to establish caseby-case consultation procedures consistent with our ex parte rules.
(k) In evaluating a proposed hydroelectric project, the Commission will
consider any comprehensive plans prepared by Indian tribes or inter-tribal
organizations for improving, developing, or conserving a waterway or waterways affected by a proposed project.
The Commission will treat as a comprehensive plan, a plan that:
(1) Is a comprehensive study of one or
more of the beneficial uses of a waterway or waterways;
(2) Includes a description of the
standards applied, the data relied upon,
and the methodology used in preparing
the plan; and
(3) Is filed with the Secretary of the
Commission. See generally 18 CFR 2.19.
[Order 635, 68 FR 46455, Aug. 6, 2003]

STATEMENTS OF GENERAL POLICY AND
INTERPRETATIONS UNDER THE FEDERAL POWER ACT
AUTHORITY: Sections 2.2 through 2.13,
issued under sec. 309, 49 Stat. 858; 16 U.S.C.
825h, unless otherwise noted.

§ 2.2

Transmission lines.

In a public statement dated March 7,
1941, the Commission announced its determination that transmission lines

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§ 2.4

18 CFR Ch. I (4–1–18 Edition)

which are not primary lines transmitting power from the power house or appurtenant works of a project to the
point of junction with the distribution
system or with the interconnected primary transmission system as set forth
in section 3(11) of the Act are not within the licensing authority of the Commission, and directed that future applications filed with it for such licenses
be referred for appropriate action to
the Federal department having supervision over the lands or waterways involved.

statutory authority is a matter within
the discretion of the Commission.

[Order 141, 12 FR 8471, Dec. 19, 1947. Redesignated by Order 147, 13 FR 8259, Dec. 23, 1948]

The Commission will evaluate the
recreational resources of all projects
under Federal license or applications
therefor and seek, within its authority,
the ultimate development of these resources, consistent with the needs of
the area to the extent that such development is not inconsistent with the
primary purpose of the project. Reasonable expenditures by a licensee for
public recreational development pursuant to an approved plan, including the
purchase of land, will be included as
part of the project cost. The Commission will not object to licensees and operators of recreational facilities within
the boundaries of a project charging
reasonable fees to users of such facilities in order to help defray the cost of
constructing, operating, and maintaining such facilities. The Commission expects the licensee to assume the following responsibilities:
(a) To acquire in fee and include
within the project boundary enough
land to assure optimum development of
the recreational resources afforded by
the project. To the extent consistent
with the other objectives of the license,
such lands to be acquired in fee for recreational purposes shall include the
lands adjacent to the exterior margin
of any project reservoir plus all other
project lands specified in any approved
recreational use plan for the project.
(b) To develop suitable public recreational facilities upon project lands
and waters and to make provisions for
adequate public access to such project
facilities and waters and to include
therein consideration of the needs of
persons with disabilities in the design
and construction of such project facilities and access.

§ 2.4

(Natural Gas Act, 15 U.S.C. 717–717w (1976 &
Supp. IV 1980); Federal Power Act, 16 U.S.C.
791a–828c (1976 & Supp. IV 1980); Dept. of Energy Organization Act, 42 U.S.C. 7101–7352
(Supp. IV 1980); E.O. 12009, 3 CFR part 142
(1978); 5 U.S.C. 553 (1976))
[Order 141, 12 FR 8471, Dec. 19, 1947. Redesignated by Order 147, 13 FR 8259, Dec. 23, 1948,
and amended by Order 303, 48 FR 24361, June
1, 1983; Order 575, 60 FR 4852, Jan. 25, 1995]

§ 2.7 Recreational development at licensed projects.

Suspension of rate schedules.

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The Commission approved and adopted on May 29, 1945, the following conclusions as to its powers of suspension
of rate schedules under section 205 of
the act:
(a) The Commission cannot suspend a
rate schedule after its effective date.
(b) The Commission can suspend any
new schedule making any change in an
existing filed rate schedule, including
any rate, charge, classification, or
service, or in any rule, regulation, or
contract relating thereto, contained in
the filed schedule.
(c) Included in such changes which
may be suspended are:
(1) Increases.
(2) Reductions.
(3) Discriminatory changes.
(4) Cancellation or notice of termination.
(5) Changes in classification, service,
rule, regulation or contract.
(d) Immaterial, unimportant or routine changes will not be suspended.
(e) During suspension, the prior existing rate schedule continues in effect
and should not be changed during suspension.
(f) Changes under escalator clauses
may be suspended as changes in existing filed schedules.
(g) Suspension of a rate schedule,
within the ambit of the Commission’s

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Federal Energy Regulatory Commission
(c) To encourage and cooperate with
appropriate local, State, and Federal
agencies and other interested entities
in the determination of public recreation needs and to cooperate in the
preparation of plans to meet these
needs, including those for sport fishing
and hunting.
(d) To encourage governmental agencies and private interests, such as operators of user-fee facilities, to assist in
carrying out plans for recreation, including operation and adequate maintenance of recreational areas and facilities.
(e) To cooperate with local, State,
and Federal Government agencies in
planning, providing, operating, and
maintaining facilities for recreational
use of public lands administered by
those agencies adjacent to the project
area.
(f)(1) To comply with Federal, State
and local regulations for health, sanitation, and public safety, and to cooperate with law enforcement authorities in the development of additional
necessary regulations for such purposes.
(2) To provide either by itself or
through arrangement with others for
facilities to process adequately sewage,
litter, and other wastes from recreation facilities including wastes from
watercraft, at recreation facilities
maintained and operated by the licensee or its concessionaires.
(g) To ensure public access and recreational use of project lands and waters without regard to race, color, sex,
religious creed or national origin.
(h) To inform the public of the opportunities for recreation at licensed
projects, as well as of rules governing
the accessibility and use of recreational facilities.

mits or licenses for hydroelectric developments. In a special situation, of
course, the Commission in issuing a
permit or license for a project will
modify or eliminate a particular article (condition). For reference purposes
the sets of conditions are designated as
‘‘Forms’’—those for preliminary permits are published in Form P–1, and
those for licenses are published in
Form L’s. There are different Form L’s
for different types of licenses, and the
forms have been revised from time to
time. Thus at any given time there will
be several series of standard forms applicable to the various vintages of different types of licenses. The forms and
their revisions are published on the
Commission’s Web site (www.ferc.gov/
industries/hydropower/gen-info/compadmin/l-forms.asp).
(b) Forms currently in use may be
obtained on the Commission’s Web site
or from Federal Energy Regulatory
Commission, Washington, DC 20426.
(Secs. 3, 4, 15, 16, 301, 304, 308, and 309 (41 Stat.
1063–1066, 1068, 1072, 1075; 49 Stat. 838, 839, 840,
841, 854–856, 858–859; 82 Stat. 617; 16 U.S.C. 796,
797, 803, 808, 809, 816, 825, 825b, 825c, 825g, 825h,
826i), as amended, secs. 8, 10, and 16 (52 Stat.
825–826, 830; 15 U.S.C. 717g, 717i, 717o))
[Order 348, 32 FR 8521, June 14, 1967, as
amended by Order 540, 40 FR 51998, Nov. 7,
1975; Order 567, 42 FR 30612, June 16, 1977;
Order 699, 72 FR 45323, Aug. 14, 2007; Order
737, 75 FR 43402, July 26, 2010; Order 756, 77
FR 4893, Feb. 1, 2012]

§ 2.12 Calculation of taxes for property
of public utilities and licensees constructed or acquired after January
1, 1970.
Pursuant to the provisions of section
441(a)(4)(A) of the Tax Reform Act of
1969, 83 Stat. 487, 625, public utilities
and licensees regulated by the Commission under the Federal Power Act
which have exercised the option provided by that section to change from
flow through accounting will be permitted by the Commission, with respect to liberalized depreciation, to
employ a normalization method for
computing federal income taxes in
their accounts and annual reports with
respect to property constructed or acquired after January 1, 1970, to the extent with which such property increases the productive or operational

[Order 313, 30 FR 16198, Dec. 29, 1965, as
amended by Order 375–B, 35 FR 6315, Apr. 18,
1970; Order 508, 39 FR 16338, May 8, 1974; Order
2002, 68 FR 51115, Aug. 25, 2003]

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§ 2.8

§ 2.12

[Reserved]

§ 2.9 Conditions in preliminary permits and licenses—list of and citations to ‘‘P—’’ and ‘‘L—’’ forms.
(a) The Commission has approved
several sets of standard conditions for
normal inclusion in preliminary per-

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§ 2.13

18 CFR Ch. I (4–1–18 Edition)

capacity of the utility and is not a replacement of existing capacity. Such
normalization will also be permitted
for ratemaking purposes to the extent
such rates are subject to the Commission’s ratemaking authority. As to balances in Account 282 of the Uniform
System of Accounts, ‘‘Accumulated deferred income taxes—Other property,’’
it will remain the Commission’s policy
to deduct such balances from rate base
in rate proceedings.

puting amortization reserves for hydroelectric project licenses shall be calculated annually based on current capital ratios developed from an average
of 13 monthly balances of amounts
properly includible in the licensee’s
long-term debt and proprietary capital
accounts, as listed in the Commission’s
Uniform System of Accounts. The cost
rate for such ratios shall be the weighted average cost of long-term debt and
preferred stock for the year, and the
cost of common equity shall be the interest rate on 10-year government
bonds (reported as the Treasury Department’s 10-year constant maturity
series) computed on the monthly average for the year in question, plus four
percentage points (400 basis points).
(b) The Statement of Policy adopted
herein shall be effective upon issuance
of this order.
(c) The Secretary shall cause prompt
publication of this order to be made in
the FEDERAL REGISTER.
(d) All requests and suggestions not
specifically dealt with herein are hereby denied.
(e) The Secretary is hereby authorized to change the appropriate license
article upon application by the licensees to reflect the specified reasonable
rate of return as adopted herein.

(Secs. 3, 4, 15, 16, 301, 304, 308, and 309 (41 Stat.
1063–1066, 1068, 1072, 1075; 49 Stat. 838, 839, 840,
841, 854–856, 858–859; 82 Stat. 617; 16 U.S.C. 796,
797, 803, 808, 809, 816, 825, 825b, 825c, 825g, 825h,
826i), as amended, Secs. 8, 10, and 16 (52 Stat.
825–826, 830; 15 U.S.C. 717g, 717i, 717o))
[Order 404, 35 FR 7964, May 23, 1970, as
amended by Order 567, 42 FR 30612, June 16,
1977]

§ 2.13

Design and construction.

(a) The Commission recognizes the
importance of protecting and enhancing natural, historic, scenic, and recreational values at projects licensed or
proposed to be licensed under the Federal Power Act.
(b) In furtherance of these polices,
the Commission will not (1) permit the
amendment of any license for the purpose of construction of additional facilities or (2) authorize the disposition
of any interest in project lands for construction of any type, unless a showing
is made that the construction will be
designed to avoid or minimize conflict
with the natural, historic, and scenic
values and resources of the project
area.

