held by a number of their public utilities' directors or officers (public utility/financial institution Rule 70 interlocks), so that the directors and officers can remain in their positions until the Commission can take action under section 305(b) of the FPA regarding the holding of these positions.19 The Filing Companies also request that the Commission adopt a declaratory order of general applicability giving holders of public utility/financial institution Rule 70 interlocks20 a fixed amount of time to apply to this Commission under section 305(b) of the FPA for authorization to hold such interlocks, but authorizing only such holdings as have been permitted by section 17(c) of PUHCA and SEC Rule 70.

We are sympathetic to the situation in which these officers and directors holding interlocks find themselves. Until Arcadia, there was no suggestion that the holding of public utility/ financial institution Rule 70 interlocks also required authorization from this Commission under section 305(b) of the FPA. This fact, coupled with the number of persons affected, persuades the Commission that interim authorization is appropriate. Moreover, we note that there has been no suggestion in this proceeding that the continued holding of these interlocking directorate positions, for a modest period while the Commission reviews individual applications under section 305(b) of the FPA, will adversely affect either public or private interests. Nor is there any allegation, or showing at this stage, of actual abuses of the type which led to Congress' enactment of these provisions as part of the Public Utility Act of 1935. Accordingly, we believe it appropriate to authorize the continued holding of such positions on an interim basis, but only if a person holding such interlocking directorate positions,

within 45 days of the issuance of this order, files an application, pursuant to section 305(b) of the FPA and Part 45 of our regulations, to hold the interlocking directorate positions. Such interim authorization will be effective only until the Commission acts on the individual application.

Finally, we caution that this interim authorization should not be construed as prejudging in any way the Commission's review of the individual applications.

The Commission orders:

(A) Until further order of this Commission, any person now authorized to hold positions as an officer or director of a public utility subsidiary of a registered public utility holding company and as an officer or director of a commercial banking, investment banking, or other financial institution under section 17(c) of the Public Utility Holding Company Act and Rule 70 of the Securities and Exchange Commission and who actually holds such position, is hereby authorized, pursuant to section 305(b) of the Federal Power Act, to hold such position on an interim basis; Provided that such person file an application with the Commission to hold such interlocking directorate positions, pursuant to section 305(b) of the Federal Power Act and Part 45 of the Commission's regulations, within 45 days from the date of the issuance of this order.

(B) The Filing Company's petition for declaratory order is hereby granted, as described above.

(C) This order shall not affect the liability of any person under section 305(a) of the Federal Power Act or under any other provision of the Federal Power Act.

19 Petition at 5.

20 Based on a review of the information submitted in response to FERC Form 561, Annual Report of Interlocking Positions (18 C.FR. § 46.4 (1990)), it appears that approximately 150 officers/directors of public utility subsidiaries of registered public utility holding companies may be affected.

sheets pursuant to the Commission's Order Nos. 528 and 528-A, to revise the allocation of

1 Item 1: Third Revised Sheet No. 4A.6, Sixteenth Revised Sheet No. 76, Ninth Revised Sheet No. 77, Seventeenth Revised Sheet No. 78, and Fifteenth Revised Sheet No. 79 to FERC Gas Tariff, Second Revised Volume No. 1.

the fixed take-or-pay charges billed to it by United Gas Pipe Line Company (United). On March 4, 1991, MRT filed additional tariff sheets to correct pagination errors in the sheets listed in item 2 of footnote 1. MRT requests an effective date of March 25, 1991. The Commission accepts and suspends MRT's tariff sheets, listed in footnote no. 1, item 1, and footnote no. 2, to become effective March 25, 1991, subject to refund, and subject to the conditions stated in the body of this order. The Commission also consolidates this proceeding with MRT's previous Order No. 528 filings, and permits MRT to withdraw the tariff sheets listed in item 2 of footnote no. 1, as discussed below.

Background

Since January 1988, pursuant to Order No. 500 [FERC Statutes and Regulations 30,761], MRT has been billed fixed take-orpay charges by three upstream pipelines: Natural Gas Pipeline Company of America (Natural), Trunkline Gas Company (Trunkline), and United. All three of these pipeline companies allocated their respective fixed charges to their customers, such as MRT, based on a purchase deficiency method. MRT also used this method in passing through these costs to its customers, in compliance with the Commission's policy under Order No. 500 requiring downstream pipelines to use the same allocation method as was used by their upstream pipeline suppliers in flowing through the costs to them.

The purchase deficiency methodology has been found by the United States Court of Appeals for the District of Columbia to violate the filed rate doctrine. Associated Gas Distributors v. FERC (AGD II), 893 F.2d 349 (D.C. Cir. 1989). On October 9, 1990, the Supreme Court of the United States denied the request for certiorari of the AGD II decision, and the court of appeals' mandate issued on October 17, 1990.

