On November 13, 1978, Transcontinental Gas Pipe Line Corporation (Transco) filed an application for rehearing of the Commission's order issuing a certificate of public convenience and necessity pursuant to Section 7(c) of the Natural Gas Act on October 12, 1978, 5 FERC ¶ 61,033, in the instant docket. An application for rehearing was also filed by The Brooklyn Union Gas Company (Brooklyn Union). On December 13, 1978, the Commission issued an order granting rehearing for the purposes of further consideration. Upon consideration of the points developed in the application for rehearing the Commission determined that the order of October 12, 1978 was appropriate and proper and modification is not warranted.

The order of October 12, 1978, in the instant docket authorized Transco to provide a temporary storage service for certain customers by use of the Hester Storage Field. As part of the authorization granted, the Commission required Transco to credit the revenues it would receive in excess of the costs associated with the temporary service, ie., the net revenues, to its Account 191 of the Uniform System of Accounts Prescribed for Natural Gas Companies, in order to assure that the benefits would flow to those customers that had borne the costs of the storage field. In its application for rehearing Transco requests that the Commission, as an alternative to requiring the crediting of revenues to Account 191, consider a proposal to allow an offset of the net revenues received for the temporary storage service in the Hester Storage Field with an amount at issue in the proceeding pending in Docket No. CP77-267, relating to the treatment of certain costs associated with the purchase of the Hester Storage Field (this amount is termed the acquisition adjustment). Brooklyn Union, in its application for rehearing, joins Transco in requesting that the Commission allow the offset as an expeditious means of resolving a number of pending questions involving the treatment of revenues from several of Transco's

storage services. The Commission has determined not to allow the offset as requested. We believe that the acquisition adjustment involves questions of sufficient importance, having already been the subject of a full hearing and initial decision by an Administrative Law Judge, as to warrant full consideration and a separate order.

The crediting of the net revenues, received by Transco from the temporary storage service authorized, to its Account 191, as ordered, is proper and consistent with Commission Policy.' The Hester Storage Field provides system-wide storage, unlike Transco's other storage fields, and the costs associated with the Hester Storage Field are borne by its resale customers as a part of their resale rates. To the extent that Transco is able to provide additional, temporary storage to additional customers, the benefit of the net revenues received for such temporary service should redound to the benefit of those customers who have paid the costs of the facility. Since Transco does not have a provision in its currently effective tariff to cover the disposition of such revenues, we have required it to credit the net revenues to its Account 191 as a convenient mechanism for achieving this equitable goal. The Commission finds:

The applications for rehearing present no new facts or principles of law which were not heretofore considered, or which having now been considered, warrant modification of the order of October 12, 1978, in the instant docket.

The Commission orders:

The applications for rehearing and modification of the order of October 12, 1979, in Docket No. CP78-406, filed by Transco and Brooklyn Union are denied.

-Footnote

See e.g., El Paso Natural Gas Co., Docket No. CP78-446, Order on Rehearing, February 9, 1979, 6 FERC ¶ 61,126.

Order on Rehearing

On January 26, 1979, Union Light, Heat & Power Company (Union Light) filed an application for rehearing of the Commission's order of December 27, 1978, 5 FERC 61,288, in Docket No. CP71-304. On February 26, 1979, an order was

issued granting rehearing for the purposes of further consideration. Upon further consideration the Commission has determined that modification of the December 27, 1978 order is not warranted.

By the order of December 27, 1978, the

Commission denied Union Light's petition to amend the order issuing a certificate of public convenience and necessity in the instant docket. Union Light had petitioned to amend the order issued under Section 7 of the Natural Gas Act so as to increase its rate of return for the authorized service. In the Commission's initial order in this docket, as well as in the December 27th order, the Commission stated that any changes in the rates after service commenced must be accomplished through filings under Section 4 of the Natural Gas Act and the Commission's Regulations thereunder.