[Order 550, 41 FR 27032, July 1, 1976]

§ 2.17 Price discrimination and anticompetitive effect (price squeeze
issue).
To implement compliance with the
Supreme Court decision in F.P.C. v.
Con-Way Corp., 426 U.S. 271 (1976), aff’g
510 F. 2d 1264 (D.C. Cir. 1975) and to expedite the consideration of price
squeeze issues in wholesale electric
rate proceedings, the Commission
adopts the following procedures for
raising price squeeze issues which are
to be followed unless they are demonstrated in an individual case to be
inadequate:
(a) Any wholesale customer, state
commission or other interested person
may file petitions to intervene alleging
price discrimination and anticompetitive effects of the wholesale rates. In
order to have the issue of price discrimination considered in the rate proceeding, the intervening customer or
other interested person must support

(Secs. 3, 4, 15, 16, 301, 304, 308, and 309 (41 Stat.
1063–1066, 1068, 1072, 1075; 49 Stat. 838, 839, 840,
841, 854–856, 858–859; 82 Stat. 617; 16 U.S.C. 796,
797, 803, 808, 809, 816, 825, 825b, 825c, 825g, 825h,
826i), as amended, Secs. 8, 10, and 16 (52 Stat.
825–826, 830; 15 U.S.C. 717g, 717i, 717o))
[Order 414, 35 FR 18586, Dec. 8,
amended by Order 567, 42 FR 30612,
1977; Order 737, 75 FR 43402, July
Order 756, 77 FR 4893, Feb. 1, 2012; 77
Feb. 14, 2012]

1970, as
June 16,
26, 2010;
FR 8095,

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§ 2.15 Specified reasonable rate of return.
(a) Pursuant to section 10(d) of the
Federal Power Act, the Commission
has determined that the specified reasonable rate of return used in com-

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Federal Energy Regulatory Commission
its allegation by a prima facie case.
The elements of the prima facie case
shall include at a minimum:
(1) Specification of the filing utility’s
retail rate schedules with which the intervening wholesale customer is unable
to compete due to purchased power
costs;
(2) A showing that a competitive situation exists in that the wholesale customer competes in the same market as
the filing utility;
(3) A showing that the retail rates
are lower than the proposed wholesale
rates for comparable service;
(4) The wholesale customer’s prospective rate for comparable retail service,
i.e. the rate necessary to recover bulk
power costs (at the proposed wholesale
rate) and distribution costs;
(5) An indication of the reduction in
the wholesale rate necessary to eliminate the price squeeze alleged.
(b) Where price squeeze is alleged,
the Commission shall, in the order
granting intervention, direct the Administrative Law Judge to convene a
prehearing conference within 15 days
from the date of the order for the purpose of hearing intervenors’ request for
data required to present their case, including prima facie showing, on price
squeeze issues.
(c) Within 30 days from the date of
the conference the filing utility shall
respond to the data requests authorized
by the Administrative Law Judge.
(d) Within 30 days from the filing
utility’s response, the intervenors shall
file their case-in-chief on price squeeze
issues, which shall include their prima
facie case, unless filed previously.
(e) The burden of proof (i.e. the risk
of nonpersuasion) to rebut the allegations of price squeeze and to justify the
proposed rates are on the utility proposing the rates under section 205(e) of
the Federal Power Act.
(f) In proceedings where price squeeze
is an issue, the Secretary shall include
the state commission, agency or body
which is responsible for regulation of
retail rates in the state affected in the
service
list
maintained
under
§ 385.2010(c) of this chapter.

§ 2.19
§ 2.18 Phased electric rate increase filings.
(a) In general, when a public utility
files a phased rate increase, the Commission will determine the appropriate
suspension period based on the total increase requested in all phases. If a utility files a rate increase within sixty
days after filing another rate increase,
the Commission will consider the filings together to be a phased rate increase request.
(b) This policy will not be applied if
the increase is phased:
(1) To coordinate with new facilities
coming on line;
(2) To implement a rate moderation
plan;
(3) To avoid price squeeze;
(4) To comply with a settlement approved by the Commission; or
(5) If the utility makes a convincing
showing that application of the policy
would be harsh and inequitable and
that, therefore, good cause has been
shown not to apply the policy in the
case.
[52 FR 11, Jan. 11, 1987]

§ 2.19 State and Federal comprehensive plans.
(a) In determining whether the proposed hydroelectric project is best
adapted to a comprehensive plan under
section (10)(a)(1) of the Federal Power
Act for improving or developing a waterway, the Commission will consider
the extent to which the project is consistent with a comprehensive plan
(where one exists) for improving, developing, or conserving a waterway or waterways affected by the project that is
prepared by:
(1) An agency established pursuant to
Federal law that has the authority to
prepare such a plan, or
(2) A state agency, of the state in
which the facility is or will be located,
authorized to conduct such planning
pursuant to state law.
(b) The Commission will treat as a
state or Federal comprehensive plan a
plan that:
(1) Is a comprehensive study of one or
more of the beneficial uses of a waterway or waterways;
(2) Includes a description of the
standards applied, the data relied upon,

[Order 563, 42 FR 16132, Mar. 25, 1977, as
amended by Order 225, 47 FR 19054, May 3,
1982]

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§ 2.20

18 CFR Ch. I (4–1–18 Edition)

and the methodology used in preparing
the plan; and
(3) Is filed with the Secretary of the
Commission.

minimum components of a good faith
request for transmission services:
(1) The identity, address, telephone
number, and facsimile number of the
party requesting transmission services,
and the same information, if different,
for the party’s contact person or persons.
(2) A statement that the party requesting transmission services is, or
will be upon commencement of service,
an entity eligible to request transmission under sections 211(a) and 213(a)
of the FPA.
(3) A statement that the request for
transmission services is intended to
satisfy the ‘‘request for transmission
services’’ requirement under sections
211(a) and 213(a) of the FPA, and that
the request is not a request for mandatory retail wheeling prohibited under
section 212(h) of the FPA.
(4) The party requesting transmission
services should specify the character
and nature of the services requested.
Some types of service may require
more detailed information than others.
Where point-to-point service is requested, the party requesting transmission services should specify the anticipated point(s) of receipt to the
transmitting utility’s grid and the anticipated point(s) of delivery from the
transmitting utility’s grid. Where a
party requesting transmission services
requests additional flexibility to schedule multiple resources to meet its
needs (e.g., network service), the request for services should contain a description of the requested services in
sufficient detail to permit the transmitting utility to model the additional
services on its transmission system.
(5) The names of any other parties
likely to provide transmission service
to deliver electric energy to, and receive electric energy from, the transmitting utility’s grid in connection
with the requested transmission services.
(6) The proposed dates for initiating
and terminating the requested transmission services.
(7) The total amount of transmission
capacity being requested.
(8) To the extent it is known or can
be estimated, a description of the ‘‘expected transaction profile’’ including
load factor data describing the hourly

[Order 481–A, 53 FR 15804, May 4, 1988]

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§ 2.20 Good faith requests for transmission services and good faith responses by transmitting utilities.
(a) General Policy. (1) This Statement
of Policy is adopted in furtherance of
the goals of sections 211(a) and 213(a) of
the Federal Power Act, as amended and
added by the Energy Policy Act of 1992.
(2) Under section 211(a), the Commission may issue an order requiring a
transmitting utility to provide transmission services (including any enlargement of transmission capacity
necessary to provide such services)
only if an applicant has made a request
for transmission services to the transmitting utility that would be the subject of such order at least 60 days prior
to its filing of an application for such
order. The requirement in section
211(a) that an applicant make such a
request will be met if such an applicant
has, pursuant to section 213(a) of the
FPA, made a good faith request to a
transmitting utility to provide wholesale transmission services and requests
specific rates and charges, and other
terms and conditions.
(3) It is the Commission’s intention
to apply the standards of this Statement of Policy when determining
whether and when a valid ‘‘good faith’’
request for service was made.
(4) It is the Commission’s intention
to encourage an open exchange of information that exhibits a reasonable
degree of specificity and completeness
between the party requesting transmission services and the transmitting
utility.
(5) The Commission intends to apply
this Statement of Policy so as to carry
out Congress’ objective that, subject to
appropriate terms and conditions and
just and reasonable rates, in conformance with section 212 of the FPA, access to the electric transmission system for the purposes of wholesale
transactions be more widely available.
(b) The Components of a good faith request. The Commission generally considers the following to constitute the

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Federal Energy Regulatory Commission

§ 2.20
(c) Components of a Reply to a Good
Faith Request. The Commission generally considers the following to constitute the minimum components of a
reply to a good faith request for transmission services under section 213(a):
(1) Unless the parties agree to a different time frame, the transmitting
utility must acknowledge the request
within 10 days of receipt. The acknowledgement must include a date by which
a response will be sent to the party requesting transmission services and a
statement of any fees associated with
responding to the request (e.g., initial
studies).
(2) The transmitting utility may ask
the applicant to provide clarification
of only the information needed to
evaluate and process a ‘‘good faith’’ request. If the person requesting transmission services believes the transmitting utility is attempting to frustrate
the process by making excessive requests for clarification, it may raise
this issue if, and when, it files a request for a section 211 order with the
Commission.
(3) The transmitting utility must respond to a request within 60 days of receipt or some other mutually agreed
upon response date. If both parties
agree to an alternative schedule, the
agreement must be in writing and
signed by both parties.
(4) If the transmitting utility determines that it can provide all the requested services from existing capacity, it should respond by offering the
party requesting transmission services
an executable service agreement that
at a minimum contains the following
information:
(i) A description of the proposed
transmission rate and any other costs.
It is not necessary for the proposed
service agreement to contain a fully
developed cost-of-service. However, the
agreement should explain the basis for
the charges for each component of
service, including the unbundled components of any transmission rate as
well as any other charges.
(ii) The proposed service agreement
should explicitly describe all of the applicable terms and conditions of the
transmission services provided under
the agreement.

quantities of power and energy the
party requesting transmission services
would expect to deliver to the transmitting utility’s grid at relevant
points of interconnection. In the event
delivery is to multiple points within
the transmitting utility’s electric control area, the requestor should describe, to the extent it is known or can
be estimated, the expected load (over a
given duration of time) at each such
delivery point.
(9) Whether firm or non-firm service
is being requested. Where a party requests non-firm service, it should
specify the priority of service it is willing to accept, or the conditions under
which it is willing to accept interruption or curtailment, if known.
(10) A statement as to whether the
request is being made in response to a
solicitation and a copy of the solicitation if publicly available. This will
help the transmitting utility determine whether requests for transmission service are duplicative or mutually exclusive of requests filed by
other parties.
(11) The proposed rates, terms and
conditions for the requested transmission services as required by section
213(a). It is not necessary for the requestor to propose a specific numerical
rate. Rather, a party requesting transmission services can fulfill the rates,
terms and conditions requirement by
specifying a rate methodology (e.g.,
embedded or incremental cost) or by
referencing an existing formula rate,
transmission tariff, or transmission
contract. The validity of the good faith
request will not depend on the rates
proposed by the party requesting transmission services. This requirement is
not intended to allow utilities to delay
responses to requests for transmission
services, or to deny requests for transmission services on the basis of an
overly rigid or technical approach to
the ‘‘rates, terms and conditions’’ element of the request.
(12) Any other information to facilitate the expeditious processing of its
request. Such information will improve
the negotiation process, reduce costs,
and will improve chances to arrange
the requested transmission without resorting to section 211 application procedures before the Commission.

