FERC-regulated entities such as pipelines should not be required to file cash management agreements with the Commission, nor should they have to notify FERC when their proprietary equity falls below 30%, the Interstate Natural Gas Association of America (INGAA) said in comments on a recently-issued interim rule (see Daily GPI, June 26).

While INGAA appreciates that the Federal Energy Regulatory Commission has already backed off requirements that a regulated utility, participating along with other, non-regulated subsidiaries in a corporate cash management program, maintain a 30% proprietary capital ratio, and both the utility and the parent maintain an investment grade credit rating, the pipeline group still believes the proposed requirements go too far.

The interim rule issued June 26 calls for FERC-regulated subsidiaries involved in cash-management programs to “keep and maintain” written agreements that specify the duties and responsibilities of the cash-management administrator and the participants in the arrangement. It then asks for comments on whether those agreements should be filed with the Commission, and whether regulated companies be required to notify FERC within 20 days when their minimum propriety capital balance drops to below 30% of total capital.

INGAA believes regulated entities may be required to maintain written agreements and documentation detailing that entity’s participation in a cash-management program, but not documentation on the non-regulated participants. Also, the regulated entity should not be required to file its documentation with the Commission.

INGAA said FERC does not have the authority to require documentation on the non-regulated participants. Also, the regulated entity “will not necessarily know about the restrictions on deposits or borrowing by each of the other participants in the cash management program.”

Further, INGAA said, simply requiring the utility to maintain the records of its participation, subject to audit, is enough. They should not have to be filed. The pipeline group maintains that the annual Form 2 filing required of pipelines already elicits information regarding significant agreements with related parties.

Pipelines also should not be required to notify the Commission when their proprietary equity falls below 30%, since that is just one indicator of a company’s financial condition. And if the information is made public it could trigger a drop in a company’s stock market price. INGAA suggests that if the 30% notification requirement is enacted, that the information be kept confidential.

FERC’s timing for the monthly equity ratio update — 15 days after the end of each month — is precipitate since pipeline companies would not have final data available to determine their equity ratio until at least 45 days after the end of a month. Filing on a quarterly basis would be even better, INGAA said.

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