ble."41 No such waiver is demonstrated in this instance.42 Third, Maine Public asserts that Central Maine did not attach Rate Schedule 54 to the 1978 letter but instead attached only the Commission order accepting Rate Schedule 54.43 Maine Public argues that Central Maine thus intended to inform Maine Public only that the Commission had accepted the rate in Rate Schedule 54, not that the service was to be provided subject to the terms of Rate Schedule 54. The 1978 letter states, however, that "[e]nclosed for your information is a copy of Rate Schedule No. 54." While this sentence may have been inaccurate, as Maine Public argues, we find it equally, if not more, probable that the error was made in omitting the rate schedule from the mailed envelope. In any event, even if Central Maine intended to send only the Commission's order, we would not be persuaded that the 1978 letter is a fixed-rate contract. For the foregoing reasons, we will deny Maine Public's request for rehearing. The Commission orders: (A) Central Maine's request for rehearing in Docket No. ER90-471-001 is hereby denied. (B) Central Maine's request for a stay in Docket No. ER90-471-001 is hereby denied. Central Maine is hereby directed to comply with the directives in the Commission's December 28 order within ten days of the date of this order. (C) Maine Public's request for rehearing in Docket No. ER90-539-001 is hereby denied. Before Commissioners: Martin L. Allday, Chairman; Charles A. Trabandt, On January 31 and February 13, 1991, Colorado Interstate Gas Company (Colorado Interstate) filed petitions for waiver of section 284.223(a) of the Commission's regulations in the above dockets. Section 284.223(a) provides interstate pipelines that have accepted a blanket certificate under section 284.221 of the 41 Kansas Cities v. FERC, 723 F.2d 82, 87-88 (D.C. Cir. 1983). As explained in Kansas Cities, courts and the Commission have "almost universally" construed rate change provisions as authorizing a just-and-reasonable standard of proof, since the rate change provisions would otherwise be "virtually inoperative." Id. at 88. Commission's regulations with automatic authorization to commence transportation service on behalf of any shipper for a term of 120 days. The 120-day term may be extended indefinitely if the transporting pipeline complies with the prior notice requirements of section 157.205 of the Commission's regulations.1 42 We note, as stated in our December 28 order, that Rate Schedule 54 expressly reserves to Central Maine the right to revise the rate. 53 FERC at p. 62,649. 43 Id. at 26-27. 118 C.F.R. § 284.223(b). The prior notice requirement is satisfied if no protests are filed after issuance of notice by the Commission. Section 157.205(e) establishes a 45-day notice period for such protests. Colorado Interstate instituted transportation service pursuant to section 284.223(a) for Texaco Gas Marketing, Inc., and Coastal Gas Marketing Company on November 1, 1990, and filed prior notice requests for authorization to continue the services with the Commission on January 31 and February 13, 1991. Due to the late filing of the prior notice requests, the selfimplementing transportation portion of these transactions will expire before the end of the 45-day comment period for the prior notice requests. Therefore, Colorado Interstate requests that the Commission waive its regulations by extending the 120-day limit in section 284.223(a). Colorado Interstate states in each docket, "Due to administrative burdens, the parties in this transaction were unable to execute the agreement provided herein in a timely manner...." We find that the potential hardship inherent in interrupting the ongoing transportation services outweighs the potential benefit of strict adherence to the 120-day limitation in section 284.223(a)(1) of the regulations. The Commission orders: The 120-day limitation in section 284.223(a)(1) of the Commission's regulations is waived to the extent necessary to permit Colorado Interstate to continue the transportation activities described in its petitions without interruption until 45 days after the date notice was issued in these proceeding in accordance with section 157.205 of the regulations. [¶ 61,209] Panhandle Eastern Pipe Line Company, Docket Nos. TA91-1-28-000 and Order Accepting and Suspending Tariff Sheets Subject to Refund and Conditions (Issued February 28, 1991) Before Commissioners: Martin L. Allday, Chairman; Charles A. Trabandt, On December 28, 1990, Panhandle Eastern Pipe Line Company (Panhandle) filed tariff sheets to effect an annual purchased gas adjustment PGA and an Alaska Natural Gas Transportation System (ANGTS) rate adjustment to become effective March 1, 1991. In calculating these rate changes, Panhandle employed revised billing determinants. Three parties protested the filing, challenging the billing determinants, the prudence of the incurred demand costs, and the take-or-pay surcharge included in the ANGTS rate adjustment. Panhandle filed an answer to the pro tests. Panhandle's Filing The PGA Adjustments No PGA adjustments were made to Panhandle's commodity rates because of Panhandle's Seasonal Sales Program (SSP), under which the commodity portion of Panhandle's PGA tariff 2 18 C.F.R. § 157.205(a). 