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§ 2.21

18 CFR Ch. I (4–1–18 Edition)

(iii) The transmitting utility should
accompany the proposed service agreement with a clear statement of the
time during which the offer to provide
the transmission services will remain
open. An open agreement offer may obligate the seller while imposing no
countervailing obligation on the purchaser, and an unexecuted contract potentially ties up transmission facilities, thus jeopardizing the availability
and price for subsequent requests that
would use the same facilities. However,
at a minimum, a transmitting utility
should permit the party requesting
transmission services sufficient time
to review service agreements and coordinate multiple stages of joint transactions.
(5) If the transmitting utility determines that it must construct additional facilities or modify existing facilities to provide all or part of the requested services, it must:
(i) Identify the specific constraints
and their duration that prevent it from
providing all the requested services and
explain how these constraints prevent
it from providing all the requested
services or the desired level of firmness.
(ii) Provide to the applicant all studies, computer input and output data,
planning, operating and other documents, work papers, assumptions and
any other material that forms the
basis for determining the constraints.
(iii) Offer to the applicant an executable agreement under which the applicant agrees to reimburse the transmitting utility for all costs of performing
any studies necessary to determine
what changes to the transmitting utility’s grid are needed to overcome the
constraint and provide the requested
services, their cost, and the estimated
time to complete them. At a minimum,
the proposed agreement should contain
the following:
(A) An estimate of the cost of the
study and the time required to complete it, and
(B) A commitment to supply to the
party requesting transmission services
all computer input and output data,
planning, operating and other documents, work papers, assumptions and
any other material used to perform the
study.

(iv) If a transmitting utility determines that it can provide part but not
all of the requested services without
building new facilities, it should inform the applicant of any portion of
the requested services that can be performed without constructing additional facilities or modifying existing
facilities. In effect, the transmitting
utility may be able to treat such a request as two separate transactions—
one for service on existing facilities
and the other as a request involving expansion decisions. Furthermore, where
there are alternative, less expensive
means of satisfying all or a portion of
a transmission request, the Commission expects the transmitting utility to
explore such alternatives (e.g., redispatching certain generating units to
alleviate a constraint).
[58 FR 38969, July 21, 1993]

§ 2.21 Regional Transmission Groups.
(a) General policy. The Commission
encourages
Regional
Transmission
Groups (RTGs) as a means of enabling
the market for electric power to operate in a more competitive and efficient
way. The Commission believes that
RTGs can provide a means of coordinating regional planning of the transmission system and assuring that system capabilities are always adequate
to meet system demands. RTG agreements that contain components that
satisfy paragraphs (b) and (c) of this
section generally will be considered to
be just, reasonable, and not unduly discriminatory or preferential under the
Federal Power Act (FPA). The Commission encourages RTG agreements
that contain as much detail as possible
in all of the components listed, particularly if the RTG participants will
be seeking Commission deference to decisions reached under an RTG agreement.
(b) Organizational components. (1) An
RTG agreement should provide for
broad membership and, at a minimum,
allow any entity that is subject to, or
eligible to apply for, an order under
section 211 of the FPA to be a member.
An RTG agreement should encompass
an area of sufficient size and contiguity to enable members to provide
transmission services in a reliable, efficient, and competitive manner.

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Federal Energy Regulatory Commission
(2) An RTG agreement should provide
a means of adequate consultation and
coordination with relevant state regulatory, siting, and other authorities.
(3) An RTG agreement should include
fair and nondiscriminatory governance
and decision making procedures, including voting procedures.
(c) Other components. (1) An RTG
agreement should impose on member
transmitting utilities an obligation to
provide transmission services for other
members, including the obligation to
enlarge facilities, on a basis that is
consistent with sections 205, 206, 211,
212 and 213 of the FPA. To the extent
practicable and known, the RTG agreement should specify the terms and conditions under which transmission services will be offered.
(2) An RTG agreement should require, at a minimum, the development
of a coordinated transmission plan on a
regional basis and the sharing of transmission planning information, with the
goal of efficient use, expansion, and coordination of the interconnected electric system on a grid-wide basis. An
RTG agreement should provide mechanisms to incorporate the transmission
needs of non-members into regional
plans. An RTG agreement should include as much detail as possible with
regard to operational and planning procedures.
(3) An RTG agreement should include
voluntary dispute resolution procedures that provide a fair alternative to
resorting in the first instance to section 206 complaints or section 211 proceedings.
(4) An RTG agreement should include
an exit provision for RTG members
that leave the RTG, specifying the obligations of a departing member.
(d) Filing procedures. Any proposed
RTG agreement that in any manner affects or relates to the transmission of
electric energy in interstate commerce
by a public utility, or rates or charges
for such transmission, must be filed
with the Commission. Any public utility member of a proposed RTG may file
the RTG agreement with the Commission on behalf of the other public utility members under section 205 of the
FPA.

§ 2.23
§ 2.22 Pricing policy for transmission
services provided under the Federal Power Act.
(a) The Commission has adopted a
Policy Statement on its pricing policy
for transmission services provided
under the Federal Power Act. That
Policy Statement can be found at 69
FERC 61,086. The Policy Statement
constitutes a complete description of
the Commission’s guidelines for assessing the pricing proposals. Paragraph
(b) of this section is only a brief summary of the Policy Statement.
(b) The Commission endorses transmission pricing flexibility, consistent
with the principles and procedures set
forth in the Policy Statement. It will
entertain transmission pricing proposals that do not conform to the traditional revenue requirement as well as
proposals that conform to the traditional revenue requirement. The Commission will evaluate ‘‘conforming’’
transmission pricing proposals using
the following five principles, described
more fully in the Policy Statement.
(1) Transmission pricing must meet
the traditional revenue requirement.
(2) Transmission pricing must reflect
comparability.
(3) Transmission pricing should promote economic efficiency.
(4) Transmission pricing should promote fairness.
(5) Transmission pricing should be
practical.
(c) Under these principles, the Commission will also evaluate ‘‘non-conforming’’ proposals which do not meet
the traditional revenue requirement,
and will require such proposals to conform to the comparability principle.
Non-conforming proposals must include an open access comparability
tariff and will not be allowed to go into
effect prior to review and approval by
the Commission under procedures described in the Policy Statement.
[59 FR 55039, Nov. 3, 1994]

§ 2.23 Use of reserved authority in hydropower licenses to ameliorate cumulative impacts.
The Commission will address and
consider cumulative impact issues at
original licensing and relicensing to
the fullest extent possible consistent

[58 FR 41632, Aug. 5, 1993]

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§ 2.24

18 CFR Ch. I (4–1–18 Edition)

with the Commission’s statutory responsibility to avoid undue delay in
the relicensing process and to avoid
undue delay in the amelioration of individual project impacts at relicensing.
To the extent, if any, that it is not possible to explore and address all cumulative impacts at relicensing, the Commission will reserve authority to examine and address such impacts after the
new license has been issued, but will
define that reserved authority as narrowly and with as much specificity as
possible, particularly with respect to
the purpose of reserving that authority. The Commission intends that such
articles will describe, to the maximum
extent possible, reasonably foreseeable
future resource concerns that may warrant modifications of the licensed
project. Before taking any action pursuant to such reserved authority, the
Commission will publish notice of its
proposed action and will provide an opportunity for hearing by the licensee
and all interested parties. Hydropower
licenses also contain standard ‘‘reopener’’ articles (see § 2.9 of this part)
which reserve authority to the Commission to require, among other
things, licensees of projects located in
the same river basin to mitigate the
cumulative impacts of those projects
on the river basin. In light of the policy described above, the Commission
will use the standard ‘‘reopener’’ articles to explore and address cumulative
impacts only (except in extraordinary
circumstances) where such impacts
were not known at the time of licensing or are the result of changed circumstances. The Commission has authority under the Federal Power Act to
require licensees, during the term of
the license, to develop and provide data
to the Commission on the cumulative
impacts of licensed projects located in
the same river basin. In issuing both
new and original licenses, the Commission will coordinate the expiration
dates of the licenses to the maximum
extent possible, to maximize future
consideration of cumulative impacts at
the same time in contemporaneous proceedings at relicensing. The Commission’s intention is to consider to the
extent practicable cumulative impacts
at the time of licensing and reli-

censing, and to eliminate the need to
resort to the use of reserved authority.
[59 FR 66718, Dec. 28, 1994]

§ 2.24 Project decommissioning at relicensing.
The Commission issued a statement
of policy on project decommissioning
at relicensing in Docket No. RM93–23–
000 on December 14, 1994.
[60 FR 347, Jan. 4, 1995]

§ 2.25 Ratemaking treatment of the
cost of emissions allowances in coordination transactions.
(a) General Policy. This Statement of
Policy is adopted in furtherance of the
goals of Title IV of the Clean Air Act
Amendments of 1990, Pub. L. 101–549,
Title IV, 104 Stat. 2399, 2584 (1990).
(b) Costing Emissions Allowances in Coordination Sales. If a public utility’s coordination rate on file with the Commission provides for recovery of variable costs on an incremental basis, the
Commission will allow recovery of the
incremental costs of emissions allowances associated with a coordination
sale. If a coordination rate does not reflect incremental costs, the public utility should propose alternative allowance costing methods or demonstrate
that the coordination rate does not
produce unreasonable results. The
Commission finds that the cost to replace an allowance is an appropriate
basis to establish the incremental cost.
(c) Use of Indices. The Commission
will allow public utilities to determine
emissions allowance costs on the basis
of an index or combination of indices of
the current price of emissions allowances, provided that the public utility
affords purchasing utilities the option
of providing emissions allowances.
Public utilities should explain and justify any use of different incremental
cost indices for pricing coordination
sales and making dispatch decisions.
(d) Calculation of Amount of Emissions
Allowances Associated With Coordination
Transactions. Public utilities should explain the methods used to compute the
amount of emissions allowances included in coordination transactions.

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Federal Energy Regulatory Commission
(e) Timing. (1) Public utilities should
provide information to purchasing utilities regarding the timing of opportunities for purchasers to stipulate whether
they will purchase or return emissions
allowances. A public utility may require a purchasing utility to declare,
no later than the beginning of the coordination transaction:
(i) Whether it will purchase or return
emissions allowances; and
(ii) If it will return emissions allowances, the date on which those allowances will be returned.
(2) Public utilities may include in
agreements with purchasing utilities
non-discriminatory provisions for indemnification if the purchasing utility
fails to provide emissions allowances
by the date on which it declares that
the allowances will be returned.
(f) Other Costing Methods Not Precluded. The ratemaking treatment of
emissions allowance costs endorsed in
this Policy Statement does not preclude other approaches proposed by individual utilities on a case-by-case
basis.

