below the level at which the Board has indicated, as a matter of policy, it will suspend proposed rates. WPL cites increases in the cost of its purchased power, labor, materials, and services as support for its increase. It is estimated by WPL that total 1978 operating expenses increased by 21.6 percent over 1977 levels. On a per-barrel basis expenses have increased by an estimated 15.4 percent. WPL projects that it will earn an 8.86 percent return on valuation in 1979 if the proposed rate increase is allowed to become effective as requested.

Mid-Continent's complaint, as supplemented, protests the WPL increase on three principal grounds. First, it contends that WPL's rates reflect excessive depreciation charges. WPL, it is asserted, amortizes the pipeline assets which it purchased from Great Lakes Pipe Line Company on the basis of WPL's "fair-market" value purchase price ($287.6 million) rather than on the basis of the property's original cost to Great Lakes ($174.8 million). Second, Mid-Continent argues that WPL's historical earnings have been excessive. The protestors claim that WPL earned a 16.1 percent before tax return on average net investment in 1977. Finally, Mid-Continent charges that WPL's filing will increase rates applicable to its shipments by an average of 6.5 percent while increasing joint rates' from Gulf coast origins by an average rate of only 4.3 percent. This disparity in percentage increase, it is said, constitutes undue preference and prejudice violative of Section 3(1) of the I.C.A. The protestors point out that both their depreciation and discrimination claims were, in part, the subject of the Farmers Union' case and Williams Pipe Line Co., I.C.C. Docket No. I&S 9089.

WPL in its January 10, 1979 reply responds to all of Mid-Continent's contentions. WPL points out that the depreciation and discrimination issues raised by Mid-Continent are before the FERC on remand from the D.C. Circuit Court of Appeal's opinion in Farmers Union. WPL argues that it would be premature to decide those issues in a suspension order: The proper forum is in the remand of Farmers Union and not here. Contrary to Mid-Continent's assertion that WPL earnings have been excessive, the pipeline stresses that it projects for 1979 only a 7.7 percent return on valuation absent the rate relief requested.

Having reviewed the pleadings of Mid-Continent and WPL, the Board finds that the proposed rates have not been shown to be just and reasonable and may be unjust, unreasonable, unduly discriminatory, preferential, prejudicial or otherwise unlawful. Accordingly, the Board shall suspend WPL's rate increase until August 1, 1979, and permit it to become effective, subject to refund, on that date.

The unique circumstances arising in this case fully justify a suspension period until August 1, 1979. In particular, the Board is concerned that WPL's proposed rates may grant an undue prefer

ence to shippers of products originating in Gulf coast areas resulting in undue prejudice to MidContinent shippers and others similarly situated. Without addressing the merits of the shippers' or WPL's contentions on this point, the Board finds that the potential for harm to the complaining shippers supports the length of the suspension period provided for by this order.

With respect to WPL's Section 4 applications, the Board finds that the suspension of WPL's general rate increase request makes it inappropriate to grant these applications at this time. The Board shall institute an investigation to determine whether circumstances continue to exist which require departure from the long- and short-haul restriction of Section 4 of the I.C.A. Because the Section 4 investigation involves questions common to WPL's general rate increase request, the Board shall consolidate Docket Nos. IS79-4, FS79-1 and FS79-2 for purposes of hearing and decision.

The Board takes notice of the fact that the filings in Docket Nos. IS79-4, FS79-1 and FS79-2 represent the most recent of a series of WPL rate cases now before the Federal Energy Regulatory Commission. Other pending cases include the remand of Farmers Union, supra, and I.C.C. Docket Nos. I&S 9089, 36423 and 36520.

Because the proceeding instituted by this order involves questions of law and fact common to other pending WPL cases, the Board believes that it should be consolidated for purposes of hearing and decision with the Farmers Union remand, as well as other WPL rate cases. The authority to consolidate this proceeding with pre-existing WPL cases, however, resides in the full Commission. The Board, therefore, shall certify this matter (together with the record thus far developed in these dockets) to the Commission and, as part of this order, shall request the Commission to consolidate this proceeding with one or more of WPL's pending rate cases. Except as may be modified by any consolidation orders which may eventually be entered by the Commission in the proceeding, the schedule established in the Ordering Paragraphs, below, shall control the conduct of hearings in this case.

The Board orders:

(A) Pursuant to Section 15(7) of the I.C.A. an investigation shall be instituted into the lawfulness of the proposed rate increases reflected in the supplemental tariff sheets filed by WPL on November 30, 1978. Pending hearing and decision on the lawfulness of WPL's proposed rates, the supplemental tariff sheets filed November 30, 1978, shall be accepted for filing and suspended until August 1, 1979, when they shall be permitted to become effective subject to refund.

