soon, and that it should have filed earlier, the Commission pointed out that the filing could not have been properly supported had it been filed at a significantly earlier date, but that the filing was proper when made because it reflected changed circumstances facing Tennessee as indicated in spot market surveys reported in trade publications in early December that reflected sudden and sizeable spot price increases in the Gulf Coast area. In Columbia, the company proposed an increase based upon "higher prices paid to producers under its market responsive contracts." The Commission accepted this filing premised upon the company's representation that the filing was based upon known and measurable changes in its gas costs.10 In the support for both Tennessee's and Columbia's filings it was indicated that the rate changes were based upon gas cost changes that had already occurred; the rate changes were not based upon unknown projected increases as in this proceeding.

Although the cost of future prices of spot market gas cannot be estimated, this does not prevent a company from including in its filing expected purchases on the spot market based upon the most recent prices in effect at the time of the filing.11 Texas Eastern has referred to and relied on, "anticipated" spot market increases only, not more explicit factors such as prices actually paid, as in Columbia, or such as prices available on the spot market at the time of filing as in Tennessee. Texas Eastern's basis for requesting an increase is more amorphous and, thus, the costs cannot be held to be known and measurable in the same sense as in Tennessee and Columbia. Accordingly, rehearing is denied.

II.

Texas Eastern also argues that the Commission erred in rejecting certain costs allegedly related to the resolution of contract pricing disputes. Texas Eastern asserts that these costs are to be included on a prospective basis beginning December 1, 1990, and are therefore eligible for current recovery in its PGA.

Texas Eastern's argument misses the point that the nature of these costs is unsupported. As explained in the December 20 order:

[t]he Commission finds that TETCO's claims regarding these costs are unsupported, as

8 53 FERC 61,471, at p. 62,654 (1990). 953 FERC 61,448, at p. 62,576 (1990).

10 Id.

11 East Tennessee Natural Gas Co., 53 FERC [61,478, at p. 62,698 (1990); Alabama-Tennessee Natural Gas Co., 51 FERC 61,061, at p. 61,135 (1990).

this increase of approximately 5 cents per Dth is supported merely by a general assertion in the transmittal letter as to the nature of the costs. The filing contains nothing further as to the nature or determination of these costs. Accordingly, the Commission cannot be certain whether the alleged pricing dispute payments relate to the settlement of take-or-pay buy-out and/or buy-down costs or to contract reformation costs limited solely to the resolution of pricing disputes. [12]

Further, as the December 20 order notes, only contract reformation costs limited solely to contract pricing disputes may be recovered in a pipeline's PGA.13

On rehearing, Texas Eastern has provided nothing which would enable the Commission to determine the nature of these costs. Just because the increases from the alleged resolution of contract pricing disputes were proposed to commence prospectively on December 1, 1990, does not absolve Texas Eastern from the requirement that it provide sufficient information to support the nature of these costs. Its argument regarding the timing of any recovery is moot because it has not met the threshold requirements of supporting these costs with enough information to allow the Commission to determine that these costs are pricing dispute settlement costs which meet the standard established in ANR for distinguishing between pricing dispute settlement costs which are eligible for PGA recovery and Global take-or-pay settlement costs which are not. Accordingly, the Commission denies rehearing on this issue. This action is without prejudice to Texas Eastern providing the supporting information14 and seeking to recover such costs in a future filing on a prospective basis. In addition, if such cosis are found to be eligible for PGA recovery, Texas Eastern would be permitted to include any underrecoveries related to such costs in its Account No. 191.

The Commission orders:

Texas Eastern's request for rehearing of the Commission's December 20, 1990 order, is denied.

12 53 FERC 61,420, at p. 62,480 (1990).

13 See ANR Pipeline Co., 50 FERC 161,372 (1990) (ANR) and Transwestern Pipeline Co., 52 FERC 61,274 (1990).

14 Other pipelines have also been required to provide such supporting information. See, e.g., Tennessee Gas Pipeline Co., 52 FERC ¶ 61,276 (1990).