Statement and Appendix A to the Policy Statement.
(d) Effect on rates. Applicants should
propose mechanisms to protect customers from costs due to the merger. If
the proposal raises substantial issues
of relevant fact, the Commission may
set this issue for hearing.
(e) Effect on regulation. (1) Where the
affected state commissions have authority to act on the transaction, the
Commission will not set for hearing
whether the transaction would impair
effective regulation by the state commissions. The application should state
whether the state commissions have
this authority.
(2) Where the affected state commissions do not have authority to act on
the transaction, the Commission may
set for hearing the issue of whether the
transaction would impair effective
state regulation.
(f) Under section 203(a)(4) of the Federal Power Act (16 U.S.C. 824b), in reviewing a proposed transaction subject
to section 203, the Commission will
also consider whether the proposed
transaction will result in cross-subsidization of a non-utility associate
company or pledge or encumbrance of
utility assets for the benefit of an associate company, unless that cross-subsidization, pledge, or encumbrance will
be consistent with the public interest.

[59 FR 65938, Dec. 22, 1994, as amended by
Order 579, 60 FR 22261, May 5, 1995]

§ 2.26 Policies concerning review of
applications under section 203.

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§ 2.27

(a) The Commission has adopted a
Policy Statement on its policies for reviewing transactions subject to section
203. That Policy Statement can be
found at 77 FERC ¶ 61,263 (1996). The
Policy Statement is a complete description of the relevant guidelines.
Paragraphs (b)–(e) of this section are
only a brief summary of the Policy
Statement.
(b) Factors Commission will generally
consider. In determining whether a proposed transaction subject to section 203
is consistent with the public interest,
the Commission will generally consider
the following factors; it may also consider other factors:
(1) The effect on competition;
(2) The effect on rates; and
(3) The effect on regulation.
(c) Effect on competition. Applicants
should provide data adequate to allow
analysis under the Department of Justice/Federal Trade Commission Merger
Guidelines, as described in the Policy

[Order 592, 61 FR 68606, Dec. 30, 1996, as
amended by Order 669–A, 71 FR 28443, May 16,
2006]

NON-MANDATORY GUIDANCE ON SMART
GRID STANDARDS
§ 2.27 Availability of North American
Energy Standards Board (NAESB)
Smart Grid Standards as non-mandatory guidance.
The
Commission
informationally
lists the following NAESB Business
Practices Standards as non-mandatory
guidance:
(a) WEQ–016, Specifications for Common Electricity Product and Pricing
Definition, WEQ Version 003, July 31,
2012;
(b) WEQ–017, Specifications for Common Schedule Communication Mechanism for Energy Transactions, WEQ
Version 003, July 31, 2012;

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§ 2.51

18 CFR Ch. I (4–1–18 Edition)

(c)
WEQ–018,
Specifications
for
Wholesale Standard Demand Response
Signals, WEQ Version 003, July 31, 2012;
(d) WEQ–019, Customer Energy Usage
Information
Communication,
WEQ
Version 003, July 31, 2012, as amended
on March 21, 2013; and
(e) WEQ–020, Smart Grid Standards
Data Element Table, WEQ Version 003,
July 31, 2012.
(f) Copies of these standards may be
obtained from the North American Energy Standards Board, 801 Travis
Street, Suite 1675, Houston, TX 77002,
Tel: (713) 356–0060. NAESB’s Web site is
at http://www.naesb.org/. Copies may be
inspected at the Federal Energy Regulatory Commission, Public Reference
and Files Maintenance Branch, 888
First Street NE., Washington, DC 20426,
Tel: (202) 502–8371, http://www.ferc.gov.

piping; cathodic protection equipment;
gas cleaning, cooling and dehydration
equipment; residual refining equipment; water pumping, treatment and
cooling equipment; electrical and communication equipment; and buildings.
The auxiliary installations must be located within the existing or proposed
certificated permanent right-of-way or
authorized facility site and must be
constructed using the temporary work
space used to construct the existing or
proposed facility (see Appendix A to
this Part 2 for guidelines on what is
considered to be the appropriate work
area in this context).
(2) Advance notification. One of the
following requirements will apply to
any specified auxiliary installation. If
auxiliary facilities are to be installed:
(i) On existing transmission facilities, then no notification is required;
(ii) On, or at the same time as, certificated facilities which are not yet in
service (except those authorized under
the automatic procedures of part 157 of
subpart F of this chapter), then a description of the auxiliary facilities and
their locations must be provided to the
Commission at least 30 days in advance
of their installation; or
(iii) On, or at the same time as facilities that are proposed, then the auxiliary facilities must be described in the
environmental report specified in
§ 380.12 or in a supplemental filing
while the application is pending.
(3) Abandonment or replacement of auxiliary installations. Authorization to
abandon or replace auxiliary facilities
that were or could be installed under
paragraph (a)(1) of this section is pregranted under section 7(b) of the Natural Gas Act, and no reporting is required, provided that:
(i) All activities will be confined to
areas, including temporary work space,
previously authorized by the Commission for the construction and operation
of facilities at that location;
(ii) All activities will comply with
applicable conditions on certificate authorizations for the construction and
operation of facilities at that location;
and
(iii) The abandonment or replacement will have no adverse impact on
customers’ certificated services.

[79 FR 56954, Sept. 24, 2014]

STATEMENTS OF GENERAL POLICY AND
INTERPRETATIONS UNDER THE NATURAL GAS ACT
§ 2.51

[Reserved]

§ 2.52 Suspension of rate schedules.
The interpretation stated in § 2.4 applies as well to the suspension of rate
schedules under section 4 of the Natural Gas Act.
(Natural Gas Act, 15 U.S.C. 717–717w (1976 &
Supp. IV 1980); Federal Power Act, 16 U.S.C.
791a–828c (1976 & Supp. IV 1980); Dept. of Energy Organization Act, 42 U.S.C. 7101–7352
(Supp. IV 1980); E.O. 12009, 3 CFR part 142
(1978); 5 U.S.C. 553 (1976))

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[Order 303, 48 FR 24361, June 1, 1983]

§ 2.55 Auxiliary installations and replacement facilities.
For the purposes of section 7(c) of the
Natural Gas Act, as amended, the word
facilities as used therein shall be interpreted to exclude:
(a) Auxiliary installations. (1) Installations (excluding gas compressors)
which are merely auxiliary or appurtenant to an authorized or proposed
transmission pipeline system and
which are installations only for the
purpose of obtaining more efficient or
more economical operation of the authorized or proposed transmission facilities, such as: Valves; drips; pig
launchers/receivers; yard and station

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Federal Energy Regulatory Commission
(b) Replacement of facilities. (1) Facilities which constitute the replacement
of existing facilities that have or will
soon become physically deteriorated or
obsolete, to the extent that replacement is deemed advisable, if:
(i) The replacement will not result in
a reduction or abandonment of service
through the facilities;
(ii) The replacement facilities will
have a substantially equivalent designed delivery capacity, will be located in the same right-of-way or on
the same site as the facilities being replaced, and will be constructed using
the temporary work space used to construct the existing facility (see Appendix A to Part 2 for guidelines on what
is considered to be the appropriate
work area in this context);
(iii) Except as described in paragraph
(b)(2) of this section, the company files
notification of such activity with the
Commission at least 30 days prior to
commencing construction.
(2) Advance notification not required.
The advance notification described in
paragraph (b)(1)(iii) of this section is
not required if:
(i) The cost of the replacement
project does not exceed the cost limit
specified in Column 1 of Table I of
§ 157.208(d) of this chapter; or
(ii) U.S. Department of Transportation safety regulations require that
the replacement activity be performed
immediately;
(3) Contents of the advance notification.
The advance notification described in
paragraph (b)(1)(iii) of this section
must include the following information:
(i) A brief description of the facilities
to be replaced (including pipeline size
and length, compression horsepower,
design capacity, and cost of construction);
(ii) Current U.S. Geological Survey
7.5-minute series topographic maps
showing the location of the facilities to
be replaced; and
(iii) A description of the procedures
to be used for erosion control, revegetation and maintenance, and stream
and wetland crossings.
(4) Annual report. On or before May 1
of each year, a company must file (in
accordance with filing procedures posted on the Commission’s Web site at

§ 2.55
http://www.ferc.gov.) an annual report
that lists for the previous calendar
year each replacement project that was
completed pursuant to paragraph (b)(1)
of this section and that was exempt
from the advance notification requirement pursuant to paragraph (b)(2) of
this section. For each such replacement project, the company must include all of the information described
in paragraph (b)(3) of this section. Exception. A company does not have to include in this annual report any aboveground replacement project that did
not involve compression facilities or
the use of earthmoving equipment.
(c) Landowner notification. (1)(i) No
activity described in paragraphs (a)
and (b) of this section that involves
ground disturbance is authorized unless a company makes a good faith effort to notify in writing each affected
landowner, as noted in the most recent
county/city tax records as receiving
the tax notice, whose property will be
used and subject to ground disturbance
as a result of the proposed activity, at
least five days prior to commencing
any activity under this section. A landowner may waive the five-day prior notice requirement in writing, so long as
the notice has been provided. No landowner notice under this section is required:
(A) If all ground disturbance will be
confined entirely to areas within the
fence line of an existing above-ground
site of facilities operated by the company; or
(B) For activities done for safety,
DOT compliance, or environmental or
unplanned maintenance reasons that
are not foreseen and that require immediate attention by the company.
(ii) The notification shall include at
least:
(A) A brief description of the facilities to be constructed or replaced and
the effect the activity may have on the
landowner’s property;
(B) The name and phone number of a
company representative who is knowledgeable about the project; and
(C) A description of the Commission’s
Landowner Helpline, which an affected
person may contact to seek an informal resolution of a dispute as explained in § 1b.22(a) of this chapter and
the Landowner Helpline number.

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§ 2.57

18 CFR Ch. I (4–1–18 Edition)

(2) ‘‘Affected landowners’’ include
owners of interests, as noted in the
most recent county/city tax records as
receiving tax notice, in properties (including properties subject to rights-ofway and easements for facility sites,
compressor stations, well sites, and all
above-ground facilities, and access
roads, pipe and contractor yards, and
temporary work space) that will be directly affected by (i.e., used) and subject to ground disturbance as a result
of activity under this section.
(d) [Reserved]

§ 2.60 Facilities and activities during
an emergency—accounting treatment of defense-related expenditures.
The Commission, cognizant of the
need of the natural gas industry for advice with respect to the applicability of
the Natural Gas Act and the Commission’s regulations thereunder regarding
activities and operations of natural gas
companies taking security measures in
preparation for a possible national
emergency, sets forth the following interpretation and statement of policy:
(a) Facilities. The definition of auxiliary installations in § 2.55(a) for which no
certificate authority is necessary includes such defense-related facilities as
(1) fallout shelters at compressor stations and other operating and maintenance camps; (2) emergency company
headquarters or other similar installations; and (3) emergency communication equipment.
(b) The Commission will consider
reasonable investment in defense-related facilities, such as those described
in paragraph (a) of this section, to be
prudent investment for ratemaking purposes.
(c) When a person, not otherwise subject to the jurisdiction of the Commission, files an application for a certificate of public convenience and necessity authorizing the construction of facilities to be used solely for operation
in a national emergency for the delivery of gas to, or receipt of gas from, a
person subject to the Commission’s jurisdiction, the Commission will consider a request by such applicant for
waiver of the requirement to keep and
maintain its accounts in accordance
with the Uniform System of Accounts
for Natural Gas Companies (parts 201
and 204 of this chapter) or to file the
annual reports to the Commission required by §§ 260.1 and 260.2 of this chapter.

