filing which becomes effective prior to the effective date of the subject filing.

Finally, Tennessee requests waiver of the requirements of Section 154.63(e)(2)(ii) of the Regulations to permit the inclusion of uncertificated gas supply facilities in the filing. We shall grant waiver of that section, subject to the conditions in Ordering Paragraph (C).

Public notice of Tennessee's filing was issued on February 2, 1979, requiring protests or petitions to intervene to be filed on or before February 21, 1979.' Petitions to intervene have been filed by Consolidated Edison Company of New York, Inc., Public Service Electric and Gas Company, Rochester Gas and Electric Corporation, The New England Customer Group, and Knoxville Utilities Board, et al. Good cause exists to grant these petitions to intervene, and they are hereby granted.

Based upon a review of Tennessee's filing, the Commission finds that the proposed rate increase has not been shown to be just and reasonable, and may be unjust, unreasonable and unduly discriminatory, or otherwise unlawful. Accordingly, the Commission shall accept Tennessee's revised tariff sheets to its FERC Gas Tariff, Volume Nos. 1 and 2, suspend their effectiveness for five months until August 1, 1979, when it shall be permitted to become effective subject to refund in the manner prescribed in the Natural Gas Act subject to the conditions set forth below. We shall also set the matter for hearing.

The Commission orders:

(A) Pursuant to the authority of the Natural Gas Act, particularly Sections 4, 5, 8 and 15 thereof, and the Commission's Rules and Regulations, a public hearing shall be held concerning the lawfulness of the increased rates proposed by Tennessee Gas Pipeline Company.

(B) Pending hearing and decision, and subject to the conditions of Ordering Paragraphs (C), (D) and (H) below, Tennessee's proposed Revised Tariff Sheets to its FERC Gas Tariff Volume Nos. 1 and 2, set forth in Appendix A hereto, are accepted for filing and suspended for five months until August 1, 1979, when they may become effective subject to refund, in the manner prescribed by the Natural Gas Act and the Commission's Regulations.

(C) Tennessee shall file substitute revised tariff sheets as of July 1, 1979, reflecting the elimination of costs associated with facilities which are not in service by June 30, 1979, pursuant to the requirements of 18 CFR 154.63(e)(2)(ii) and subject to condition that Tennessee shall not be permitted to make offsetting adjustments to the suspended rates prior to hearing, except for those adjustments made pursuant to Commission approved tracking provisions, those adjustments required by this order, and those required by other Commission orders.

(D) The revised tariff sheets discussed in Ordering Paragraph C above shall also reflect the

actual balance of advance payments in Account 166 outstanding as of June 30, 1979, subject to condition that inclusion of a higher overall advance payments balance shall not be permitted to increase the level of the original suspended rates.

(E) The Commission Staff shall prepare and serve top sheets on all parties on or before June 1, 1979.

(F) A Presiding Administrative Law Judge to be designated by the Chief Administrative Law Judge for that purpose (18 CFR 3.5 (d)), shall convene a settlement conference in this proceeding to be held within 10 days after the service of top sheets by the Staff, in a hearing or conference room of the Federal Energy Regulatory Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426. The Presiding Administrative Law Judge is authorized to establish such further procedural dates as may be necessary, and to rule upon all motions (except motions to consolidate, sever, or dismiss), as provided for in the Rules of Practice and Procedure.

(G) These petitioners are permitted to intervene in the captioned proceeding subject to the Commission's Rules and Regulations; Provided, however, that the participation of the intervenors shall be limited to matters affecting asserted rights and interests specifically set forth in the petitions to intervene; and Provided, further, that the admission of such intervenors shall not be construed as recognition that they might be aggrieved by any order entered in this proceeding.

(H) Acceptance for filing of the tariff sheets enumerated in Appendix A is conditioned upon Tennessee reflecting the effective GRI Funding Unit on the effective date of the increased rates and any resulting reduction in costs, as per Opinion Nos. 30 and 30-A.

Commissioner Holden voted present.

-Footnotes

1 See Appendix A attached hereto.

2 Issued October 18, 1978 in Docket No. R-406. [This Order appears at FERC Statutes and Regulations ¶ 30,020-A.]

'An errata notice was issued February 6, 1979, to correctly state the Docket number.