Background

On October 26, 1990, Rhone-Poulenc Pipeline Company, an intrastate pipeline with facilities in the State of Wyoming, filed a petition for rate approval pursuant to section 284.123(b)(2) of the Commission's regulations1 seeking approval of a $0.277 cents per MMBtu transportation rate for services pursuant to section 311 of the Natural Gas Policy Act of 1978 (NGPA).2

Public notice of the filing of RPPC's petition for rate approval in Docket No. PR91-2-000 was issued on November 20, 1990. Pursuant to Rule 214 of the Commission's Rules of Practice and Procedure, any timely motions to intervene are granted unless an answer in opposition is filed within 15 days of the date such motion is filed.3

Discussion

Section 284.123(b)(2)(ii) of the Commission's regulations establishes a 150-day period for approval of rates charged by intrastate pipelines for transportation authorized by section 311(a)(2) NGPA. If the Commission fails to act within 150 days of the filing of an application for rate approval, the rates and charges in question are deemed to be "fair and equitable and not in excess of an amount which interstate pipelines would be permitted to charge for providing similar services."4 However, the Commission may institute a "proceeding in which all interested parties will be afforded an opportunity for written comments and for the oral presentation of views, data and arguments."5 In such a proceeding, the Commission will determine the appropriate rates and order refunds, if necessary.

The 150-day period for review of RPPC's petition will expire on March 25, 1991. Because RPPC has not shown that its proposed rate is

1 18 C.F.R. § 284.123(b)(2) (1990).

2 15 U.S.C. § 3371 (1988).

3 18 C.F.R. § 385.214 (1990).

18 C.F.R. § 284.123(b)(2)(ii) (1990).

fair and equitable, the Commission orders that a proceeding be instituted for review of the application.

The Commission notes that the standards for review of a petition for approval of rates under Part 284 of the regulations are quite broad. Moreover, they are amenable to application in an informal reviewing process. In the instant case, the Commission has been unable to make a determination that RPPC's rate is fair and equitable. Accordingly, it is necessary to exercise the option under section 284.123(b)(2)(ii) of the Commission's regulations by instituting a formal proceeding. A Staff Panel shall be convened for that purpose as soon as practicable. Staff Panel hearings are advisory, nonevidentiary proceedings to permit parties an opportunity for oral presentation of data, views and arguments in accordance with section 502(b) of the NGPA.6 Within 90 days of the date of the issuance of this order, the Panel shall certify the record of the parties and any recommendations to the Commission.

The proceeding will include a hearing before a Staff Panel consisting of Philip Burgiel, Chief, Certificated Rates and Transportation Branch of the Office of Pipeline and Producer Regulation; a representative of the Office of the General Counsel; and John F. Joseph, Chief, Pipeline Compliance Branch. The hearing will not be a judicial or evidentiary-type hearing and there will be no cross-examination of persons presenting statements. Members participating on the panel before whom the presentations are made may ask questions. If time permits, panel members may also ask such relevant questions as are submitted to them by participants. Other procedural rules relating to the hearing will be announced at the time the proceeding commences. A transcript of the hearing will be placed in the public files for this docket and will be made available at the Commission's Division of Public Information.

5 Id.

615 U.S.C. § 3412(b) (1982); see also, Mustang Fuel Corp., 31 FERC ¶ 61,265, at p. 61,535 (1985).

pany, et al. (Arcadia), which concerned the respective jurisdiction of this Commission and the SEC and the interpretation of section 318 of the FPA.10 In Arcadia, the Court explained that section 318 was not a general conflicts provision "policing the entire regulatory border between the two agencies," but rather that section 318 applied only to four enumerated areas of duplicative requirements under PUHCA and the FPA: (1) the issue, sale, or guaranty of a security; (2) the method of keeping accounts; (3) the filing of reports; and (4) the acquisition or disposition of any security, capital assets, facilities, or any other subject matter.