On November 1, 1990, the Commission issued Order No. 528,3 in which it addressed the issue of the collection by interstate pipelines of the take-or-pay costs included in their fixed charges in light of the court's decision. Among other things, the Commission stayed the tariff provisions of all pipelines (except those specifically excluded) to collect fixed (Footnote Continued)

Item 2: Twentieth Revised Sheet No. 4A and Eighth Revised Sheet No. 4A.3 to FERC Gas Tariff, Second Revised Volume No. 1.

2 Twenty-first Revised Sheet No. 4A and Ninth Revised Sheet No. 4A.3 to FERC Gas Tariff, Second Revised Volume No. 1.

353 FERC 61,163 (1990). 51,337

charges based on a purchase deficiency allocation method, effective December 16, 1990. In addition, the Commission permitted pipelines subject to Order No. 528 to file new tariff provisions to replace the stayed provisions, and the Commission adopted certain principles under which those proposals will be evaluated.

Subsequently, in Docket No. RP91-46-000, MRT filed to revise the method by which it allocates the fixed charges billed to it by Natural. By order issued on January 9, 1991, the Commission accepted and suspended that filing, and directed staff to convene a conference to discuss settlement. On January 14, 1991, in Docket No. RP91-71-000, MRT made an additional filing to revise its allocation of the fixed charges billed to it by Trunkline. By order issued February 13, 1991, the Commission accepted and suspended that filing, and consolidated it with the proceedings in Docket No. RP91-46-000.5 MRT allocated both the Natural and Trunkline costs to its firm sales customers under Rate Schedules CD-1 and SGS-1 based on the contract demands of the custom

ers.

On January 31, 1991, the Commission issued Order No. 528-A,6 which, among other things, addressed the allocation of fixed charges to small captive sales customers. In that order, the Commission stated that to achieve the Commission's objective of minimizing harm to small captive sales customers, the Commission would require pipelines to reallocate to the pipelines' larger customers 50 percent of the costs that would otherwise be allocated to small customers under the pipeline's revised allocation method. The Commission's February 13, 1991 order accepting MRT's filing to flowthrough the Trunkline costs required it to reallocate costs away from its small customers consistent with Order No. 528-A.

On December 14, 1990, the Commission issued an order determining, among other things, that the application of the Order No. 528 stay to United's collection of its take-orpay settlement costs with producers would be deferred until 30 days after the Commission issues a final order on the take-or-pay aspects of United's Base Stipulation and Agreement (Base Settlement) in Docket No. RP85-209-027 et al. In addition, the December 14 order exempted from the Order No. 528 stay

4 54 FERC 61,010 (1991).

5 54 FERC 61,147 (1991).

654 FERC 61,095 (1991).

7 53 FERC 61,380 (1990).

United's flowthrough of fixed charges billed it by Sea Robin under Docket No. RP89-147-000. To date, the Commission has not issued a final order on the Base Settlement. However, on February 28, 1991, the Commission granted rehearing of the December 14 orders and determined Docket No. RP89-147-000 costs were subject to Order Nos. 528 and 528-A. The Commission deferred application of the Order No. 528 stay to these costs for 45 days in order to give United an opportunity to file a revised allocation method.9

Thus, as of now, United is continuing to recover both its own settlement costs and the Sea Robin costs pursuant to the purchase deficiency allocation method. On February 22, 1991, MRT made the instant filing pursuant to Order Nos. 528 and 528-A to revise its allocation of the take-or-pay charges allocated to it by United in Docket Nos. RP88-27-000, et al., RP88-264-000, et al., RP89-138-000, et al., RP89-147-000, et al., and RP90-91-000, et al.

Details of the Filing

MRT proposes to recover $385,596 each month from its jurisdictional customers in take-or-pay costs allocated to it from United in the dockets listed above through a separately stated fixed charge.

MRT proposes to allocate these costs to each firm sales customer receiving service under MRT's Rate Schedules CD-1 and SGS-1 on the basis of their contract demands as of March 1, 1988, the effective date of MRT's first filing to flow through take-or-pay costs billed to it by United. MRT has applied a jurisdictional allocation factor of 89.46 percent to the amounts allocated to MRT by United. For each jurisdictional sales customer, MRT has developed a ratio of the individual customer's contract demand effective March 1, 1988, to the total of all CD-1 and SGS-1 contract demands effective March 1, 1988. MRT then nets the resulting revised charge for each customer against amounts collected to date from that customer under the purchase deficiency method. MRT proposes to amortize the remaining amounts over a period of 12 months. MRT has also revised its contract demand allocation pursuant to the policy established in Order No. 528-A, by reallocating 50 percent of the costs that would otherwise be allocated to its small SGS-1 customers, to the pipeline's other customers paying the direct bill. MRT asserts that its CD allocation method assigns costs to the customers who benefitted most substantially

8 54 FERC 61,211 (1991).