(Sec. 7, 52 Stat. 824; 15 U.S.C. 717f)
[Order 148, 14 FR 681, Feb. 16, 1949]
EDITORIAL NOTE: For FEDERAL REGISTER citations affecting § 2.55, see the List of CFR
Sections Affected, which appears in the
Finding Aids section of the printed volume
and at www.fdsys.gov.

§ 2.57 Temporary certificates—pipeline
companies.
The Federal Energy Regulatory Commission will exercise the emergency
powers set forth in the second proviso
of section 7(c) of the Natural Gas Act
to authorize in appropriate cases, by
issuance of temporary certificates,
comparatively minor enlargements or
extensions of an existing pipeline system. It will not be the policy of the
Commission, however, to proceed summarily, i.e., without notice or hearing,
in cases where the proposed construction is of major proportions. Pipeline
companies are accordingly urged to
conduct their planning and to submit
their applications for authority sufficiently early so that compliance with
the requirements relating to issuance
of permanent certificates of public convenience and necessity (when those requirements are deemed applicable by
the Commission) will not cause undue
delay in the commencement of necessary construction.

(Secs. 3, 4, 15, 16, 301, 304, 308, and 309 (41 Stat.
1063–1066, 1068, 1072, 1075; 49 Stat. 838, 839, 840,
841, 854–856, 858–859; 82 Stat. 617; 16 U.S.C. 796,
797, 803, 808, 809, 816, 825, 825b, 825c, 825g, 825h,
826i), as amended, secs. 8, 10, and 16 (52 Stat.
825–826, 830; 15 U.S.C. 717g, 717i, 717o))

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(52 Stat. 824; 56 Stat. 83; 15 U.S.C. 717f)
[Gen. Policy 62–1, 26 FR 10098, Oct. 27, 1961, as
amended by Order 737, 75 FR 43402, July 26,
2010]

[Order 274, 28 FR 12866, Dec. 4, 1963, as
amended by Order 567, 42 FR 30612, June 16,
1977]

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Federal Energy Regulatory Commission

tract for the first sale of natural gas is
not in violation of section 504(a) of the
NGPA.
(b) Recovery in rates. A pipeline that
makes any payments referred to under
paragraph (a) of this section, to first
sellers may file to recover such costs in
any section 4(e) rate filing other than a
filing to recover purchased gas costs.
(c) Case-specific review. A pipeline’s
method of recovering these costs and
how it should apportion them among
customers will be addressed on a caseby-case basis in the context of individual rate case filings.
(d) Customers’ rights. When a pipeline
seeks to recover payments referred to
under paragraph (a) of this section, its
customers will have the full opportunity contemplated by section 4 of the
Natural Gas Act to raise questions as
to the prudence of such payments, the
apportionment of costs among customers proposed by the filing pipeline,
and any other reasonably related matters.
(e) Certificate amendments and abandonment. With regard to natural gas
the sale of which is subject to the Commission’s jurisdiction under the Natural Gas Act, if any payments referred
to under paragraph (a) of this section
are accompanied by a change in or a
termination of, the first seller’s contractual obligation to provide natural
gas service, the Commission will, as a
general policy under sections 7(c) and
7(b) of the Natural Gas Act, expeditiously grant any certificate amendments or abandonment authorizations,
required to effectuate such contractual
or service modifications.
In cases where a producer abandonment application is based on payments
made pursuant to this policy statement, the interstate pipeline making
the payments will be deemed to have
waived any right to oppose the abandonment.

§ 2.67 Calculation of taxes for property
of pipeline companies constructed
or acquired after January 1, 1970.
Pursuant to the provisions of section
441(a)(4)(A) of the Tax Reform Act of
1969, 83 Stat. 487, 625, natural gas pipeline companies which have exercised
the option provided by that section to
change from flow through accounting
will be permitted by the Commission,
with respect to liberalized depreciation, to employ a normalization method for computing Federal income taxes
in their accounts and annual reports
with respect to property constructed or
acquired after January 1, 1970, to the
extent to which such property increases the productive or operational
capacity of the utility and is not a replacement of existing capacity. Such
normalization will also be permitted
for ratemaking purposes. As to balances in Account No. 282 of the Uniform System of Accounts, ‘‘Accumulated deferred income taxes—Other
property,’’ it will remain the Commission’s policy to deduct such balances
from the rate base of natural gas pipeline companies in rate proceedings.
(Secs. 3, 4, 5, 8, 9, 10, 15, 16, 301, 304, 308, and
309 (41 Stat. 1063–1066, 1068, 1072, 1075; 49 Stat.
838, 839, 840, 841, 854–856, 858–859; 52 Stat. 822,
823, 825, 826; 76 Stat. 72; 82 Stat. 617; 16 U.S.C.
796, 797, 803, 808, 809, 816, 825, 825b, 825c, 825g,
825h, 826i); as amended, secs. 8, 10, and 16 (52
Stat. 825–826, 830; 15 U.S.C. 717c, 717d, 717g,
717h, 717i, 717o))
[Order 404, 35 FR 7964, May 23, 1970, as
amended by Order 567, 42 FR 30612, June 16,
1977]

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§ 2.69

§ 2.78

[Reserved]

§ 2.76 Regulatory treatment of payments made in lieu of take-or-pay
obligations.
With respect to payments made to a
first seller of natural gas as consideration for waiving or revising any agreement for the first sale of natural gas,
as defined by section (2)(21) of the Natural Gas Policy Act (NGPA), the Commission sets forth the following statement of general policy and interpretation of law.
(a) Payments in consideration. A first
seller of natural gas that receives payments as consideration for amending or
waiving the take-or-pay or similar
minimum payment provisions of a con-

[50 FR 16080, Apr. 24, 1985, as amended by
Order 436, 50 FR 42487, Oct. 18, 1985]

§ 2.78 Utilization and conservation of
natural resources—natural gas.
(a)(1) The national interests in the
development and utilization of natural
gas resources throughout the United
States will be served by recognition
and implementation of the following

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§ 2.78

18 CFR Ch. I (4–1–18 Edition)

priority-of-service categories for use
during periods of curtailed deliveries
by jurisdictional pipeline companies:
(i) Residential, small commercial
(less than 50 Mcf on a peak day).
(ii) Large commercial requirements
(50 Mcf or more on a peak day), firm industrial requirements for plant protection, feedstock and process needs, and
pipeline customer storage injection requirements.
(iii) All industrial requirements not
specified in paragraph (a)(1)(ii), (iv),
(v), (vi), (vii), (viii), or (ix) of this section.
(iv) Firm industrial requirements for
boiler fuel use at less than 3,000 Mcf per
day, but more than 1,500 Mcf per day,
where alternate fuel capabilities can
meet such requirements.
(v) Firm industrial requirements for
large volume (3,000 Mcf or more per
day) boiler fuel use where alternate
fuel capabilities can meet such requirements.
(vi) Interruptible requirements of
more than 300 Mcf per day, but less
than 1,500 Mcf per day, where alternate
fuel capabilities can meet such requirements.
(vii) Interruptible requirements of intermediate volumes (from 1,500 Mcf per
day through 3,000 Mcf per day), where
alternate fuel capabilities can meet
such requirements.
(viii) Interruptible requirements of
more than 3,000 Mcf per day, but less
than 10,000 Mcf per day, where alternate fuel capabilities can meet such requirements.
(ix) Interruptible requirements of
more than 10,000 Mcf per day, where alternate fuel capabilities can meet such
requirements.
(2) The priorities-of-deliveries set
forth above will be applied to the deliveries of all jurisdictional pipeline companies during periods of curtailment on
each company’s system; except, however, that, upon a finding of extraordinary circumstances after hearing initiated by a petition filed under § 385.207
of this chapter, exceptions to those priorities may be permitted.
(3) The above list of priorities requires the full curtailment of the lower
priority category volumes to be accomplished before curtailment of any higher priority volumes is commenced. Ad-

ditionally, the above list requires both
the direct and indirect customers of
the pipeline that use gas for similar
purposes to be placed in the same category of priority.
(4) The tariffs filed with this Commission should contain provisions that
will reflect sufficient flexibility to permit pipeline companies to respond to
emergency situations (including environmental emergencies) during periods
of curtailment where supplemental deliveries are required to forestall irreparable injury to life or property.
(b) Request for relief from curtailment shall be filed under § 385.1501 of
this chapter. Those petitions shall use
the priorities set forth in (paragraph
(a)(1) of this section) above, the definitions contained in paragraph (b)(3) of
this section and shall contain the following minimal information:
(1) The specific amount of natural
gas deliveries requested on peak day
and monthly basis, and the type of contract under which the deliveries would
be made.
(2) The estimated duration of the relief requested.
(3) A breakdown of all natural gas requirements on peak day and monthly
bases at the plant site by specific enduses.
(4) The specific end-uses to which the
natural gas requested will be utilized
and should also reflect the scheduling
within each particular end-use with
and without the relief requested.
(5) The estimated peak day and
monthly volumes of natural gas which
would be available with and without
the relief requested from all sources of
supply for the period specified in the
request.
(6) A description of existing alternate
fuel capabilities on peak day and
monthly bases broken down by enduses as shown in paragraph (b)(3) of
this section.
(7) For the alternate fuels shown in
paragraph (b)(5) of this section, provide
a description of the existing storage facilities and the amount of present fuel
inventory, names and addresses of existing alternate fuel suppliers, and anticipated delivery schedules for the period for which relief is sought.