1 Eighty-fourth Revised Sheet No. 3-A, Sixty-first Revised Sheet No. 3-B, and Eighth Revised Sheet No. 3-B.1 to FERC Gas Tariff, Original Volume No. 1. 2 See Panhandle Eastern Pipe Line Company, 47 FERC 61,472 (1989) and order on reh'g, 53 FERC provisions has been suspended.2 The filing reflects the following demand adjustments when compared to the quarterly PGA rates in Docket No. TQ91-1-28-000, which became effective December 1, 1990: (1) a current adjustment increase of $1.41 per Dt for Demand 1, (2) an increase of 1 cent per Dt in the Demand 1 surcharge adjustment (from 41 cents to 42 cents) to recover $3,351,561 in unrecovered demand gas costs, and (3) a decrease of 0.32 cent per Dt in the Demand 2 surcharge adjustment (from 0.29 cent to (0.03 cent)) to return $45,863 in overrecovered demand gas costs. ANGTS Rate Adjustment Section 22 of the General Terms and Conditions of Panhandle's tariff provides a tracking mechanism under which Panhandle tracks ANGTS rate changes by implementing a bian 61,098 (1990). The SSP provides an alternative mechanism for pricing gas under Panhandle's sales services. nual ANGTS rate adjustment. The subject filing proposes the following ANGTS rate adjustment: (1) a decrease of $1.20 per Dt in the Demand 1 ANGTS adjustment (from ($.66) to ($1.86)), (2) an increase of 7.53 cents per Dt in the non-gas commodity ANGTS adjustment (from .91 cent to 8.44 cents), and (3) an increase of 3.58 cents per Dt in the one-part rate ANGTS adjustment (from (1.26) cents to 2.32 cents). Billing Determinants The demand rate changes partially resulted from a reduction in the demand billing determinants. Panhandle states that the Demand 1 billing determinants were reduced as a result of the contracts reflected in its application for an interim gas inventory charge (GIC) proposal in Docket No. CP91-446-000, filed November 15, 1990 and proposed to be effective during the period April 1, 1991 through October 31, 1992. No explanation was provided for the reduction in Demand 2 billing determinants. Public Notice, Intervention, and Protests Public notice of the instant filing was issued on January 7, 1991, with comments due on or before January 28, 1991. Timely notices or motions to intervene were filed by Battle Creek Gas Company; Citizens Gas & Coke Utility (Citizens); Dayton Power and Light Company; Illinois Power Company; Indiana Gas Company, Inc. (Indiana Gas); Michigan Gas Storage Company; Missouri Public Service Division of UtiliCorp United, Inc.; Northern Illinois Gas Company; Northern Indiana Public Service Company; Southeastern Michigan Gas Company; the Kansas Power and Light Company; and jointly by Associated Natural Gas Company, Central Illinois Light Company, Central Illinois Public Service Company, Citizens Gas Fuel Company, Illinois Power Company, Ohio Gas Company, and Union Electric Company, (collectively the Customer Group).3 Pursuant to Rule 214 (18 C.F.R. § 385.214 (1990)), any timely filed motions to intervene are granted unless an answer in opposition is filed within 15 days of the date such motion is filed. Any timely filed motions or notices not listed here are also granted in accordance with the conditions of Rule 214. Discussion billing determinants used to allocate its costs. Citizens and the Customer Group contend that Panhandle's PGA tariff provisions are intended only to permit passthrough of supplier rate increases or decreases, not to reallocate the unchanged supplier costs on its system. Noting that section 18.42 of Panhandle's tariff specifies that Panhandle shall calculate rate adjustments using its "applicable" demand billing determinants, these protesters argue that the Commission can only interpret "applicable" to mean the demand billing determinants used to develop Panhandle's base tariff rates. The protesters contend that any change in Panhandle's billing determinants must be achieved through a general rate case, rather than in a PGA proceeding. Indiana Gas questions the propriety of a change in PGA rates in the instant filing based upon proposed modifications in contract demands that have yet to be accepted by the Commission. The Commission does not agree that changes in billing determinants can only be made in a general rate proceeding. Section 18.4 of Panhandle's tariff also refers to "actual" billing determinants and to "demand billing determinants for the Recovery Period." There is no specific connection made in section 18.4 between the billing determinants used in Panhandle's last rate case and the billing determinants to be used in calculating PGA rate changes. Further, there is nothing in the Commission's PGA regulations which supports protesters' argument. In fact, the PGA mechanism is intended to allow a pipeline to flow through to its customers changes in purchased gas costs without requiring the pipeline