(B) Pursuant to Section 15(7) of the I.C.A. a public hearing shall be held in Docket No. IS79-4 concerning the lawfulness of WPL's proposed rates. (C) An investigation and public hearing shall

be held in Docket Nos. FS79-1 and FS79-2 to determine whether WPL is entitled to relief from the long- and short-haul restriction of Section 4 of the I.C.A.

(D) The hearings and investigations instituted in Docket Nos. IS79-4, FS79-1 and FS79-2 shall be consolidated for purposes of hearing and decision.

(E) WPL shall file its case-in-chief fully justifying the proposed general rate increase and Section 4 applications on or before April 2, 1979. WPL's case-in-chief shall contain a schedule setting forth net original cost investment, with details. WPL may propose an appropriate working capital allowance to be included in rate base and may propose a rate of return to be applied to this rate base.

(F) Staff shall serve its top sheets on or before June 29, 1979.

(G) 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 on July 17, 1979, 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.

(H) If WPL's proposed rate increase becomes effective, subject to refund, after the suspension period but prior to final Commission decision upon the lawfulness of such increase, WPL shall keep an accurate account of all amounts received by reason of such increase, specifying when, by whom, and in whose behalf such amounts are paid. The account shall be in sufficient detail so that refunds, with interest, can be ordered of any portion of the increased rates ultimately found unjustified.

(I) If WPL's proposed increase becomes effective, subject to refund, after the suspension period but prior to final Commission decision on the lawfulness of the increase, WPL shall file an undertaking with the Board in a form and manner substantially similar to the undertaking required of gas pipeline companies under Section 154.67(d) of the Commission's Regulations under the Natural Gas Act (18 CFR § 154.67(d)).

(J) Pursuant to 18 CFR Part 3.5(e)(9) the Board by this order certifies to the full Commission the following matter: Should the proceedings in these dockets be consolidated with one or more of the proceedings pending before the Commission involving WPL? For the sole purpose of assisting the Commission in its determination, the Board concurrently certifies the pleadings and applications filed to date in this proceeding.

-Footnotes

Supplement 18 to WPL FERC No. 5; Supplement 17 to WPL FERC No. 6; Supplement 12 to WPL FERC No. 8; Supplement 6 to WPL FERC No. 9; Supplement 15 to WPL FERC No. 10; Supplement 6 to WPL FERC No. 11; Supplement 15 to WPL FERC No. 12; Supplement 4 to WPL FERC No. 13; Supplement 4 to FERC No. 14; and Supplement 4 to WPL FERC No. 15.

2 Postponement supplement filed December 22, 1978, delayed the effective date from the originally proposed date of January 1, 1979.

Both I.C.C. orders require, however, that WPL not increase applicable rates unless new Commission authorization is obtained.

The rates complained of consist of through rates filed jointly by Explorer Pipeline and WPL and are published as FERC No. 12.

Farmers Union Central Exchange, et al. v. F.E.R.C., 584 F. 2d 408 (D.C. Cir. 1978) reh. denied July 25, 1978, cert. denied 439 U.S. 995 (1978). Farmers Union is now before the Commission on remand from the D.C. Circuit Court of Appeals and has been assigned Docket No. OR 79-1.

On November 7, 1978, Lone Star Gas Company, a Division of Enserch Corporation (Lone Star)' filed in Docket Nos. CP79-63 and CP79-64 applications pursuant to Section 7 of the Natural Gas Act as implemented by paragraphs (b) and (e) of Section 157.7 of the Regulations thereunder (18 CFR 157.7(b)(e)), for a certificate of public conven

ience and necessity authorizing (1) the construction, during calendar year 1979, and operation of certain natural gas facilities to take natural gas which will be purchased from producers or other similar sellers thereof; and (2) for permission for and approval of the abandonment during calendar year 1979, direct sale service and facilities no longer required for

[162,0261

deliveries of natural gas to Lone Star's customers, respectively, all as more fully set forth in the application.

The purpose of these budget-type authorizations is to augment Lone Star's ability to act with reasonable dispatch in (1) constructing facilities to connect the facilities of an independent producer or other similar seller with the facilities of Lone Star or with the system of another natural gas company authorized to transport natural gas for the account of or exchange natural gas with Lone Star; (2) abandoning service and removing direct sale measuring, regulating, and related facilities.

Lone Star will not abandon any service under the authorization granted under Section 157.7(e) unless it has received a written request or written permission from the direct customer to terminate service. In the event that such requests or permission cannot be obtained, an appropriate statement certifying that the customer has no further need for service shall be filed with the Commission. Further, the deliveries to any one of these direct sales customers through the sales measuring facilities shall not have exceeded 100,000 Mcf of gas annually during the last year of service.

The total cost of the gas-purchase facilities shall not exceed $3,000,000 with no single project to exceed $750,000. The cost of the new facilities will be financed by Lone Star from funds on hand.