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Federal Energy Regulatory Commission
(8) The current price per million Btu
for natural gas supplies and alternate
fuels supplies.
(9) A description of efforts to secure
natural gas and alternate fuels, including documentation of contacts with the
Federal Energy Office and any state or
local fuel allocation agencies or public
utility commission.
(10) A description of all fuel conservation activities undertaken in the facility for which relief is sought.
(11) If petitioner is a local natural
gas distributor, a description of the
currently effective curtailment program and details regarding any flexibility which may be available by effectuating additional curtailment to its
existing industrial customers. The distributor should also provide a breakdown of the estimated disposition of its
natural gas estimated to be available
by end-use priorities established in
paragraph (a)(1) of this section for the
period for which relief is sought.
(c) When used in paragraphs (a) and
(b) of this section, the following terms
will be defined as follows:
(1) Residential. Service to customers
which consists of direct natural gas
usage in a residential dwelling for
space heating, air conditioning, cooking, water heating, and other residential uses.
(2) Commercial. Service to customers
engaged primarily in the sale of goods
or services including institutions and
local, state, and federal government
agencies for uses other than those involving manufacturing or electric
power generation.
(3) Industrial. Service to customers
engaged primarily in a process which
creates or changes raw or unfinished
materials into another form or product
including the generation of electric
power.
(4) Firm service. Service from schedules or contracts under which seller is
expressly obligated to deliver specific
volumes within a given time period and
which anticipates no interruptions, but
which may permit unexpected interruption in case the supply to higher
priority customers is threatened.
(5) Interruptible service. Service from
schedules or contracts under which
seller is not expressly obligated to deliver specific volumes within a given

§ 2.78
time period, and which anticipates and
permits interruption on short notice,
or service under schedules or contracts
which expressly or impliedly require
installation of alternate fuel capability.
(6) Plant protection gas. Is defined as
minimum volumes required to prevent
physical harm to the plant facilities or
danger to plant personnel when such
protection cannot be afforded through
the use of an alternate fuel. This includes the protection of such material
in process as would otherwise be destroyed, but shall not include deliveries required to maintain plant production. For the purposes of this definition propane and other gaseous fuels
shall not be considered alternate fuels.
(7) Feedstock gas. Is defined as natural
gas used as raw material for its chemical properties in creating an end product.
(8) Process gas. Is defined as gas use
for which alternate fuels are not technically feasible such as in applications
requiring precise temperature controls
and precise flame characteristics. For
the purposes of this definition propane
and other gaseous fuels shall not be
considered alternate fuels.
(9) Boiler fuel. Is considered to be natural gas used as a fuel for the generation of steam or electricity, including
the utilization of gas turbines for the
generation of electricity.
(10) Alternate fuel capabilities. Is defined as a situation where an alternate
fuel could have been utilized whether
or not the facilities for such use have
actually been installed; Provided, however, Where the use of natural gas is for
plant protection, feedstock, or process
uses and the only alternate fuel is propane or other gaseous fuel then the
consumer will be treated as if he had
no alternate fuel capability.
(Sec. 4, 52 Stat. 822, 76 Stat. 72 (15 U.S.C.
717c); Sec. 5, 52 Stat. 823 (15 U.S.C. 717d); Sec.
7, 52 Stat. 824, 825, 56 Stat. 83, 84, 61 Stat. 459
(15 U.S.C. 717f); Sec. 10, 52 Stat. 826 (15 U.S.C.
717i); Sec. 14, 52 Stat. 820 (15 U.S.C. 717m);
Sec. 15, 52 Stat. 829 (15 U.S.C. 717n); Sec. 16,
52 Stat. 930 (15 U.S.C. 717o); Pub. L. 96–511, 94
Stat. 2812 (44 U.S.C. 3501 et seq.))
[Order 467A, 38 FR 2171, Jan. 22, 1973, as
amended by Order 467B, 38 FR 6386, Mar. 9,
1973; Order 493–A, 38 FR 30433, Nov. 5, 1973;
Order 467–C, 39 FR 12984, Apr. 10, 1974; Order
225, 47 FR 19055, May 3, 1982]

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§ 2.80

18 CFR Ch. I (4–1–18 Edition)

STATEMENT OF GENERAL POLICY TO IMPLEMENT PROCEDURES FOR COMPLIANCE WITH THE NATIONAL ENVIRONMENTAL POLICY ACT OF 1969

§§ 2.100–2.102

§ 2.103 Statement of policy respecting
take or pay provisions in gas purchase contracts.
(a) Recognizing that take or pay contract obligations may be shielding the
prices of deregulated and other higher
cost gas from market constraints, the
Commission sets forth its general policy regarding prepayments for natural
gas pursuant to take or pay provisions
in gas contracts and amendments
thereto between producers and interstate pipelines which become effective
December 23, 1982. The provisions of
this policy statement do not establish
a binding norm but instead provide
general guidance. In particular cases,
both the underlying validity of the policy and its application to particular
facts may be challenged and are subject to further consideration.
(b) With respect to gas purchase contracts entered into on or after December 23, 1982, the Commission intends to
apply a rebuttable presumption in general rate cases that prepayments to
producers will not be given rate base
treatment if the prepayments are made
pursuant to take or pay requirements
in such gas purchase contracts or
amendments which exceed 75 percent of
annual deliverability.

AUTHORITY: Sections 2.80–2.82 issued under
secs. 4, 10, 15, 307, 309, 311 and 312 (41 Stat.
1065, 1066, 1068, 1070; 46 Stat. 798, 49 Stat. 839,
840, 841, 942, 843, 844, 856, 857, 858, 859, 860,
Stat. 501, 82 Stat. 617; 16 U.S.C. 797, 803, 808,
825f, 825h, 825j, 825k), and the Natural Gas
Act, particularly secs. 7 and 16 (52 Stat. 824,
825, 830, 56 Stat. 83, 84; 61 Stat. 459; 15 U.S.C.
717f, 717o), and the National Environmental
Policy Act of 1969, Pub. L. 91–190, approved
January 1, 1970, particularly secs. 102 and 103
(83 Stat. 853, 854), unless otherwise noted.

§ 2.80 Detailed
ment.

environmental

state-

(a) It will be the general policy of the
Federal Energy Regulatory Commission to adopt and to adhere to the objectives and aims of the National Environmental Policy Act of 1969 (NEPA) in
its regulations promulgated for statutes under the jurisdiction of the Commission, including the Federal Power
Act, the Natural Gas Act and the Natural Gas Policy Act. The National Environmental Policy Act of 1969 requires, among other things, all Federal
agencies to include a detailed environmental statement in every recommendation or report on proposals
for legislation and other major Federal
actions significantly affecting the
quality of the human environment.
(b) Therefore, in compliance with the
National Environmental Policy Act of
1969, the Commission staff will make a
detailed
environmental
statement
when the regulatory action taken by
the Commission under the statutes
under the jurisdiction of the Commission will have a significant environmental impact. The specific regulations implementing NEPA are contained in part 380 of the Commission’s
regulations.

(Natural Gas Act, 15 U.S.C. 717–717w; Natural
Gas Policy Act of 1978, Pub. L. No. 95–621, 92
Stat. 3350, 15 U.S.C. 3301–3432)
[47 FR 57269, Dec. 23, 1982]

§ 2.104 Mechanisms for passthrough of
pipeline take-or-pay buyout and
buydown costs.
(a) General Policy. The Commission as
a matter of policy will provide two distinct mechanisms for passthrough of
take-or-pay buyout and buydown costs
of interstate natural gas pipelines. The
first is pursuant to existing Commission policy and practice. Under this
method, pipelines may pass through
prudently incurred take-or-pay buyout
and buydown costs in their sales commodity rates. The second method is
available to pipelines which agree to
an equitable sharing of take-or-pay
costs and which transport under part
284 of this chapter. Qualifying pipelines
may utilize the alternative passthrough mechanisms described in this

[Order 486, 52 FR 47910, Dec. 17, 1987]

STATEMENT OF GENERAL POLICY TO IMPLEMENT THE ECONOMIC STABILIZATION ACT OF 1970, AS AMENDED, AND
EXECUTIVE ORDERS 11615 AND 11627
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[Reserved]

AUTHORITY: Sections 2.90 through 2.102
issued under 84 Stat. 799, as amended, 85
Stat. 38, unless otherwise noted.

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kpayne on DSK54DXVN1OFR with $$_JOB

Federal Energy Regulatory Commission
section. Where a pipeline agrees to absorb from 25 to 50 percent of take-orpay buyout and buydown costs, the
Commission will permit the pipeline to
recover through a fixed charge an
amount equal to (but not greater than)
the amount absorbed. Any remaining
costs up to 50 percent of total buyout
and buydown costs may be recovered
either through a commodity rate surcharge or a volumetric surcharge on
total throughput.
(b) Cost allocation procedures. A pipeline’s volume-based surcharges must be
based on the volumes which underlie
its most recent Commission-approved
rates. Fixed charges must be based on
each customer’s cumulative deficiency
in purchases in recent years (during
which the current take-or-pay liabilities of the pipelines were incurred)
measured in relation to that customer’s purchases during a representative period during which take-or-pay
liabilities were not incurred. The allocation formula employed must incorporate the following guidelines:
(1) A representative base period must
be selected. The base period must reflect a representative level of purchases by the pipeline’s firm customers
during a period preceding the onset of
changed conditions which resulted in
reduced purchases and growth of the
take-or-pay problem.
(2) Firm purchases by each customer
during the base year under firm rate
schedules or contracts for firm service
must be determined.
(3) Firm sales purchase deficiency
volumes for each subsequent year must
be determined.
(4) A fixed charge based on each customer’s cumulative deficiencies as
compared to total cumulative deficiencies must be derived. The filing
pipeline will be free to select for rate
calculation and filing purposes a reasonable amortization period for buyout
and buydown costs being recovered
through fixed charges or volumetric
surcharges. The pipeline will be entitled to interest at the rate set forth in
part 154 of this chapter on unamortized
amounts.
(c) Implementing procedures. (1) Pipelines acting pursuant to this section
may submit on or before December 31,
1990, a non-PGA rate filing under sec-

§ 2.104
tion 4(e) of the Natural Gas Act. Pipelines may include in their filings a
fixed charge and a volumetric surcharge to recover buyout and buydown
costs actually paid as of the date of filing plus similar costs which are known
and measurable within the following
nine months. Detailed support for the
amounts claimed and for the calculation of customer surcharges must be
provided. In addition, the pipeline must
disclose and describe all consideration,
both cash and noncash, given to producers in exchange for take-or-pay relief.
(2) In any filings made under this section, pipelines must include proposals
for periodic (preferably annual) adjustments to customer surcharges, together with any necessary accounting
procedures, designed to assure that
revenues recovered by the pipeline remain in balance with buyout and
buydown costs covered by the filing
and actually incurred by the pipeline.
(d) Prudence. (1) The Commission will
examine the issue of prudence if it is
raised by a party in an individual proceeding. If it is raised, the pipeline will
be required to demonstrate the prudence of take-or-pay buyout and
buydown costs which it seeks to recover from its customers through both
fixed and volume-based charges.
(2) The Commission intends to exercise its authority to the full extent
permitted by the Natural Gas Act to
approve take-or-pay settlements. The
Commission
intends
to
approve
uncontested take-or-pay settlements
which are consistent with this section
and found to be in the public interest.
The Commission will also, if it appears
reasonable and permissible to do so, approve contested settlements as to all
consenting parties and initiate separate hearings to establish the rates for
opposing parties. Alternatively, the
Commission will approve contested settlements on the merits if supported by
substantial evidence in the record. In
any case where hearings are held as to
the prudence of take-or-pay buyout and
buydown costs, the Commission will
permit the pipeline the opportunity to
recover all take-or-pay costs found to
be prudent from the contesting parties
on a proportional basis, even if the
amount allowed is greater than the

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kpayne on DSK54DXVN1OFR with $$_JOB