to file a general rate case. To require the use of outdated billing determinants would frustrate this purpose by producing rate changes which would tend not to match current revenues with current costs. However, the Commission believes Panhandle should not be able to base its filing on billing determinant levels which are not authorized at the time the PGA filing becomes effective. Therefore, for PGA purposes, the billing determinants should reflect Commission authorized changes in billing determinants that occur in service agreements between rate cases, provided such changes are in effect as of the effective date of the PGA filing. The Commission will require Panhandle to file revised 6 6 Section 154.21 of the Commission's Rules and Regulations requires pipeline companies to have currently effective tariffs and properly executed service agreements on file with the Commission and timely update their tariffs and executed service agreements rates within 30 days of issuance of this order, to be effective March 1, 1991, reflecting Commission authorized billing determinant levels in effect as of such date. To the extent Panhandle's Commission authorized billing determinant levels change substantially subsequent to the effectiveness of its scheduled PGA filing, Panhandle could file a fully supported out-of-cycle PGA to be effective prospectively on one day's notice to incorporate such changes. A quick implementation of this type of rate charge would serve to prevent unnecessary build-up of deferred demand costs. In its protest, Indiana Gas also argues that Panhandle should be required to make refunds, with interest, to compensate for past improper billings that utilized billing determinants not in effect. Panhandle's previous quarterly PGA filing in Docket No. TQ91-1-28-000 was protested by these same protesters concerning the appropriate billing determinant levels to be used in calculating the projected PGA rates. The Commission's order in that docket, among other things, accepted the filing effective December 1, 1990, subject to refund, and noted that the issues raised by the protesters in the quarterly PGA filing are appropriately addressed in the annual PGA filing. Accordingly, to the extent Panhandle reflected anticipated billing determinants in calculating its PGA filing in Docket No. TQ91-1-28-000, it will be required to file, within 30 days of issuance of this order, revised reduced rates to be effective December 1, 1990, and to refund any overcollections with interest calculated consistently with section 154.67 of the Commission's regulations. The revised rates should reflect Commission authorized changes in billing determinants in effect as of the effective date of December 1, 1990. Prudence of Incurred Costs Citizens protests a “large increase" in Panhandle's pipeline supplier demand costs. Citizens states that while the prudence of Panhandle's contract with its affiliate, Trunkline Gas Company (Trunkline), has been raised in the past, the magnitude of Trunkline's demand charges to Panhandle's customers suggests the Commission should further evaluate the prudence of Panhandle's contractual obligation with Trunkline. Citizens does not clearly indicate what action it wishes the Commission to take on this issue. However, the Commission has determined to make its acceptance of the filing subject to the outcome (Footnote Continued) on file with the Commission to reflect all changes in service. 753 FERC 61,363, at p. 62,290 (1990). of the proceedings in Docket Nos. TA90-1-28-000, TA89-1-28-000, RP88-262-000, et al. where the prudence of Panhandle's contract with Trunkline is at issue. This should satisfy Citizens' concerns. The Customer Group and Indiana Gas also protest Panhandle's filing to the extent Panhandle previously recovered and seeks recovery of certain gas costs incurred from Trunkline, Northwest Alaskan Pipeline Company, Northern Border Pipeline Company, and Northern Natural Gas Company (Northern). These protesters request the filing be subject to the outcome of the proceeding in Docket No. RP88-262-000 et al., in which they have protested the recovery of these costs. As stated above, this filing will be subject to the outcome of the proceeding in Docket No. RP88-262-000 et al. ANG TS Rate Adjustment Component Citizens questions the appropriateness of the commodity take-or-pay surcharge paid by Panhandle to Northern and included in the ANGTS rate adjustment. Citizens avers the prudence of incurring these take-or-pay costs on Panhandle's system, based on its pipeline purchases, is the type of issue reviewable in the annual PGA proceedings. The instant filing tracks Northern's commodity take-or-pay surcharge as filed in Docket No. RP91-40-000. Such surcharge was initially proposed to be effective February 1, 1991, but Northern subsequently requested its effectiveness be deferred until April 1, 1991. Accordingly, Panhandle will be required to file revised rates to be effective March 1, 1991, within 30 days of the issuance of this order, to reflect Northern's rates in effect