Appendix A

Tennessee Gas Pipeline Company

Docket No. RP79-29
Revised Tariff Sheets

Ninth Revised Volume No. 1

Twenty-Fourth Revised Sheet Nos. 12A and 12B
First Revised Sheet Nos. 66 and 71

Sixth Revised Volume No. 2

First Revised Sheet Nos. 266J, 268C, 277B, 285E, 286E, 287E, 297D, and 297E;

Second Revised Sheet Nos. 264H, 2661, and 274E;

APPENDIX A-Continued

Third Revised Sheet No. 141A;

Fourth Revised Sheet Nos. 246D, 247D, 248D, 249H, and 2491;

Fifth Revised Sheet No. 245D;

Sixth Revised Sheet Nos. 76 and 215;
Seventh Revised Sheet Nos. 53, 54, and 77;
Eighth Revised Sheet No. 141; and
Tenth Revised Sheet Nos. 11 and 12.

On December 5, 1978, Tucson Gas & Electric Company (Tucson) submitted for filing the TucsonSan Diego Ten Year Power Sale and Interconnection Agreement (Agreement) and various schedules of rates for the sale of power and energy to San Diego Gas & Electric Company (San Diego) from existing and future generating units owned by Tucson. The Agreement was executed by the parties on November 29, 1978. Tucson has requested that the Agreement be accepted for filing, effective March 1, 1979.

Notice of the filing was issued December 15, 1978, with comments, protests, or petitions to intervene due on or before December 29, 1978. On January 2, 1979, the Arizona Corporation Commission filed a Notice of Intervention. On January 22, the Corporation Commission filed a clarification stating that it did not request a formal hearing or enlargement of issues in this proceeding.

The proposed sale is divided into five "phases" described in the Agreement. The rates which are proposed to be applicable to each phase are specified in corresponding Exhibits One through Five to the Agreement.

The proposed term of Phase One is March 1, 1979 through June 30, 1979. Billing and contract demand is specified as 100 MW of firm power from Tucson's system. Demand will be billed at the rate of $6.90 per kW per month and energy at the rate of 0.991 cents per kWh, subject to a fuel adjustment clause.

Phase Two will extend from July 1, 1979 through April 30, 1982, with firm power and energy to be supplied from Tucson's San Juan Generating Station Unit No. 3. Contract and billing demand for Phase Two is specified at 100 MW, except from November 1, 1979 through April 30, 1980, when contract and billing demand shall be 150 MW.

Phase Two rates are specified at $13.60 per kW per month with energy billed at the net average cost per kWh generally described by the expense recorded in "FPC Account 501-Fuel" for the San Juan Generating Station No. 3 divided by the net generation for the month.

Phase Three is proposed to begin on May 1, 1982, and continue until the day prior to the commercial operation date of Tucson's proposed Springerville Unit No. 1 or May 31, 1985, whichever occurs first. During Phase Three contract and billing demand will be 100 MW of firm power and energy from Tucson's system resources. Further, by the exercise of an option retained under the Agreement, Tucson may extend Phase Three until May 31, 1987, during which time it will make available to San Diego a certain amount of power and energy, up to 100 MW, from its system resources. This amount of power is to be regarded as contract and billing demand.

The Agreement also provides that Phase Four shall begin on the commercial operation date of the Springerville Unit No. 1 and continue through the earlier of December 31, 1988 or the commencement of Phase Five, the in-service date of Springerville Unit No. 2. During Phases Four and Five, power and energy are to be supplied to San Diego from Tucson's Springerville Unit Nos. 1 and 2, with provision for back-up from Tucson's system resources. Proposed charges for service during these two phases are to be determined by cost of service formulae set forth in Exhibits Four and Five to the Agreement.

Upon our review of Tucson's submittal, we shall accept for filing the Tucson-San Diego Agreement and the Phase One rate schedule (Exhibit One to the Agreement) to be effective March 1, 1979. We shall also accept for filing the rate schedule for

On December 1, 1978, The Federal Energy Regulatory Commission (Commission) issued Interim Regulations implementing the Natural Gas Policy Act of 1978 (NGPA) FERC Statutes and Regulations ¶ 30,026. Although the interim Regulations were effective upon date of issuance, the Commission called for a sixty-day comment period which ended January 31, 1979. After consideration of the comments filed, this order amends the Interim Regulations, Part 273, without an additional comment period.

Part 273 of the Interim Regulations sets forth procedures for the Interim collection of prices, subject to refund, for certain categories of natural gas for which a determination of eligibility is made by a jurisdictional agency.

Specifically, Section 273.202 deals with the collection of such prices pending a jurisdictional agency determination of eligibility. Section 273.202(c) places a special limitation on the period of collection. It suspends such collections after March 1, 1979 unless the Commission is notified in writing that "the jurisdictional agency has authority to process applications for determinations under Subparts B, C, G, and H of Part 271 and is making such determinations."