Since the facilities proposed to be constructed or abandoned will be or are used in the transportation of natural gas in interstate commerce subject to the jurisdiction of the Commission, they are subject to the requirements of Subsections (c) and (e) and Subsection (b), respectively, of Section 7 of the Natural Gas Act.

After due notice by publication in the Federal Register on November 30, 1978 (43 F.R. 56096), no petitions to intervene, notices of intervention, or protests to the granting of the applications have been filed.

At a hearing held on January 18, 1979, there was received and made a part of the record in this proceeding all evidence, including the application and exhibits thereto, submitted in support of the authorizations sought herein, and upon consideration of the record,

It is found:

(1) Lone Star is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of the Natural Gas Act and the requirements, rules and regulations of the Commission thereunder.

(2) The construction and operation of the proposed facilities by Lone Star are required by the public convenience and necessity and a certificate therefor should be issued as hereinafter ordered and conditioned.

(3) The abandonment proposed by Lone Star is

permitted by the public convenience and necessity and should be approved as hereinafter ordered.

(4) The proposed expenditures are within the limits prescribed by paragraphs (b) and (e) of Section 157.7 of the Regulations under the Natural Gas Act.

Pursuant to the authority delegated by 18 CFR 3.5(f) (43 F.R. 36433), it is ordered:

(A) Upon the terms and conditions of this order, a certificate of public convenience and necessity is issued authorizing Lone Star (1) to construct, during the calendar year 1979, the proposed facilities and to operate such facilities only to take natural gas supplies from producers or other similar sellers thereof who sell natural gas to the gas purchaser and to permit the delivery of natural gas to implement authorized exchange and/or transportation arrangements with other pipeline companies, all as hereinbefore described and as more fully described in the application in Docket No. CP79-63.

(B) Upon the terms and conditions of this order, permission for and approval of the abandonment by Lone Star of the facilities and service hereinbefore described, all as more fully described in the application in Docket No. CP79-64 are granted.

(C) The certificate issued by paragraph (A) above and the rights granted thereunder are conditioned upon Lone Star's compliance with all applicable Commission Regulations under the Natural Gas Act and particularly the general terms and conditions set forth in paragraph (b) of Section 157.7 as applicable and in paragraphs (a), (e) and (f) of Section 157.20 of such Regulations.

(D) The permission and approval for the abandonment granted by paragraph (B) above are conditioned upon Lone Star's compliance with Section 157.7 (e) of the Regulations under the Natural Gas Act and are limited to the calendar year 1979.

(E) The total cost of facilities authorized herein under Section 157.7 (b) of the Commission's Regulations shall not exceed $3,000,000 with no single project to exceed $750,000.

(F) The permission and approval for the abandonments authorized herein under Section 157.7 (e) of the Commission's Regulations shall be limited to abandonments where deliveries to any one direct sale customer through any one of the sales measuring facilities to be abandoned have not exceeded 100,000 Mcf annually during the last year of service; and further, Lone Star shall not abandon service unless it has received a written request or written permission from the direct sale customer to terminate service. In the event such request or permission cannot be obtained, a statement certifying that the customer has no further need for the service and that Lone Star has made all reasonable efforts to notify the customer of the proposed abandonment must be filed. Abandonment shall not

be permitted if the customer objects within 90 days after the issuance of such notice by Lone Star of the proposed abandonment and the above described certified statement.

(G) The grant of the certificate herein is conditioned upon Lone Star's certifying to the Commission within 60 days after all construction is completed under the instant authorization that it has fully complied with the provisions of Section

2.69 of the Commission's General Policy and Interpretations.

-Footnote

Lone Star, a Texas corporation having its principal place of business in Dallas, Texas, is a "natural-gas company" within the meaning of the Natural Gas Act as heretofore found by order of April 11, 1944, in Docket No. G-442 (4 FPC 565).

On November 7, 1978, as supplemented December 22, 1978, Lone Star Gathering Company (Applicant)' filed in Docket No. CP79-65 an application pursuant to Section 7(c) of the Natural Gas Act as implemented by Section 157.7(c) of the Regulations thereunder (18 CFR 157.7(c)), for a certificate of public convenience and necessity authorizing the construction, during the calendar year 1979, and operation of facilities to make miscellaneous rearrangements on its system, all as more fully set forth in the application.

The purpose of this budget-type authorization is to enable Applicant to make miscellaneous rearrangements which will not result in any material change in the service presently rendered by Applicant.

The total cost of said facilities will not exceed $100,000 which cost Applicant will finance from current working funds, funds from operations, short-term borrowings, or long-term financing.

Since the facilities proposed to be constructed will be used in the transportation and sale of natural gas in interstate commerce, the construction and operation thereof by Applicant are subject to the requirements of Subsections (c) and (e) of Section 7 of the Natural Gas Act.

After due notice by publication in the Federal Register on December 7, 1978 (43 F.R. 57338), no petitions to intervene, notices of intervention or protests to the granting of the application have been filed.

