National Association of Regulatory
Utilities Commissioners
Staff Subcommittee on Accounting
and Finance
FERC Update
April 1, 2008
New Orleans, LA
FERC Update
Steven D. Hunt, CPA
Division of Financial Regulation
Office of Enforcement
Washington, DC
Disclaimer
The views and comments presented
are my own and do not represent, nor
are they to be interpreted to represent
the views, comments, or positions of
the Federal Energy Regulatory
Commission.
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AGENDA
Commission Members
Organizational Changes
Form 2 Final Rule
Form 1 NOPR
Cross-Subsidization Restrictions on
Affiliate Transactions
Blanket Authorization Under Section
203
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Chairman Kelliher
Nominated by President George W. Bush to a
Republican seat on the Commission, and was sworn
in on November 20, 2003, for his first term and on
December 21, 2007 for his second term.
He was designated Chairman of the Commission by
President Bush, effective July 9, 2005.
Before becoming a Commissioner, Mr. Kelliher was
Senior Policy Advisor to Secretary of Energy Spencer
Abraham. In that capacity, he advised the Secretary
on a wide range of energy policy matters. Mr. Kelliher
helped develop the National Energy Policy. He had
served as Senior Policy Advisor to the Secretary since
the inauguration of President George W. Bush.
Education: Georgetown University, School of Foreign
Service, B.S.F.S., 1983; American University
Washington College of Law, J.D., Magna Cum Laude,
1994.
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Commissioner Kelly
Suedeen G. Kelly is a Commissioner at the Federal
Energy Regulatory Commission, confirmed to a term
that expires June 30, 2009.
Previously she was a Professor of Law at the
University of New Mexico School of Law, where she
taught energy law, public utility regulation,
administrative law and legislative process. She also
worked with the law firm of Modrall, Sperling, Roehl,
Harris & Sisk in Albuquerque from 2000 through
2003.
In 2000, Ms. Kelly served as counsel to the California
Independent System Operator. In 1999, she worked
as a Legislative Aide to U.S. Senator Jeff Bingaman.
She received a B.A. With Distinction in Chemistry
from the University of Rochester and a J.D. cum laude
from Cornell Law School. She is admitted to the bars
of New Mexico and the District of Columbia.
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Commissioner Moeller
Commissioner Philip D. Moeller was nominated by
President Bush, and sworn into office on July 24,
2006, by Chief Justice of the United States John
Roberts, for a term expiring June 30, 2010.
From 1997 through 2000, Mr. Moeller served
as an energy policy advisor to U.S. Senator Slade
Gorton (R-Washington) where he worked on
electricity policy, electric system reliability,
hydropower, energy efficiency, nuclear waste, energy
and water appropriations and other energy legislation.
Before becoming a Commissioner, Mr. Moeller
headed the Washington, D.C., office of Alliant Energy
Corporation, an electric and natural gas utility
company based in Madison, Wisconsin. Prior to
Alliant Energy, Mr. Moeller worked in the Washington
office of Calpine Corporation.
Mr. Moeller was born in Chicago, and grew up
on a ranch near Spokane, Washington.
He received a B.A. in Political Science from
Stanford University.
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Commissioner Spitzer
Marc Spitzer was nominated by President Bush to the
Federal Energy Regulatory Commission and
confirmed by the U.S. Senate for a term expiring June
30, 2011.
Mr. Spitzer was elected in 2000 to the Arizona
Corporation Commission (ACC) and in 2002 was
elected ACC Chairman by his colleagues.
As Chairman, he focused on policies encouraging
expansion of natural gas infrastructure, specifically
distribution and storage; creating a demand side
management policy; enhancing the ACC’s
renewables standard; and advancing consumer
privacy concerns in telecommunications. As
Chairman, he established a legacy of balancing
competing interests, while ensuring Arizonans receive
safe, economical and reliable utility services.
After graduating from Dickinson College in Carlisle,
Pennsylvania, he attended the University of Michigan
School of Law.
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Commissioner Wellinghoff
Commissioner Jon Wellinghoff was nominated by
President Bush, and sworn into office on July 31, 2006,
by U.S. Senator Harry Reid of Nevada, for a term expiring
June 30, 2008.
Before coming to the Commission, Mr. Wellinghoff was a
shareholder with a Nevada law firm. He has concentrated
his practice in the fields of energy law and utility
regulation for the past thirty years.
Mr. Wellinghoff was appointed by the Attorney General
of Nevada to serve as the state's first Consumer
Advocate for Customers of Public Utilities. While
Consumer Advocate, He served two terms as Consumer
Advocate, and personally participated in dozens of
complex utility rate and regulatory matters on behalf of
Nevada Consumers.