Section 273.204(a) sets forth the general rule for retroactive collection after the final determination and allows retroactive collection for first sales of natural gas delivered after November 30, 1978, if the application for determination was filed by March 1, 1979. Section 273.204(b) places a special limitation on the period of collection. It suspends retroactive collections authorized in Section 273.204(a) for deliveries commencing March 1, 1979, unless the Commission is notified in writing by March 1, 1979, that "the jurisdictional agency is authorized to process applications for determinations under Subparts B, C, G, and H of Part 271 and is making such determinations."

Prior to the March 1, 1979 filing date, many jurisdictional agencies have notified the Commission that they have the authority to make and are making these determinations. However, due to varied internal state situations, a limited number of jurisdictional agencies have not yet filed this statement of authority. To date, the Commission has received numerous comments from producers, pro

ducer associations, and jurisdictional agencies requesting an extension of the March 1, 1979 deadlines in Sections 273.202(c) and 273.204(a) and (b). After consideration of the comments filed, it is the Commission's understanding that these varied state situations can be resolved in the near future. The Commission is further informed that the jurisdictional agencies are presently endeavoring to obtain the legal authority necessary to make the NGPA Section 503 determinations. (See, e.g., the filing of the Governor of the State of Oklahoma).

Accordingly, the Commission finds that good cause exists to amend Sections 273.202(c) and 273.204(b) of the Interim Regulations by extending the time for filing the statement of authority from March 1, 1979 to April 1, 1979, and to amend Section 273.204(a) of the Interim Regulations by extending the time for filing an application for determination from March 1, 1979 to April 1, 1979. In light of the need for prompt Commission action in these circumstances to forestall the imposition of unnecessary burdens, and in view of prior Commission action in holding public hearings and soliciting comments on these regulations (43 Fed. Reg. 53270 (November 15, 1978), and 43 Fed. Reg. 56448 (December 1, 1978)), the Commission also finds that good cause exists to issue these amendments without further notice and comment; and that the amendments should be made effective immediately.

(Natural Gas Act, as amended, 15 U.S.C. 717, et seq., Energy Supply and Environmental Coordination Act, 15 U.S.C. 791, et seq., Federal Energy Administration Act, 15 U.S.C. 761, et seq., Natural Gas Policy Act of 1978, Pub. L. 95-621, 92 Stat. 3350, Department of Energy Organization Act, Pub. L. 95-91, E.O. 12009, 42 F.R. 46267).

In consideration of the foregoing, Part 273 of Subchapter H, Title 18, Code of Federal Regulations, is amended as set forth below, effective immediately.

1. Section 273.202 is amended in paragraph (c) by deleting where it occurs the date "March 1, 1979" and inserting in lieu thereof the date "April 1, 1979."

2. Section 273.204 is amended in paragraph (a)(2) by deleting the date "March 1, 1979" and inserting in lieu thereof the date "April 1, 1979."

3. Section 273.204 is amended in paragraph (b) by deleting where it occurs the date "March 1,

1979" and inserting in lieu thereof the date "April 1, 1979."

Notice of Proposed Rulemaking

Exxon Pipeline Company (Exxon), Sohio Pipe Line Company (Sohio) and Union Alaska Pipeline Company (Union), part owners in the Trans-Alaska Pipeline Systems (TAPS) have filed tariffs containing revised rules and regulations for the transportation of petroleum through TAPS.' The proposed revisions would increase the interest on unpaid bills and provide for adjustments between all shippers for differentials in the quality of oil shipped.

The proposed provision to increase the interest rate on unpaid bills would increase the rate from the present 8% on unpaid freight charged to a rate of 125% of the prime interest rate charged by the Citibank N.A. of New York for 90-day loans to substantial and responsible commercial customers calculated as of the date of delivering. Under this provision, a shipper would be uncertain of his precise obligations at the time he tenders his shipment, for he would be unaware of the prime rate in effect at that time.

Under the proposed regulation to adjust for quality differentials, the TAPS carrier would establish a "Quality Bank" to compute adjustments

among all shippers for differences in the weighted average gravity of crude petroleum each shipper introduces into the system. The higher the weighted average gravity of crude petroleum, the greater is its value. Operation of the "Quality Bank" would provide that a shipper who introduces high average gravity petroleum into the system, but as a result of commingling, receives lower gravity petroleum at delivery would be reimbursed for the difference, and that a shipper introducing low gravity petroleum, but receiving high gravity crude, would be billed for the difference. The carriers further propose to make adjustments for all petroleum shipped from the date of commissioning of the system.

On February 21, 1979, Earth Resources Company of Alaska (ERCA) filed a protest to the applied for tariff. In its application ERCA requested that the subject tariff provisions be rejected, or alternatively, suspend their operation pending an investigation into the lawfulness and reasonableness of such provisions. On February 27, 1979, Exxon Pipeline Company filed a reply in opposition to ERCA's motion.