In its application for rehearing Union Light cites several cases in which, it alleges, the Commission has addressed rate change proposals under Section 7 of the Natural Gas Act. These cases are: Southern Energy Co., Docket No. CP71-264, order issued February 13, 1978, 2 FERC ¶ 61,133; and Columbia LNG Corp., Docket No. CP71-68, order issued July 27, 1977, 59 FPC 1174. These cases are inapplicable here. In both of these cases the Commission did authorize changes in the proposed initial rates by amendments to the certificates issued under Section 7, however, service had not yet commenced in either case at the time the amendments were sought. Under Section 7 the Commission has authority to establish an initial rate for a service, but once the service commences any change in the rates must be accomplished by the appropriate filings under Section 4.

Union Light also cites as precedent Columbia

LNG's Petition to Amend filed August 29, 1978, in Docket No. CP71-68, in which a rate change was sought after service had commenced. However, that case also is inapplicable to Union Light because the rate change sought by Columbia LNG fell within the scope of Section 3 of the Natural Gas Act, within the jurisdiction of the Department of Energy, Economic Regulatory Administration, and as a result the petition was referred by the Commission to that agency for the appropriate disposition.

Once again, because service has commenced, we direct Union Light to make the appropriate filings under Section 4 of the Natural Gas Act if it desires to change its rates. Under that section a change in rates takes effect upon the appropriate filing with the Commission, subject to refund only should the Commission suspend and reject the filing. If the changes sought are truly de minimis, as Union Light maintains in its application for rehearing, then it should not have any difficulty when it makes the appropriate filings under Section 4. The Commission finds:

Union Light's application for rehearing presents no new facts or principles of law which warrant modification of the order of September 27, 1978, issued in the instant docket.

The Commission orders:

Union Light's application for rehearing is denied.

Distrigas Corporation (Distrigas) and Distrigas of Massachusetts Corporation (DOMAC) jointly filed for rehearing on January 26, 1979, of the Commission's December 28, 1978 order, 5 FERC ¶ 61,296. On January 29, 1979, Bay State Gas Company, et al. (Bay State),' Boston Gas Company (Boston Gas), and Brooklyn Union Gas Company (Brooklyn Union) also filed for rehearing. In the December 28 order, the Commission authorized construction and operation of certain facilities and the sale of additional amounts of liquefied natural gas (LNG).

I

In the December 28 order the Commission approved a Settlement Agreement on tariff issues

between DOMAC and its customers; however, the order neglected to include a specific effective date for the terminalling service rates. Bay State, Boston Gas and Brooklyn Union direct their rehearing applications to this point. These companies argue that the appropriate effective date should be April 1, 1978. Using April 1, 1978 as the effective date would result in Distrigas making refunds from April 1, 1978 to December 28, 1978.

In order to determine the appropriate date, it is necessary to examine the terms of the settlement agreement. Article II states that the terminalling and delivery service rate schedule "shall remain in effect until the later of April 1, 1978 or the effective date of authorization of the Long Term Program by the Federal Energy Regulatory Commission or

other appropriate governmental regulatory body at which time such rate schedules shall be superseded." The companies argue that the approval required in Article II was granted December 31, 1977, pursuant to the order of the Economic Regulatory Administration (ERA); therefore, according to the terms of the agreement, April 1, 1978 would be the appropriate date.

However, before reaching this result, it is necessary to determine if ERA's approval of the import was all that was necessary to trigger this portion of the settlement. We conclude that ERA's determination was only one part of the necessary approval for the Long Term Program. That is, step one is approval of the Section 3 import request by ERA and step two is approval of the Section 7 aspects of the request by the FERC. Both steps are necessary before the Long Term Program can go into effect on a permanent basis. We will therefore use December 28, 1978 as the effective date for the TS and SS Rate Schedules.

II

Distrigas and DOMAC seek rehearing of two aspects of the Commission's decision. The first pertains to finding (9) in the order which prescribes that all facilities involved in this proceeding be placed into operation by December 31, 1979. This was a typographical error and should be corrected to reflect the date December 31, 1980.