9 United's other filing to recover additional Sea Robin take-or-pay costs, in Docket No. RP90-132, has not been exempted from the Order No. 528 stay. On

from MRT's least-cost purchasing strategy, i.e., its jurisdictional sales customers. MRT avers that this allocation methodology is best suited to its system and requests that the tariff sheets be accepted.

Notice

Public notice of the instant filing was issued providing for protests, motions, or notices to intervene to be filed on or before March 5, 1991. Timely motions or notices to intervene were filed by the parties listed in the Appendix to this order. Pursuant to Rule 214, 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 motions or notices not listed in the Appendix are also granted in accordance with the conditions of Rule 214.

MRT's filing is protested by Illinois Power Company, Laclede Gas Company, and the St. Louis Gas Users. The major issues raised in these protests include the following: (1) whether MRT's reallocation results in an inequitable shifting of dollars among MRT's customers; (2) whether MRT's transportation customers should be allocated a portion of its take-or-pay costs; (3) whether MRT should be required to absorb an equitable share of the take-or-pay costs it seeks to recover; (4) whether MRT's proposed plan violates the filed rate doctrine; (5) whether the Commission should require immediate refunds of the overcharges shown in its filing; (6) whether MRT's allocation reflects current utilization of the system; and (7) whether the data used to determine the jurisdictional/nonjurisdictional allocation factors is current data.

Discussion

The Commission accepts and suspends MRT's filing to be effective March 25, 1991, subject to the conditions discussed below. Since MRT utilizes the same allocation methodology as was accepted by the Commission in MRT's two previous Order No. 528 flowthrough filings in Docket Nos. RP91-46-000 and RP91-71-000, the Commission will consolidate this filing with those proceedings. Due to the similarity of the issues raised in these proceedings and the relationship of the three proceedings, administrative efficiency warrants consolidation. In Order No. 528, the Commission sought to encourage pipelines and their customers to reach settlements regarding revised methods of allocating settlement costs included in their fixed charges.

March 1, 1991, United filed to refund these costs in lieu of reallocating them. Since MRT has not filed to reallocate these costs here, no further action is required.

The Commission further stated that conferences may help accommodate settlement discussions. In the January 9, 1991 order concerning MRT's filing to flowthrough Natural's costs, the Commission directed Staff to convene a conference at which all issues raised by the protestors would be discussed. The order further stated that all parties should come prepared to discuss settlement, and that the parties should be represented by principals who have the authority to commit to a settlement. Since these dockets are being consolidated, the conference previously ordered in Docket Nos. RP91-46-000 and RP91-71-000 will serve as a forum to resolve matters in this proceeding as well. In order to facilitate the negotiation process and to provide the parties with ample time to pursue settlement of the issues, the deadline for staff's report to the Commission on the consolidated proceedings will be delayed until 120 days from the date of this order.

Pagination error. Two of the tariff sheets contained in MRT's filing have previously been filed and acted upon. Both tariff sheets referenced in footnote no. 1, item 2 were rejected by the Commission's order issued on November 30, 1990 [53 FERC ¶ 61,283], in Docket Nos. TQ91-2-25-000 and TM91-2-25-000. Rejected sheets are uniquely identified and their pagination may not be used again. Therefore, on March 4, 1991, MRT filed to request permission to withdraw the tariff sheets listed in footnote no. 1, item 2 and submitted tariff sheets reflecting the correct pagination. As a result, MRT will be permitted to withdraw the tariff sheets listed in footnote no. 1, item 2, and the tariff sheets listed in footnote no. 2 will be accepted and suspended, effective March 25, 1991.

Request for rehearing. On January 30, 1991, the Commission denied MRT's request that it be added to the pipelines listed on Appendix A to Order No. 528. MRT is currently requesting rehearing of the January 30 order with respect to the take-or-pay costs in this filing. Acceptance of MRT's filing is subject to further action on rehearing of the Commission's January 30, 1991 order.

