A coalition of natural gas supplier and consumer groups Thursday expressed support for FERC's effort to improve the quality of the financial information that interstate pipelines are required to file with the agency quarterly and annually. It asked FERC to quickly implement a series of "minor" changes to agency financial forms to ensure that shippers are armed with adequate information about the pipelines that transport their gas.

"The industry coalition strongly believes that the annual and quarterly financial forms for interstate pipelines must be improved so as to more clearly provide sufficient data to permit an assessment of the pipelines' jurisdictional rates," said the coalition, which includes the American Public Gas Association, Independent Petroleum Association of America, Natural Gas Supply Association and the Process Gas Consumers Group [RM07-9].

"Since the removing of pipelines' obligation to periodically file Natural Gas Act (NGA) Section 4 rate cases, the annual Form 2 reports are the only source for evaluating the adequacy of the pipelines' cost-based rates," it said.

The Federal Energy Regulatory Commission recognized this when it issued its notice of inquiry (NOI) on Feb. 15, the group noted. The agency said at the time that "the financial information filed with the Commission represents, in most cases, the only source of financial data presented in a format and detail suitable for the Commission to exercise its duties and responsibilities under the...[NGA]."

Pipeline customers must have access to adequate financial information in order to mount successful NGA Section 5 challenges in which they bear the burden of proof against the pipelines, the coalition said.

The group's comments are in response to FERC's NOI in which it is seeking to determine whether the quarterly and annual financial forms filed by regulated natural gas pipeline companies, electric utilities and oil pipeline companies provide the relevant information that is critical to the agency's jurisdictional activities (see Daily GPI, Feb. 16).

FERC Chairman Joseph Kelliher has been especially concerned about the adequacy of the information contained in Form 2, on which many Section 5 gas complaints are based. He noted that pipelines often challenge Section 5 complaints, arguing that the information in Form 2 is insufficient. "The time has come to revisit Form 2 and assure that it provides the data complainants need. If Form 2 is inadequate in any respect, we must strengthen it," he said.

In the annual Form 2, the coalition recommended that pipelines be required to:

As for the quarterly Form 3-Q, the coalition recommended that the pipelines be directed to:

The group also called on FERC to ensure pipeline compliance with its financial reporting requirements. "Some accounts are left blank even though the Commission requires that information to be reported. For instances, [in] Form 2, the Commission requires that pipelines specify 'Gas Received from Shippers as Compressor Station Fuel.' This account is extremely important to shippers given that it is the primary source of information on how much fuel is retained by the pipeline. However, there are pipelines that leave this account blank year after year."

While the NOI addresses the financial reporting requirements of electric utilities and oil pipelines as well, the coalition has asked FERC to act on the reporting requirements of gas pipelines separately. "We are concerned that keeping all three sectors on the same track may possibly delay much-needed Commission action on the Form 2 and 3-Q," it said.

"We strongly believe that FERC has all the information it needs to go immediately to a proposed rulemaking on the Form 2 and 3-Q. While not advocating any delay whatsoever in the Commission's review of the other sectors' financial forms, we believe it would be unfortunate now for the Commission to delay making a determination on the Form 2 and 3-Q while it begins it process of collecting comparable information with respect to other sectors that may be at a different stage in this process."

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