§ 2.105

18 CFR Ch. I (4–1–18 Edition)

amounts initially sought to be recovered by the pipeline.
(e) Flowthrough by downstream pipelines. Downstream pipelines must flow
through approved take-or-pay fixed
charges based on the cumulative purchase deficiencies of their customers.
Volumetrically-based surcharges must
be flowed through on a volumetric
basis. Customers of downstream pipelines have the right in connection with
either PGA or general rate filings to
challenge the purchasing practices of
such pipelines. Remedies for purchasing practices found by the Commission to be imprudent will be determined on a case-by-case basis.
(f) Ongoing proceedings. Pipeline rate
proceedings pending September 15, 1987
may be utilized as a forum for implementing the approved cost recovery
mechanisms set forth in this section.
Permission will be granted in cases
where implementation of this policy in
pending proceedings appears feasible,
will not result in inordinate delay, or
can be expected to result in unnecessary or cumulative rate filings with
the Commission. In the event permission is granted, the presiding judge(s)
will allow pipelines to supplement
their filings to the extent necessary to
assure compliance with the filing and
data requirements set forth herein. The
presiding judges shall also establish
any procedures necessary to protect
the rights of all parties. Any rates established pursuant to this section will
be permitted to become effective only
prospectively upon Commission approval.
(g) Scope. This section does not go beyond the Commission’s determination
in the April 10, 1985, policy statement
(Docket No. PL85–1–000) that take-orpay buyout and buydown costs do not
violate the pricing provision of the
Natural Gas Policy Act of 1978 (NGPA).
It is not intended to affect take-or-pay
prepayments made by pipelines and included in account 165 and in their rate
bases. Nor does it address the issue of
whether take-or-pay prepayments to a
producer for gas not taken and which
cannot be made up violate the Title I
pricing provisions of the NGPA. This
policy statement applies only to
buyout and buydown costs paid by
pipelines that are transporting under

part 284 of this chapter, under existing
contracts, and is not intended to disturb in any way take-or-pay settlements previously entered into between
pipelines and their producer suppliers.
[Order 500, 52 FR 30351, Aug. 14, 1987, as
amended at 52 FR 35539, Sept. 22, 1987; Order
500–F, 53 FR 50924, Dec. 19, 1988; 54 FR 52394,
Dec. 21, 1989; Order 581, 60 FR 53064, Oct. 11,
1995]

§ 2.105 Gas supply charges.
An interstate natural gas pipeline
that transports under part 284 of this
chapter may include in its tariff a
charge, not related to facilities, for
standing ready to supply gas to sales
customers in accordance with the following principles:
(a) The pipeline may not recover
take-or-pay or similar charges from
suppliers by any other means.
(b) The pipeline must allow its sales
customers to nominate levels of service
freely within their firm sales entitlements or otherwise employ a mechanism for the renegotiation of levels of
service at regular intervals.
(c) The pipeline must announce prior
to nominations by the customers a
firm price or pricing formula for the
service, and hold that price or pricing
formula firm during the interval arranged in paragraph (b) of this section.
(d) By nominating a new level of
service lower than its current level, a
customer has consented to any abandonment sought by the pipeline commensurate with the difference between
the current level of service and the
nominated level.
[Order 500, 52 FR 30352, Aug. 14, 1987; 52 FR
35539, Sept. 22, 1987, and 54 FR 52394, Dec. 21,
1989]

RULES OF GENERAL APPLICABILITY
§ 2.201

[Reserved]

STATEMENT OF GENERAL POLICY AND INTERPRETATIONS UNDER THE NATURAL
GAS POLICY ACT OF 1978
§ 2.300 Statement of policy concerning
allegations of fraud, abuse, or similar grounds under section 601(c) of
the NGPA.
Recognizing the potential for an increasing number of intervenor complaints predicated on the fraud, abuse,

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kpayne on DSK54DXVN1OFR with $$_JOB

Federal Energy Regulatory Commission
or similar grounds exception to guaranteed passthrough, the Commission
sets forth the elements of a cognizable
claim under section 601(c)(2) which it
expects to apply in cases in which
fraud, abuse, or similar grounds is
raised. The provisions of this policy
statement do not establish a binding
norm but instead provide general guidance. In particular cases, both the underlying validity of the policy and its
application to particular facts may be
challenged and are subject to further
consideration. The procedure prescribed conforms with the NGPA’s general guarantee of passthrough by placing the burden of pleading the elements
and proving the elements of a case on
intervenors who would allege fraud,
abuse, or similar grounds as a basis for
denying passthrough of gas prices incurred by an interstate pipeline.
(a) In order for the issue of fraud, as
that term is used in section 601(c) of
the NGPA, to be considered in a proceeding, an intervenor or intervenors
must file a complaint alleging that:
(1) The interstate pipeline, any first
seller who sells natural gas to the
interstate pipeline, or both acting together, have made a fraudulent misrepresentation or concealment; and
(2) Because of that fraudulent misrepresentation or concealment, the
amount paid by the interstate pipeline
to any first seller of natural gas was
higher than it would have been absent
the fraudulent conduct.
(b) In order for the issue of abuse, as
that term is used in section 601(c) of
the NGPA, to be considered in a proceeding, an intervenor or intervenors
must file a complaint alleging that:
(1) The interstate pipeline, a first
seller who sells to the interstate pipeline, or both acting together, have
made a negligent misrepresentation or
concealment, or other misrepresentation or concealment in disregard of a
duty; and
(2) Because of that negligent misrepresentation or concealment, or
other misrepresentation or concealment in disregard of a duty, the
amount paid by the interstate pipeline
to any first seller of natural gas was
higher than it would have been absent
the negligent misrepresentation or
concealment, or other misrepresenta-

§ 2.400
tion or concealment made in disregard
of a duty.
(c) In order for the issue of similar
grounds, as that term is used in section
601(c) of the NGPA, to be considered in
a proceeding, an intervenor or intervenors must file a complaint alleging
that:
(1) The interstate pipeline, any first
seller who sells natural gas to the
interstate pipeline, or both acting together, have made an innocent misrepresentation of fact; and
(2) Because of that innocent misrepresentation of facts, the amount
paid by the interstate pipeline to any
first seller of natural gas was higher
than it would have been absent the innocent misrepresentation of fact.
(Natural Gas Policy Act of 1978, Pub. L. 95–
621, 92 Stat. 3350, (15 U.S.C. 3301–3432))
[47 FR 6262, Feb. 11, 1982]

STATEMENT OF INTERPRETATION UNDER
THE
PUBLIC UTILITY REGULATORY
POLICIES ACT OF 1978
§ 2.400 Statement of interpretation of
waste concerning natural gas as the
primary energy source for qualifying small power production facilities.
For purposes of deciding whether
natural gas may be considered as waste
as the primary energy source pursuant
to § 292.204(b)(1)(i) of this chapter, the
Commission will use the criteria described in paragraphs (a), (b) and (c) of
this section.
(a) Category 1. Except as provided in
paragraph (b) of this section, natural
gas with a heating value of 300 Btu per
standard cubic foot (scf) or below will
be considered unmarketable.
(b) Category 2. In determining whether natural gas with a heating value
above 300 Btu but not more than 800
Btu per scf and natural gas produced in
the Moxa Arch area is unmarketable,
the Commission will consider the following information:
(1) The percentages of the chemical
components of the gas, the wellhead
pressure, and the flow rate;
(2) Whether the applicant offered the
gas to all potential buyers located
within 20 miles of the wellhead under
terms and conditions commensurate
with those prevailing in the region and

39

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§ 2.500

18 CFR Ch. I (4–1–18 Edition)
the right to waive or reduce civil penalties in appropriate individual circumstances where it determines that a
waiver or reduction is warranted by
the public interest.

that such potential buyers refused to
buy the gas; and
(3) A study, which may be submitted
by an applicant, that evaluates the economics of upgrading the gas for sale
and transporting the gas to a pipeline.
The study should include estimates of
the revenues which could be derived
from the sale of the gas and the fixed
and variable costs of upgrading.
(c) Category 3. In determining whether natural gas with a heating value
above 800 Btu per scf is marketable, the
Commission will consider the information included in paragraph (b) of this
section and whether:
(1) The gas has actually been flared,
vented to the atmosphere, or continuously injected into a non-producing
zone for a period of one year, pursuant
to legal authority; or
(2) The gas has been certified as
waste, i.e., suitable for disposal, by an
appropriate state authority.

[Order 594, 62 FR 15830, Apr. 3, 1997]

APPENDIX A TO PART 2—GUIDANCE FOR
DETERMINING THE ACCEPTABLE CONSTRUCTION AREA FOR AUXILIARY AND
REPLACEMENT FACILITIES
These guidelines shall be followed to determine what area may be used to construct the
auxiliary or replacement facility. Specifically, they address what areas, in addition to
the permanent right-of-way, may be used.
An auxiliary or replacement facility must
be within the existing right-of-way or facility site as specified by § 2.55(a)(1) or
§ 2.55(b)(1)(ii). Construction activities for the
auxiliary or replacement facility can extend
outside the current permanent right-of-way
if they are within the temporary and permanent right-of-way and associated work
spaces authorized for the construction of the
existing installation.
If documentation is not available on the
location and width of the temporary and permanent rights-of-way and associated work
spaces that were used to construct the existing facility, the company may use the following guidance for the auxiliary installation or replacement, provided the appropriate easements have been obtained:
a. Construction should be limited to no
more than a 75-foot-wide right-of-way including the existing permanent right-of-way for
large diameter pipeline (pipe greater than 12
inches in diameter) to carry out routine construction. Pipeline 12 inches in diameter and
smaller should use no more than a 50-footwide right-of-way.
b. The temporary right-of-way (working
side) should be on the same side that was
used in constructing the existing pipeline.
c. A reasonable amount of additional temporary work space on both sides of roads and
interstate highways, railroads, and significant stream crossings and in side-slope areas
is allowed. The size should be dependent
upon site-specific conditions. Typical work
spaces are:

[Order 471, 52 FR 19310, May 22, 1987]

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STATEMENT OF PENALTY REDUCTION/
WAIVER POLICY TO COMPLY WITH THE
SMALL BUSINESS REGULATORY ENFORCEMENT FAIRNESS ACT OF 1996
§ 2.500 Penalty reduction/waiver policy for small entities.
(a) It is the policy of the Commission
that any small entity is eligible to be
considered for a reduction or waiver of
a civil penalty if it has no history of
previous violations, and the violations
at issue are not the product of willful
or criminal conduct, have not caused
loss of life or injury to persons, damage
to property or the environment or endangered persons, property or the environment. An eligible small entity will
be granted a waiver if it can also demonstrate that it performed timely remedial efforts, made a good faith effort
to comply with the law and did not obtain an economic benefit from the violations. An eligible small entity that
cannot meet the criteria for waiver of
a civil penalty may be eligible for consideration of a reduced penalty. Upon
the request of a small entity, the Commission will consider the entity’s ability to pay before assessing a civil penalty.
(b) Notwithstanding paragraph (a) of
this section, the Commission reserves

Item
Two lane road (bored) ...........
Four lane road (bored) ..........
Major river (wet cut) ..............
Intermediate stream (wet cut)
Single railroad track ...............