At a hearing held on January 18, 1979, there was received and made a part of the record in this proceeding all evidence, including the application and exhibits thereto, submitted in support of the authorization sought herein, and upon consideration of the record,

It is found:

(1) The proposed expenditures are within the

limits prescribed by Section 157.7(c) of the Regulations under the Natural Gas Act.

(2) Applicant is able and willing properly to do the acts and to perform the service proposed and to conform to the provisions of the Natural Gas Act and the requirements, rules and regulations of the Commission thereunder.

(3) The construction and operation of the proposed facilities by Applicant are required by the public convenience and necessity and a certificate therefor should be issued as hereinafter ordered and conditioned.

Pursuant to the authority delegated by 18 CFR 3.5(f) (43 F.R. 36433),

It is ordered:

(A) Upon the terms and conditions of this order, a certificate of public convenience and necessity is issued authorizing Applicant to construct, during the calendar year 1979, and operate the proposed facilities to make miscellaneous rearrangements, as hereinbefore described and as more fully described in the application.

(B) The certificate issued by paragraph (A) above and the rights granted thereunder are conditioned upon Applicant's compliance with all applicable Commission Regulations under the Natural Gas Act and particularly the general terms and conditions set forth in paragraph (c) of Section 157.7 and in paragraphs (a), (e) and (f) of Section 157.20 of such Regulations.

(C) Applicant shall submit within 60 days after the expiration of the authorization granted by paragraph (A) above a statement in compliance with Section 157.7(c)(4) of the Commission's Regulations under the Natural Gas Act.

(D) The total expenditures for facilities to be constructed under the authorization granted by paragraph (A) above are limited to $100,000.

(E) The grant of the certificate herein is conditioned upon Applicant's certifying to the [162,027]

Citizens Utilities Company
High Ridge Park

Stamford, Connecticut 06905

Attention: Ishier Jacobson, President and Chief Operating Officer

Gentlemen:

On December 13, 1978, we received your application pursuant to Section 204 of the Federal Power Act for authority to issue (from time to time) up to $22.5 million of short-term debt on or before February 1, 1980, with a final maturity date of not later than February 1, 1980.

The short-term debt consisting of promissory notes and commercial paper will be issued from time to time for repayment of indebtedness, to finance construction, extension and improvement of facilities, and for general corporate purposes. The interest rate applicable to the notes will be Marine Midland Bank's prime commercial lending rate, and commercial paper will be discounted at the prevailing rate at date of issuance, for paper of comparabie quality and maturity.

Written notice of the Application has been given to Arizona Corporation Commission, Idaho Public Utilities Commission, Vermont Public Service Board and to the Governors of the aforementioned States. Notice has also been given by publication in the Federal Register stating any person desiring to be heard or to make any protest with reference to the Application shall file petitions or protests on or before January 12, 1979, with the Federal Energy Regulatory Commission, Washington, D.C. 20426. No petition, protest or request to be heard in opposition to the granting of the application has been received.

The Office of Chief Accountant finds:

(1) Citizens Utilities Company, a corporation, is a public utility within the meaning of Section 204 of the Federal Power Act, subject to the jurisdiction of the Commission.

(2) The proposed issuance of short-term debt in

the aggregate principal amount of $22.5 million will constitute an issuance of securities within the purview of Section 204 of the Act.

(3) The proposed issuance of securities will be in excess of 5% of the par value of the other securities of the Applicant and, therefore, will not be exempt by virtue of Section 204(e) from the requirements of Section 204(a) of the Act.

(4) Citizens Utilities Company is not organized and operating in a State under the laws of which the security issue here involved is regulated by a state commission within the meaning of Section 204(f) of the Act, and the proposed issuance is, therefore, not exempt by virtue of that Section from the requirements of Section 204 of the Act.

(5) The proposed issuance of short-term debt will be exempt from the competitive bidding requirements of Section 34.1a of the Commission's Regulations under the Federal Power Act by reason of paragraph 34.1a(a)(2) thereof.

(6) The proposed issuance of securities is consistent with the provisions of Section 204(a) of the Federal Power Act.

Pursuant to the Authority Delegated in Docket No. RM78-19, August 14, 1978, FERC Statutes and Regulations ¶ 30,016, the Office of Chief Accountant Authorizes:

The proposed issuance of short-term debt in the aggregate principal amount not exceeding $22.5 million outstanding at any one time, upon the terms and conditions and for the purpose set forth in the Application, subject to the provisions set forth below:

(A) This authorization is expressly conditioned that all short-term debt is to be issued on or before February 1, 1980, and bear final maturities of not later than February 1, 1980.

(B) The foregoing authorization is without prejudice of the authority of the Commission or any other regulatory body with respect to rates, service, accounts, valuation, estimates or determinations of