The second issue in the Distrigas and DOMAC applications involves the Commission's refusal to permit an automatic flow-through of increases in transportation costs. Distrigas and DOMAC argue that ERA, in approving the import price, approved future adjustments in both the commodity and transportation components. It is further asserted that the Commission overstepped its jurisdiction if it were attempting "to require cost justification or approval which has already been received under Section 3." (Rehearing Application at 3).

In denying an automatic flow-through for transportation, we are in no way attempting to reexamine or alter ERA's approval under Section 3. However, in ERA's December 31, 1977 order, the tracking issue was specifically reserved to "be decided by subsequent order or orders of appropriate units of DOE." In addition, the February 22,

1978 Delegation Order in these dockets "gives to the Commission the authority to carry out such functions as are vested in the Secretary to regulate natural gas imports under Section 301 and 402(f) of the DOE Act with respect to all of the issues remaining to be decided * * (43 F.R. 7365). It is clear that ERA did not decide the tracking issue and that the resolution of the problem was delegated to the FERC. We therefore conclude that it is within our jurisdiction to resolve this issue. We, however, recognize that ERA has approved the import formula which is comprised of two factors: (1) the FOB price and (2) the cost of transportation from Algeria to Everett, Massachusetts. The transportation cost factor “will vary with changes, from defined standards, in (1) the price of No. 6 fuel oil (for bunker fuel), (2) port charges, (3) the FOB price *** (for boiloff fuel), (4) insurance costs, and (5) labor rates." (I.D. at 3).

In denying tracking authorization in our December 28 order, we were not attempting to change the approved formula, but were merely providing a means to review the reasonableness of the adjustments to the transportation portion of the formula. In further reviewing this matter and the arguments of Distrigas and DOMAC, we have decided to permit an automatic adjustment consistent with the methodology set out in the ERA order of December 31, 1977. However, this in no way means that we waive our regulatory responsibility to assure that the rates are just and reasonable. We will therefore require that before adjustments can be made under this provision, a filing must be made under Section 4 of the Natural Gas Act. This filing would demonstrate compliance with the approved methodology as well as support for the component cost levels of the transportation rates.

The Commission orders:

The applications for rehearing of the Commission's order of December 28, 1978, filed by Distrigas and DOMAC, jointly, on January 26, 1979 and by Bay State, Boston Gas and Brooklyn Union on January 29, 1979, are denied, except as provided in this order.

-Footnote

Bay State, et al, consists of 8 of the 11 customers of DOMAC.

By letters dated January 23, 1979, Florida Power and Light Company (FP&L) submitted for filing: (1) a proposed amendment to its transmission service agreement with the City of Homestead, Florida (Homestead) (Docket No. ER79-162) and (2) proposed amendments to its transmission service agreement with the Ft. Pierce Utilities Authority (Ft. Pierce) (Docket Nos. ER79-171 and ER79-172).'

In Docket No. ER79-162, FP&L proposes to amend the transmission service agreement between itself and Homestead to accommodate the amendment of the interchange agreement between Homestead and Ft. Pierce.2

FP&L states that on June 16, 1978, it submitted cost support data as Volume X in Docket No. ER78-19, et al., in compliance with Section 35.13 of the Commission's Regulations. Pursuant to Section 35.19 of the Commission's Regulations, FP&L states that it has included Volume X by reference as cost support for the instant filing.

In Docket No. ER79-171, FP&L proposes to amend the transmission service agreement between itself and Ft. Pierce' to implement Ft. Pierce's interchange agreements with the Orlando Utilities Commission, Tampa Electric Company, Florida Power Corporation, Utilities Commission of New Smyrna Beach, Florida and the Lake Worth Utilities Authority. FP&L states that cost support data were filed as Volume XI in Docket No. ER78-19, et

al., on June 28, 1978, and included Volume XI by reference as cost support for this filing.

In Docket No. ER79-172, FP&L proposes to further amend its transmission agreement with Ft. Pierce to accommodate the amendment of the interchange agreement between Ft. Pierce and Homestead. As with Docket No. ER79-171, FP&L states that it has filed the requisite cost support data in Docket No. ER78-19, et al., and incorporates the data by reference in this docket..