Typical extra area (width/
length)
25–50 by 100 feet.
50 by 100 feet.
100 by 200 feet.
50 by 100 feet.
25–50 by 100 feet.

d. The auxiliary or replacement facility
must be located within the permanent rightof-way or, in the case of nonlinear facilities,

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Federal Energy Regulatory Commission

Pt. 2, App. A
be used for construction of the auxiliary or
replacement facility.
If these guidelines cannot be met, the company should consult with the Commission’s
staff to determine if the exemption afforded
by § 2.55 may be used. If the exemption may
not be used, construction authorization must
be obtained pursuant to another regulation
under the Natural Gas Act.

the cleared building site. In the case of pipelines this is assumed to be 50 feet wide and
centered over the pipeline unless otherwise
legally specified.
However, use of the above guidelines for
work space size is constrained by the physical evidence in the area. Areas obviously
not cleared during the existing construction,
as evidenced by stands of mature trees,
structures, or other features that exceed the
age of the facility being replaced, should not

[Order 790A, 79 FR 70068, Nov. 25, 2014]

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APPENDIX B TO PART 2 [RESERVED]

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21
22
23
24
25
26

20

19

17.
18

14.
15
16

13

12

11

9 ...
10

7 ...
8 ...

4 ...
5 ...
6 ...

2 ...

2 ...

Line
No.

Direct and indirect lease costs
and expenses.
Taxes (except income and production).
Production taxes ...........................
Other lease expenses ...................
Book depletion ..............................
Depreciation expense ...................
Amortization of capitalized IDC ....
Corporate general expense ..........

revenue deductions.

Total computed revenue ....
(gross income).

Direct and indirect lease costs
and expenses.
Taxes (except income and production).
Production taxes ...........................
Other lease expenses ...................
Depletion, depreciation and amortization.
Corporate general expense ..........
Area, district, division and field expense.
Miscellaneous lease revenues .....
Return on production rate base at
15 percent.
Exploration
and
development
costs and expenses.
Return on exploration rate base at
15 percent.
Regulatory commission expense
including return.

PRODUCTION, EXPLORATION AND
DEVELOPMENT COSTS

Particulars

1–A
1–A
............
1–A
............
1–A

1–A

1–A

............

1–A

1–A

1–A

1–A
1–A

1–A
1–A

1–A
1–A
1–A

A–1

1–A

Schedule No.

03
04
........
05
........
06

02

01

........

17

16

15

09
13

06
07

03
04
05

02

01

Line
No.

278,845,909

7 (779,097,382)

7 (654,604,447)

7 (283,121,142)

479,424,297
61,102,433

210,335,720

1,694,893,558

9,465,231,966

6,514,279

588,558,894

1,673,945,853

(12,203,136)
2,505,272,672

278,845,909
261,718,417

479,424,297
61,102,433
1,716,823,070

210,335,720

1,694,893,558

(1)—Total 1

............................
61,102,433
283,121,242
654,604,447
779,097,382
278,845,909

210,335,720

1,694,893,558

8,985,807,669

6,514,279

588,558,894

1,673,945,853

(12,203,136)
2,505,272,672

278,845,909
26,178,417

............................
61,102,433
1,716,823,070

210,335,720

1,694,893,558

(2)—Total excluding production taxes 2

....................
....................
24,287,986
30,223,586
51,488,205
....................

....................

....................

....................

....................

....................

....................

(1,348,729)
186,055,524

13,611,337
7,207,320

27,124,210
17,527,077
105,999,777

16,507,630

57,287,938

(3)—Gas
only 3

......................
......................
61,675,828
94,010,520
142,194,964
......................

......................

......................

......................

......................

......................

......................

(2,768,788)
427,939,601

25,077,796
21,758,604

96,699,673
24,988,900
297,881,312

20,431,444

$144,679,567

(4)—Lease
separation 3

....................
....................
6,177,596
7,007,662
12,316,790
....................

....................

....................

....................

....................

....................

....................

(314,067)
69,857,212

3,579,728
2,778,944

10,005,599
336,427
25,502,048

4,360,024

$19,763,791

(5)—No
lease separation 3

......................
......................
92,141,410
131,241,768
205,999,959
......................

......................

......................

......................

......................

......................

......................

(4,431,584)
663,852,337

42,268,861
31,744,868

133,829,482
42,852,404
429,383,137

41,299,098

$221,731,296

(6)—Total 4

................
................
90.33
90.33
90.33
................

................

................

................

................

................

................

90.33
90.33

90.33
90.33

90.33
90.33
90.33

9.33

90.33

(7)—Percentage
lease
separation gas 5

124,478,624
40,435,977
86,177,357
122,150,951
192,249,706
39,843,838

39,323,377

207,740,872

2,336,439,376

6,514,852

234,604,103

594,971,262

(4,163,842)
622,470,578

39,843,838
29,640,811

124,478,624
40,435,977
400,578,014

39,323,337

207,740,782

(8)—Allocated
amount gas 6

APPENDIX C TO PART 2—NATIONWIDE PROCEEDING COMPUTATION OF FEDERAL INCOME TAX ALLOWANCE INDEPENDENT
PRODUCERS, PIPELINE AFFILIATES AND PIPELINE PRODUCERS CONTINENTAL U.S.—1972 DATA (DOCKET NO. R–478)

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Pt. 2, App. C
18 CFR Ch. I (4–1–18 Edition)

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............

............

............
............
............

............

........

........

........
........
........

........

........

01

4–A
............

09
........

07

1–A
............

1–A

261,718,417

1,992,245,949

2,158,266,445

9 (243,846,540)

8 (1,470,935,857)

779,097,282

3,093,951,461

6,371,380,505

6,384,384

(12,203,136)
1,673,945,853

261,718,417

1,992,245,949

2,158,266,445

779,097,382
(1,470,935,857)
(243,846,540)

3,093,951,460

5,891,856,209

6,394,384

(12,203,136)
1,673,945,853

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Sfmt 8027

[Opinion 749, 41 FR 3092, Jan. 21, 1976]

3 From

2 Production

1 thru 15, col. (1). From Notice issued Sept. 12, 1974, app. A, p. 12, col. (d).
taxes have been deleted from col. (1).
notice issued Sept. 12, 1974, app. A, p. 12, cols. (g), (h), and (i).
4 Col. (3) plus col. (4) plus col. (5).
5 Calculated on a modified British thermal unit basis (1.5 to 1).
6 Col. (7) times col. (4), plus cols. (3) and (5).
7 See composites mailed to all parties on Feb. 13, 1974.
8 Calculated, 188.8 percent (A R64–1–2) times $779,097,382 equals $1,470,935,857.
9 Calculated 0.0146 (interest rate) times $16,701,817,818 (app. A, schedule 2–A, (d), line 11, p. 13) equals $243,846,540.
10 $577,745,791 divided by 9,508,369,001 equals 6.08 cents per thousand cubic feet.

1 Lines

Federal income tax at 48
percent.

Taxable income ..................

40.
41

42.
43

tax adjustment—add (DEDUCT).
Amortization of capitalized IDC ....
Estimated IDC capitalized in 1972
Interest expense (calculated) .......

35.
36
37
38
39

33.
34

Production net income (line 15
less line 32).

Total book expenses ..........

30

31.
32

28
29

Area, district, division and field expense.
Miscellaneous lease revenues .....
Exploration
and
development
costs and expenses.
Regulatory commission expense ..

27

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29,640,811

10 577,745,791

625,891,274

192,249,706
(362,967,445)
(60,587,136)

857,190,149

1,479,243,227

6,394,384

(4,163,842)
594,971,262

Federal Energy Regulatory Commission
Pt. 2, App. C

43

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31

Pt. 3a

18 CFR Ch. I (4–1–18 Edition)
ments cited herein are applicable to
the entire agency except that material
pertaining to personnel security shall
be safeguarded by the Personnel Security Officer and shall not be considered
classified material for the purpose of
this part.

PART 3 [RESERVED]
PART 3a—NATIONAL SECURITY
INFORMATION
GENERAL
Sec.
3a.1 Purpose.
3a.2 Authority.

[Order 470, 38 FR 5161, Feb. 26, 1973, as
amended by Order 756, 77 FR 4893, Feb. 1,
2012]

CLASSIFICATION

§ 3a.2 Authority.
Official information or material referred to as classified in this part is expressly exempted from public disclosure by 5 U.S.C. 552(b)(1). Wrongful disclosure thereof is recognized in the
Federal Criminal Code as providing a
basis for prosecution. E.O. 11652, March
8, 1972 (37 FR 5209, March 10, 1972), identifies the information to be protected,
prescribes classification, downgrading,
declassification, and safeguarding procedures to be followed and establishes a
monitoring system to insure its effectiveness. National Security Council Directive Governing the Classification,
Downgrading,
Declassification
and
Safeguarding of National Security Information, May 17, 1972 (37 FR 10053,
May 19, 1972), implements E.O. 11652.

3a.11 Classification of official information.
3a.12 Authority to classify official information.
3a.13 Classification responsibility and procedure.
DECLASSIFICATION AND DOWNGRADING
3a.21 Authority to downgrade and declassify.
3a.22 Declassification and downgrading.
3a.23 Review of classified material for declassification purposes.
CLASSIFICATION MARKINGS AND SPECIAL
NOTATIONS
3a.31 Classification markings and special
notations.
ACCESS TO CLASSIFIED MATERIALS
3a.41

Access requirements.

3a.51

Designation of security officers.

SECURITY OFFICERS

CLASSIFICATION

STORAGE AND CUSTODY OF CLASSIFIED
INFORMATION

§ 3a.11 Classification of official information.
(a) Security Classification Categories.
Information or material which requires
protection against unauthorized disclosure in the interest of the national defense or foreign relations of the United
States (hereinafter collectively termed
national security) is classified Top Secret, Secret or Confidential, depending
upon the degree of its significance to
national security. No other categories
are to be used to identify official information or material requiring protection in the interest of national security, except as otherwise expressly provided by statute. These classification
categories are defined as follows:
(1) Top Secret. Top Secret refers to
national security information or material which requires the highest degree
of protection. The test for assigning
Top Secret classification is whether its
unauthorized disclosure could reasonably be expected to cause exceptionally

3a.61 Storage and custody of classified information.
ACCOUNTABILITY FOR CLASSIFIED MATERIAL
3a.71

Accountability for classified material.

TRANSMITTAL OF CLASSIFIED MATERIAL
3a.81

Transmittal of classified material.

3a.91

Data index system.

DATA INDEX SYSTEM

AUTHORITY: 15 U.S.C. 717o; 16 U.S.C. 825h.
SOURCE: Order 470, 38 FR 5161, Feb. 26, 1973,
unless otherwise noted.

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GENERAL
§ 3a.1 Purpose.
This part 3a describes the Federal
Energy Regulatory Commission program to govern the classification,
downgrading,
declassification,
and
safeguarding of national security information. The provisions and require-

44

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