on March 1, 1991, and thus any issue related to the inclusion of the take-or-pay charge in Panhandle's rates at this time is moot. Other Matters Demand Rate Methodology The Customer Group notes that the Commission has previously authorized Panhandle to recover upstream pipeline suppliers' demand charges based on an annual projection of costs rather than a quarterly projection, and that this methodology is used in the instant filing. Customer Group seeks Commission confirmation that this methodology is unaffected by the SSP. The Commission confirms that the SSP does not involve the recovery of pipeline supplier demand charges. Need for Technical Conference The Customer Group states it may be appropriate to convene a technical conference to expeditiously resolve all of the above issues. Based on its actions in this order, the Commission does not believe a technical conference is warranted at this time. Challenges to Future Gas Costs Indiana Gas seeks confirmation that the prudence of Panhandle's demand costs after March 1, 1991, may be challenged in Panhandle's next annual PGA filing. Indiana Gas is advised that the deferral period subject to review in Panhandle's next annual PGA filing is the period November 1, 1990 through October 31, 1991, and that Panhandle's gas costs incurred during this period will be subject to review in its next annual PGA filing. Panhandle's Answer to the Protests On February 12, 1991, Panhandle filed an answer in opposition to the protests of Indiana Gas and the Customer Group. Panhandle states its answer is in accordance with the provision of Rule 213 of the Commission's procedural rules because it characterizes Indiana Gas' filing as a motion for refunds and for rejection of the tariff sheets and the Customer Group's filing as a motion for a technical conference. Rule 213 provides that an answer may be made to any pleading, if not prohibited by paragraph (a)(2) of the rule. Among other things, paragraph (a)(2) of Rule 213 prohibits the filing of an answer to a protest. The Commission's review of the filings by Indiana Gas and Customer Group indicates they are protests, not motions. Therefore, Panhandle's answer is rejected. FERC Form No. 542-PGA (Revised) Filing Errors Panhandle made a number of errors in its submittal of FERC Form No. 542-PGA (Revised), which provides data supporting the requested rate changes. These errors are detailed in the Appendix. As discussed in the Appendix, Panhandle shall correct these errors where indicated by filing a revised electronic version of pertinent portions of FERC Form No. 542-PGA (Revised). As further indicated, some of the errors need only be avoided in future filings. Suspension Based upon a review of the filing, the Commission finds that the proposed tariff sheets have not been shown to be just and reasonable, and may be unjust, unreasonable, unduly discriminatory, or otherwise unlawful. Accordingly, the Commission shall accept the tariff sheets for filing and suspend their effectiveness for the period set forth below, subject to the conditions set forth in this order. The Commission's policy regarding rate suspensions is that rate filings generally should be suspended for the maximum period permitted by statute where preliminary study leads the Commission to believe that the filing may by unjust, unreasonable, or that it may be inconsistent with other statutory standards. See Great Lakes Gas Transmission Co., 12 FERC ¶ 61,293 (1980) (five-month suspension). It is recognized, however, that shorter suspensions may be warranted in circumstances where suspension for the maximum period may lead to harsh and inequitable results. See Valley Gas Transmission, Inc., 12 FERC ¶ 61,197 (1980) (one-day suspension). Such circumstances exist here. Accordingly, in this case, where the pipeline is filing pursuant to Commission approved tracking authority, the Commission will exercise its discretion to suspend the rates for a shorter, minimal period and permit the rates to take effect on March 1, 1991, subject to refund and subject to the conditions set forth in the body of this order and in the ordering paragraphs below. The Commission orders: (A) The Commission accepts and suspends the tariff sheets listed in footnote No. 1 effective March 1, 1991, subject to refund and to the conditions discussed in the body of this order and listed below. (B) Panhandle shall file revised rates, within 30 days of issuance of this order, to be effective March 1, 1991, reflecting FERC authorized billing determinant levels in effect as of March 1, 1991. The revised filing shall include additional information to fully substantiate the demand billing determinants reflected in the filing. (C) To the extent Panhandle reflected anticipated billing determinants in calculating its PGA filing in Docket No. TQ91-1-28-000, it shall file, within 30 days of issuance of this order, revised reduced rates to be effective December 1, 1990, and to refund any overcollections with interest. The revised rates shall reflect FERC authorized changes in billing |