Notice of the filing in Docket No. ER79-162 was issued on February 2, 1979. Notices of the filings in Docket Nos. ER79-171 and ER79-172 were issued on February 7, 1979. Responses in all dockets were due on or before February 16, 1979.

On February 16, 1979, in Docket No. ER79-171, Ft. Pierce filed a Protest, Request for Intervention and Consolidated Hearing. The City objects to the rates, form, and terms and conditions of the proposed service. Ft. Pierce requests that it be allowed to intervene in this proceeding.

FP&L's proposed rates and terms and conditions of service have not been shown to be just and reasonable and may be unjust, unreasonable, unduly discriminatory, preferential or otherwise unlawful. The Commission shall suspend the proposed rate schedules for one day, to become effective March 26, 1979, subject to refund, pending the outcome of a hearing and decision thereon.

The rates proposed for the above listed transmission service are identical to those being investi

gated in Docket No. ER78-19, et al. Consequently, the Commission finds it appropriate to consolidate Docket Nos. ER79–162, ER79–171 and ER79–172 with the ongoing proceeding in Docket No. ER78-19, et al.

Since Ft. Pierce has interests in Docket No. ER79-171 which may not be adequately represented by existing parties, its petition to intervene will be granted.

The Commission orders:

(A) Pursuant to the authority contained in and subject to the jurisdiction conferred upon the Federal Energy Regulatory Commission by Section 402(a) of the Department of Energy Act and by the Federal Power Act, particularly Sections 205, 206, 301, 308 and 309 thereof, and pursuant to the Commission's Rules of Practice and Procedure and to the Regulations under the Federal Power Act (18 CFR Chapter 1) a public hearing shall be held concerning the justness and reasonableness of the rate schedules proposed by FP&L in the instant docket.

(B) Pending a hearing and decision thereon, FP&L's proposed rate schedules in the instant dockets are hereby accepted for filing and suspended for one day, to become effective March 26, 1979, the rates thereunder to be subject to refund.

(C) Docket Nos. ER79-162, ER79-171 and ER79-172 are hereby consolidated with Docket No. ER78-19, et al., for the purpose of a hearing and decision thereon.

(D) Ft. Pierce is hereby permitted to intervene in Docket No. ER79–171, subject to the Rules and

Regulations of the Commission: Provided, however, that participation of Ft. Pierce shall be limited to the matters specifically set forth in its petition to intervene; and Provided, further, that the admission of Ft. Pierce shall not be construed as recognition by the Commission that it might be aggrieved by any order issued in this proceeding.

(E) The Secretary shall cause prompt publication of this order to be made in the Federal Register.

-Footnotes

'See, Attachment A for designations. [Note: Attachment not printed with order. Reports Section unable to locate a copy.]

2 On April 20, 1978, in Docket No. ER78-325, FP&L submitted for filing a transmission service agreement between itself and Homestead. Under that agreement, FP&L transmits power and energy for Homestead as required to implement the City's interchange agreements with Orlando Utilities Commission, Tampa Electric Company, Florida Power Corporation, Ft. Pierce and the Utilities Commission of New Smyrna Beach, Florida. By order issued May 19, 1978, 3 FERC ¶ 61,160, that docket was consolidated with Docket No. ER78-19, et al, for a hearing and decision thereon. FP&L proposed to amend the original agreement in Docket No. ER78-527 to implement Homestead's interchange agreement with the Lake Worth Utilities Authority. That docket was also consolidated with Docket No. ER78–19, et al.

'On May 16, 1978, in Docket No. ER78–376, FP&L filed a proposed transmission service agreement between itself and Ft. Pierce to implement the City's interchange agreement with Homestead. By order issued June 15, 1978, 3 FERC 161,240, the Commission consolidated that docket with Docket No. ER78-19 et al.

Order No. 24

Interim Regulation

30,044.]