United's Base Settlement. Acceptance of MRT's tariff sheets is subject to final resolution of Docket No. RP85-209-000 et al., concerning United's take-or-pay settlement, and subject to MRT's filing revised tariff sheets to track any changes in the costs allocated to MRT by United in the subject dockets.

criminatory, 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, where the pipeline is filing because of changed circumstances resulting from a court remand, as recognized by the Commission in Order No. 528. Accordingly, in this case, the Commission will exercise its discretion to suspend the rates for a shorter period and permit the rates to take effect on March 25, 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) MRT's tariff sheets listed in item 1 of footnote no. 1, and footnote no. 2 to this order are accepted and suspended, to be effective March 25, 1991, subject to refund and the conditions below.

(B) MRT is permitted to withdraw the tariff sheets in item 2 of footnote no. 1.

(C) This proceeding is consolidated with the proceedings in Docket Nos. RP91-46-000 and RP91-71-000.

(D) The Commission's staff is directed to report the results of the conference in the consolidated proceedings within 120 days after the issuance of this order.

(E) Acceptance of MRT's filing is subject to final resolution of Docket No. RP85-209-000 et al., and subject to MRT's tracking any changes in the take-or-pay costs allocated to MRT by United.

(F) Acceptance of MRT's filing is subject to further action on MRT's request for rehearing of the Commission's January 30, 1991 order.

Appendix

Mississippi River Transmission Corporation Docket Nos. RP91-95-000 and RP91-95-001 Timely Interventions

City of Augusta, Arkansas

I. Introduction

On September 20, 1990, the Commission issued an order in this proceeding accepting and modifying a partially contested offer of settlement (the Settlement) filed by Paiute Pipeline Company (Paiute) in the captioned proceedings. Among other things, the September 20, 1990 order established rates and terms and conditions for Paiute's open-access firm and interruptible transportation, and authorized Paiute to assign to its firm sales customers all of Paiute's right to firm transportation on Northwest Pipeline Corporation (Northwest). As a part of the Settlement Paiute also proposed to terminate its entire gas sales function and become a transportation-only pipeline. Since part of Paiute's sales function was performed through the use of peak shaving LNG and LPG facilities, the September 20, 1990 order further authorized Paiute to sell its LNG inventory to its customers and to operate Paiute's LNG facility on their behalf as a form of contract storage.2 The Commission's order also established the rates, terms, and conditions for that service, and concluded that the LPG facility was not subject to the Commission's jurisdiction. The September 20, 1990 order did not address rate design issues that were the subject of the ongoing proceeding in Docket No. RP88-227-000 when Paiute filed the Settle

1 Paiute Pipeline Company and Northwest Pipeline Corporation, 52 FERC ¶ 61,311 (1990). By order issued March 31, 1988, the Commission accepted Paiute's proposed rates and conditions for those services, and suspended them, subject to refund, and conditions, and established a hearing. 44 FERC ¶ 61,326 (1988).

2 52 FERC at pp. 62,251-62,257.

3 The parties conducted this proceeding in two Phases under a procedural schedule adopted by the parties and the ALJ. On August 1, 1988, Paiute filed a section 4 general rate case. The open-access transportation rates became effective September 1, 1988

ment on February 19, 1990. The rate design phase of that proceeding, Phase II,3 was established by orders of the presiding administrative law judge (ALJ) dated June 23 and July 25, 1989.

Paiute and Sierra Pacific Power Company (Sierra Pacific) filed requests for rehearing. Paiute's request for rehearing addresses issues related to the terms and conditions of its proposed open access and LNG contract storage services. These include: (1) the definition of the conversion period contained in the September 20, 1990 order, (2) the type and level of throughput to be used in establishing Paiute's rates; (3) the rejection of Paiute's proposed fuel reimbursement methodology; (4) whether throughput should be a reserved issue in the rate design phase (Phase II) of Paiute's general rate increase proceeding; (5) the conditions imposed on Paiute's proposed LNG contract storage, and (6) the Commission's requirement that Paiute modify and rewrite the substance of its proposed open-access transportation penalties. Sierra Pacific seeks rehearing of: (1) the authorization of two summer limitations on Paiute's proposed open-access transportation service; (2) the Commission's failure to order Paiute to revise its tariff sheets to clarify that the D-2 entitlement of a customer does not limit Paiute's certificate obligation; (3) the

and the sales rates on February 1, 1989, after a fivemonth suspension. Initial rounds of testimony were filed by May 1989, prior to the issuance of the Commission's Policy Statement on May 30, 1989 [47 FERC 61,295]. In the Policy Statement, the Commission directed the ALJ in Paiute's rate case to make a record and resulting finding on whether the rates are consistent with the directions of the Policy Statement. Testimony on rate design policy issues was filed by the parties between October 23, 1989 and March 5, 1990. Therefore, the testimony filed prior to May 30 is considered evidence filed in Phase I; the testimony since October is in Phase II.