12

Section 17(c) of PUHCA13 and section 305(b) of the FPA14 both prohibit officers and directors of companies subject to the respective provisions from holding certain interlocking positions 15 unless authorized to do so by: (a) the SEC by a rule or regulation; or (b) this Commission by order. Pursuant to section 17(c) of PUHCA, the SEC promulgated Rule 70 to authorize the holding of certain interlocking

9111 S.Ct. 415, 112 L.Ed.2d 374 (1990) (reversing and remanding 880 F.2d 1440 (D.C. Cir. 1990)), reh'g denied, 59 U.S.L.W. 3502 (Jan. 22, 1991).

10 16 U.S.C. § 825q (1988).

11 112 L.Ed.2d at 386. 12 Id. at 382-87.

13 In relevant part, section 17(c) of PUHCA pro

vides as follows:

no registered holding company or any subsidiary company thereof shall have, as an officer or director thereof, any executive officer, director, partner, appointee, or representative of any bank, trust company, investment banker, or banking association or firm, or any executive officer, director, partner, appointee, or representative of any corporation a majority of whose stock, having the unrestricted right to vote for the election of directors, is owned by any bank, trust company, investment banker, or banking association or firm, except in such cases as rules and regulations prescribed by the [SEC] may permit as not adversely affecting the public interest or the interest of investors or consumers.

14 In relevant part, section 305(b) of the FPA provides as follows:

it shall be unlawful for any person to hold the position of officer or director of more than one public utility or to hold the position of officer or director of a public utility and the position of officer or director of any bank, trust company, banking association, or firm that is authorized by law to underwrite or participate in the marketing of securities of a public utility, or officer or director of any company supplying electrical equipment to such public utility, unless the holding of such positions shall have been authorized by order of the Commission, upon due showing in form and manner prescribed by the Commission, that neither public nor private interests will be adversely affected thereby.

¶ 61,336

Prior to Arcadia, directors and officers of public utility subsidiaries of registered public utility holding companies that complied with section 17(c) of PUHCA and SEC Rule 70 did not also seek this Commission's authorization, pursuant to section 305(b) of the FPA, to hold those interlocking directorate positions.17 Presumably this failure to file was based on the understanding that the "or any other subject matter" language of section 318 of the FPA addressed a fifth area of duplicative requirements under PUHCA and the FPA. However, the Supreme Court's interpretation of section 318 of the FPA in Arcadia appears to resolve any ambiguity concerning whether authorization from this Commission under section 305(b) of the FPA to hold these interlocking directorate positions is also required. 18

Accordingly, the Filing Companies seek affirmative authorization from the Commission of certain interlocking directorate positions

15 We note, however, that section 17(c) of PUHCA and section 305(b) of the FPA do not address identical interlocking directorate positions. For example, certain interlocking directorate positions covered under section 305(b) of the FPA, e.g., the holding of positions as an officer or director of a public utility and an officer or director of any company supplying electrical equipment to such public utility, are not subject to section 17(c) of PUHCA. In addition, officers or directors of a registered public utility holding company or of any subsidiary company of such holding company, that are subject to section 17(c) of PUHCA and SEC Rule 70, are not also subject to section 305(b) of the FPA unless such holding company or subsidiary company is a public utility as defined in section 201(e) of the FPA. 16 U.S.C. § 824(e) (1988). See Norman Barker, Jr. et al., 53 FERC 61,223, at p. 61,932 n.48 (1990).

16 As characterized by the Filing Companies, Rule 70:

permits an affiliate of an investment banker to serve on the board of directors of a registered holding company or of a subsidiary of a holding company, subject to various limitations including the limitation that the investment banker (i) has not acted as a managing underwriter for the distribution of securities issued by any company in the holding company system for at least 12 months prior to the director's appointment or election to the board, and (ii) does not act as a managing underwriter for the distribution of securities issued by any company in the holding company system while the director serves on the board. Petition at 3-4 (citations omitted).

17 Id. at 4.

18 While Arcadia did not directly address the issue of interlocking directorate positions, this issue was specifically raised in the rehearing application filed by Ohio Power Company on December 24, 1990.