Education: Antioch School of Law, Washington, D.C., JD,
1975; Howard University, Washington, D.C., M.A.T.,
Mathematics, 1972; and University of Nevada, Reno,
Nevada, BS, Mathematics, 1971.
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AGENDA
Commission Members
Organizational Changes
Form 2 Final Rule
Form 1 NOPR
Cross-Subsidization Restrictions on
Affiliate Transactions
Blanket Authorization Under Section
203
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Organizational Changes
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AGENDA
Commission Members
Organizational Changes
Form 2 Final Rule
Form 1 NOPR
Cross-Subsidization Restrictions on
Affiliate Transactions
Blanket Authorization Under Section
203
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Form No. 2 Final Rule
Docket No. RM07-9-000, Order No. 710
Revisions to Forms, Statements, and Reporting
Requirements for Natural Gas Pipelines
NOPR Issued September 20, 2007
Final Rule Issued March 20, 2008
Comments Due 45 days after published in
Federal Register
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Form No. 2 Final Rule
Proposed Changes in NOPR:
Additional revenue information
Additional information to identify costs
associated with affiliated transactions
Additional information on incremental facilities
and discounted and negotiated rates
Eliminate FERC Form No. 11
Extend the filing date of CPA Certification
Statement to May 18
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Form No. 2 Final Rule
Purpose:
To expand & update the forms to reflect
current market and cost information relevant
to pipelines and their customers
To provide, in greater detail, information the
Commission needs to carry out its regulatory
responsibilities
To provide pipeline customers the information
they need to assess the justness and
reasonableness of pipeline rates
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Form No. 2 Final Rule
Final Rule:
Acquisition & Disposition of Shipper-supplied
Gas
• Add Page 521 A & B to Forms 2, 2-A & 3-Q
• Difference of gas received from shippers & gas consumed
in pipeline operations, monthly
• Disposition of excess gas & accounting given to disposition
• Source of gas used to meet any deficiency & accounting
basis of gas
• Add Page 520 (Gas Account-Natural Gas) to
Form 3-Q
• Footnote to Page 520 – Gas purchased applicable to
each gas pipeline expense account
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Form No. 2 Final Rule
Final Rule:
Other Gas Dispositions
• Pages 300-301 (Gas Operating Revenues) – Expand
detail to report sales amounts reported in Accounts
480-484 on individual lines
• Page 308 (Other Gas Revenues (Account 495))
• Add to Form 2-A
• Modify schedule to specify certain types of revenues
• List environmental credits earned in a footnote
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Form No. 2 Final Rule
Final Rule:
Affiliate Transactions
• Add Page 358 (Transactions with Associated
(Affiliated) Companies) to Forms 2 & 2-A
• Describe good or service transacted
• Name of the associated company
• FERC account charged or credited
• Amount charged or credited
• $250,000 cost threshold
• Page 358 & Page 357 (Charges for Outside
Professional and Other Consultative Services)
• Report the total of all services < $250,000
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Form No. 2 Final Rule
Final Rule:
Incremental Pricing Policy
• Add Page 217 (Non-Traditional Rate Treatment
Afforded New Projects) to Forms 2 & 2-A
• Name of facility
• Docket Number
• Rate treatment (e.g., incremental)
• Amount of plant in service & accumulated depreciation
• Amount of accumulated deferred income taxes
• Amount of operating & maintenance expense
• Amount of depreciation expense
• Amount of incremental revenues and other expenses
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Form No. 2 Final Rule
Final Rule:
Discounted & Negotiated Rate Services
• Add Page 313 (Discounted and Negotiated Rate
Services) to Forms 2 & 2-A
• Report revenues and volumes applicable to discounted and
negotiated rate services provided during the reporting
period
State Income Tax Expense
• Amend Pages 262-263 (Taxes Accrued, Prepaid and
Charged During Year, Distribution of Taxes Charged)
• New column to report state & local income tax rates
• Add schedule to Form 2-A
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Form No. 2 Final Rule
Final Rule:
Deferred Income Taxes
• Add instruction to each deferred tax schedule
requiring a summary of the type and amount of
deferred income taxes reported in the beginning &
end of year balances
• Pages 234-235 (Accumulated Deferred Income Taxes)
• Pages 274-275 (Accumulated Deferred Income Taxes-
Other Property)
• Pages 276-277 (Accumulated Deferred Income Taxes-
Other)
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Form No. 2 Final Rule
Final Rule:
Regulatory Assets and Liabilities
• Page 232 (Other Regulatory Assets) & Page 274 (Other
Regulatory Liabilities)
• Add footnote citation for each regulatory asset & liability to identify
regulatory approval
• New column to identify amounts written-off during period as non-
recoverable or non-refundable
Employee Pensions and Benefits
• Amend instructions to Page 122.1 – Disclose the amount of cost
recognized in the filer’s financial statements for each plan and
the basis for determining the filer’s share of the total plan costs
