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Power & Pipes

FERC, CFTC, and State Energy Law Developments

On January 20, 2011, the Federal Energy Regulatory Commission (FERC) issued Order No. 710-B, revising the financial forms, statements, and reports for natural gas companies contained in FERC Form Nos. 2, 2-A, and 3-Q to include functionalized fuel data (on pages 521a through 521c of those forms) and the amount of fuel waived, discounted, or reduced as part of a negotiated rate agreement.

Order No. 710-B explains that the additional information to be reported will allow users to match the revenues generated By the sale of excess fuel with the functionalized costs reported on page 520 (which has also been modified for consistency) and will allow users to better determine if there is a cross-subsidy. Among other changes to the reporting requirements, natural gas companies will be required to do the following:

  • Separately reflect shipper supplied fuel By function (i.e., production/extraction/processing, gathering, transmission, distribution, and storage), and separately list the volumes for each of these functions.
  • List volumes and dollar amounts for discounted, negotiated, and recourse rates.

FERC also determined that pipelines must separately report their forward-haul and backhaul volumes, to allow FERC and customers to determine whether the fuel use being assigned to customers in their bills contains any cross-subsidies, based on the inclusion of backhaul volumes in their gas purchases, and to ensure that rates are just and reasonable.

In order to provide greater transparency, FERC will require the fuel information to be reported on a monthly basis (i.e., data must be provided in separate entries for each month) in the quarterly reports.

The detailed data required By Order No. 710-B must be collected starting July 1, 2011, and the data requirements must be reflected in reports starting with the FERC Form No. 3-Q filings for the period of July 1 through September 30, 2011.