• Add Page 352 (Employee Pensions and Benefits) to Forms 2 &
2-A
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Form No. 2 Final Rule
Final Rule:
Capital Structure & Rate of Return
• Page 218a
• Amend instructions to require the name of the entity whose
capital structure is reported in a footnote
• When reporting common equity at line 5, column d
• Indicate if the ROR was approved in a rate case
• Indicate if the ROR was calculated in a black-box
settlement
• Indicate if the ROR was an actual three-year average
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Form No. 2 Final Rule
Final Rule:
Costs & Revenues (Trackers & Surcharges)
• Summary of the revenues and expenses associated
with tracked costs in the footnotes to the financial
statements
Form No. 11
• Eliminated
• Replaced with new schedule in the Form No. 2 & 2-A
• “Monthly Quantity & Revenue Data by Rate Schedule”
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Form No. 2 Final Rule
Final Rule:
CPA Certification Statement
• Filing date extended to May 18
Non-Filing Status Notification
Requests for extension of time
• Pipeline must show good cause
Effective Date – January 1, 2008
• First quarter 2009 Form 3-Q
• Calendar year 2008 Form 2 and 2-A
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AGENDA
Commission Members
Organizational Changes
Form 2 Final Rule
Form 1 NOPR
Cross-Subsidization Restrictions on
Affiliate Transactions
Blanket Authorization Under Section
203
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Form No. 1 NOPR
Docket No. RM08-5-000
Proposes changes to FERC Form Nos. 1, 1-
F, and 3-Q
Notice of Inquiry issued February 15, 2007
NOPR Issued January 18, 2008
Comments Due March 14, 2008
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Form No. 1 NOPR
Purpose of Form 1
Provide basic financial and operational
information to allow the Commission,
customers, and competitors to monitor a
utility’s rates for jurisdictional services
Provide information needed to perform a
preliminary rate assessment and determine
whether a complaint may be warranted
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Form No. 1 NOPR
Purpose of NOPR:
To improve the forms, reports, and
statements to provide, in fuller detail, the
information the Commission needs to carry
out its responsibilities to ensure that rates
are J&R, and to provide others the
information they need to assess the justness
and reasonableness of electric rates.
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Form No. 1 NOPR
Proposed Conclusions:
Demand Response Data
• Should not be collected in Form No. 1
Formula Rates
• If inputs to a formula rate deviate from Form No. 1,
filer must explain in a footnote
Defining “major” & “nonmajor” utilities
• Request specific suggestions
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Form No. 1 NOPR
Proposed Conclusions:
Waiver for utilities who are not public utilities
under Part II of the FPA
• Morenci Water & Electric Co., 121 FERC ¶
61,024 (2007)
Non-Calendar Fiscal Year
• Utility may file Form 1 (unaudited) each April and
file a second Form 1 (audited) at end of fiscal
year with CPA Certification
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Form No. 1 NOPR
Proposed Conclusions:
Affiliated Transactions
• Add Page 429 (Transactions with Associated
(Affiliated) Companies)
• Description of the good or service charged or credited
• Name of the associated company
• FERC account charged or credited
• Amount charged or credited
Other Revenues – Page 300
• Revenues not otherwise specified on Pages 328-
300 must be provided in a footnote to Page 300
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Form No. 1 NOPR
Proposed Conclusions:
Higher Threshold Levels
• Page 216 (Construction Work in Progress) –
Report projects with balances < $1 million
• Pages 232, 233, 269 & 278 (Other Regulatory
Assets, Misc. Deferred Debits, Other Deferred
Credits & Other Regulatory Liabilities) – Raise the
balance limit for grouping items to $100,000
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Form No. 1 NOPR
Proposed Conclusions:
Higher Threshold Levels
• Page 352 & 253 (Research & Development) –
Raise the cost of R&D items to be listed to
$50,000
Notification of Non-Filing Status
• Utility currently required to file Form No. 1 or 1-F
that determines it is no longer required to file must
notify the Commission of change in filing status
Extension of Time Requests
• Must show good cause
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Form No. 1 NOPR
Proposed Conclusions:
Technical Corrections
Proposed effective date:
Form 3-Q – First calendar quarter of 2009
Form 1 and 1-F – April 2010 for calendar year
2009
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AGENDA
Commission Members
Organizational Changes
Form 2 Final Rule
Form 1 NOPR
Cross-Subsidization Restrictions
on Affiliate Transactions
Blanket Authorization Under Section
203
36
Cross-Subsidization Restrictions
on Affiliate Transactions
Docket No. RM07-15-000; Order No. 707
Cross-Subsidization Restrictions on Affiliate
Transactions
NOPR Issued July 20, 2007
Final Rule Issued February 21, 2008
Amends 18 C.F.R. Part 35
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Cross-Subsidization Restrictions
on Affiliate Transactions
Purpose:
To provide certainty to public utilities and
customers with respect to the pricing
standard that must be applied to certain
affiliate transactions.
Scope:
Franchised public utilities that have captive
customers or that own or provide
transmission service over jurisdictional
transmission facilities.
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Cross-Subsidization Restrictions
on Affiliate Transactions
Requirements:
Commission approval of all wholesale sales
between a franchised public utility with
captive customers and a market-regulated
power sales affiliate
Franchised public utility with captive
customers must provide non-power goods
and services to a market-regulated power
sales affiliate or a non-utility affiliate at a price
that is the higher of cost or market price
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Cross-Subsidization Restrictions
on Affiliate Transactions
Requirements:
Franchised public utility with captive
customers cannot purchase non-power goods
or services from a market-regulated power
sales affiliate or a non-utility affiliate at a price
above market price, unless
Franchised public utility with captive
customers receive non-power goods and
services from a centralized service company
at cost.
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Cross-Subsidization Restrictions
on Affiliate Transactions
Effective:
March 31, 2008
Applies to any contracts, agreements or
arrangements entered into on or after the
effective date
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AGENDA
Commission Members
Organizational Changes
Form 2 Final Rule
Form 1 NOPR
Cross-Subsidization Restrictions on
Affiliate Transactions
Blanket Authorization Under
Section 203
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Blanket Authorization Under
Section 203
Docket No. RM07-21-000; Order No. 708
NOPR Issued July 20, 2007
Final Rule Issued February 21, 2008
Amends 18 C.F.R. Part 33
Adds five blanket authorizations under
Section 203(a)(1)
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Blanket Authorization Under
Section 203
Purpose:
To facilitate investment in the electric utility
industry
To ensure public utility customers are
adequately protected from any adverse
effects of changes in control
To ensure that transactions qualifying under
the section 203(a)(2) blanket authorization
would not have to seek approval under
section 203(a)(1)
44
Blanket Authorization Under
Section 203
Blanket Authorization NOPR
Proposes pre-authorization for a public utility
to dispose of less than 10% of its voting
securities to a public utility holding company
• Holding company and any associate companies
MUST own less than 10% (in aggregate) of the
outstanding voting interest of that public utility
Final Rule
Adopts Blanket Authorization NOPR
Provides 4 additional blanket authorizations
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Blanket Authorization Under
Section 203
Final Rule:
Provides blanket authorization for a public
utility to transfer its outstanding voting
securities to any holding company granted a
blanket authorization under section 203(a)(2)
in:
• 18 C.F.R. 33.1(c)(8)
• 18 C.F.R. 33.1(c)(9)
• 18 C.F.R. 33.1(c)(10)
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Blanket Authorization Under
Section 203
Final Rule:
§ 33.1(c)(8) - Grants a blanket authorization
under section 203(a)(2) to a person that is a
holding company solely with respect to one
or more exempt wholesale generators
(EWGs), foreign utility companies (FUCOs),
or qualifying facilities (QFs) to acquire the
securities of additional EWGs, FUCOs, or
QFs
• 10% in aggregate limitation
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Blanket Authorization Under
Section 203
Final Rule:
§ 33.1(c)(9) – Grants a conditional blanket
authorization under section 203(a)(2) to a
holding company, or a subsidiary of that
company, that is regulated by the Board of
Governors of the Federal Reserve Bank or
by the Office of the Comptroller of the
Currency, under the Bank Holding Company
Act of 1956 as amended by the Gramm-
Leach-Bliley Act of 1999
48
Blanket Authorization Under
Section 203
Final Rule:
§ 33.1(c)(10) – Grants a limited blanket
authorization under section 203(a)(2) to a
holding company, or a subsidiary of that
company, for the acquisition of securities of a
public utility or a holding company that
includes a public utility for purposes of
underwriting activities or hedging
transactions
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Blanket Authorization Under
Section 203
Final Rule:
Provides blanket authorization for the acquisition or
disposition of a jurisdictional contract where:
• Neither the acquirer nor transferor has captive customers or
owns or provides transmission service over jurisdiction
transmission facilities
• The contract does not convey control over the operation of
a generation or transmission facility
• The parties to the transaction are neither affiliates nor
associate companies,
• The acquirer is a public utility
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Where to Find More Information
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Where to Find More Information
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Compliance and Clarification
Filings
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Thank you for your attention!
Steven D. Hunt
Federal Energy Regulatory Commission
888 First Street, NE
Washington, DC 20426
(202) 502-6084
steven.hunt@ferc.gov
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