[Federal Register Volume 66, Number 149 (Thursday, August 2, 2001)]
[Notices]
[Pages 40245-40281]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-19267]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RM01-9-000]


Notice of Order Imposing Reporting Requirements on Natural Gas 
Sales to California Market

Issued July 25, 2001.
AGENCY: Federal Energy Regulatory Commission, Energy.

ACTION: Notice.

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SUMMARY: The Commission is issuing an order imposing certain reporting 
requirement on natural gas sellers and transporters serving the 
California market. This reporting requirement is for a limited time, 
and is intended to provide the Commission with the necessary 
information to determine what action, if any, it should take within its 
jurisdiction.

DATES: The reporting requirement covers the six months from August 1, 
2001 to January 31, 2002, and the first report is due October 1, 2001.

[[Page 40246]]


FOR FURTHER INFORMATION CONTACT: Jacob Silverman, Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., 
Washington, DC 20426, (202) 208-2078

SUPPLEMENTARY INFORMATION:

Federal Energy Regulatory Commission

    Before Commissioners: Curt Herbert, Jr., Chairman; William L. 
Massey, Linda Breathitt, Pat Wood, III and Nora Mead Brownell; 
Reporting of Natural Gas Sales To the California Market

[Docket No. RM01-9-000]

Federal Energy Regulatory Commission

Order Imposing Reporting Requirement on Natural Gas Sales to 
California Market

Issued July 25, 2001.
    On May 18, 2001, the Commission issued an order (May 18 order) 
proposing to impose a reporting requirement on natural gas sellers and 
transporters serving the California market.\1\ The specific information 
that the Commission proposed to collect was set forth in a series of 
questions included as an appendix to the order. The May 18 order 
requested comments on the proposal. Twenty-nine responses were filed. 
The parties filing comments are set forth in Attachment 1. Some 
commenters who support the proposal also seek to broaden the scope of 
information gathered. Other commenters raise a number of issues, such 
as the extent of the Commission's authority to collect the information, 
the period the information is to be collected, and a greater assurance 
that certain information, particularly the data on individual 
transactions, will not be disclosed to the public. In addition, some 
commenters urge clarification of a number of the questions.
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    \1\ 95 FERC para.61,262 (2001).
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    In this order, the Commission concludes that it has the authority 
to request the information set forth in the May 18 order, and that the 
filing of such information by the entities identified in this order is 
necessary for the Commission to understand why the disparity in the 
price of natural gas arose in California relative to the remainder of 
the country and in doing so discharge our statutory responsibilities. 
Consequently, the order requires sellers and transporters of natural 
gas serving the California market to submit the information specified 
in this order. The information is to be submitted monthly for the six-
month period covering August 1, 2001, through January 31, 2002, with 
the intention to extend the reporting requirement, upon approval by the 
Office of Management and Budget, through September 30, 2002, to 
coincide with the end date of the Commission's mitigation plan 
regarding wholesale electricity prices in California and the West.\2\ 
In addition, as discussed in this order, the Commission concludes that 
the specific information gas sellers and local distribution companies 
(LDCs) are required to report concerning their purchase and sales 
transactions is exempt from disclosure under the Freedom of Information 
Act (FOIA). Furthermore, the Commission will permit respondents to 
request privileged treatment of other portions of their responses 
subject to the procedures in section 388.112 of the Commission's 
regulations regarding disclosure of information covered by any such 
request for privileged treatment. In addition, in response to the 
comments received, we have modified certain of the proposed questions. 
The revised questions together with the format for reporting are set 
forth in the appendix to this order.
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    \2\ See San Diego Gas & Electric Company, et al., 95 FERC 
para.61,418 (2001).
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Background

    The May 18 order discussed our concern about a sharp increase in 
the price of natural gas sold in the California market, which has 
exceeded the increase in other markets. The Commission pointed out that 
the price for gas at various points on the southern California border 
remained higher than those in any other market in the United States, 
including those markets that are supplied by the same producing areas. 
The Commission stated that it did not currently have reliable 
information concerning the percentage of gas moving into the California 
market that is actually priced at the high spot market prices reported 
at the California borders.
    The May 18 order noted that the increase in the price of natural 
gas in California was the focus of a number of complaints. Among the 
actions the complainants sought were (1) reimposing price-caps for 
short-term releases of capacity for service to the California border 
and to points of interconnection between interstate pipelines and 
California local distribution companies (LDCs),\3\ (2) requiring 
sellers to state separately the transportation and commodity components 
of bundled rates for sales at these points \4\ and (3) setting a 
benchmark price for natural gas throughout the United States.\5\ 
Moreover, the complaints generally asserted that the high price for 
natural gas in the California market is a factor contributing to the 
current high cost of electric power in California.
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    \3\ Docket No. RP01-180-000, filed by San Diego Gas and Electric 
Company (SDG&E), and Docket No. RP01-222-000, filed by The Los 
Angeles Department of Water and Power.
    \4\ Docket No. RP01-180-000.
    \5\ Docket No. RP01-223-000, filed by the National Association 
of Gas Consumers.
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    The May 18 order stated that while the relatively high prices for 
natural gas in California were a matter of serious concern, the 
Commission's legal authority to take actions that would affect those 
prices is limited by the existing statutory framework. The Commission 
does have jurisdiction under the Natural Gas Act (NGA) to regulate the 
transportation of natural gas by interstate pipelines, and to issue 
certificates for the construction of new interstate pipelines. However, 
the Commission's jurisdiction to regulate the prices charged by sellers 
of natural gas is limited by the Natural Gas Policy Act of 1978 (NGPA), 
and Congress' subsequent enactment of the Natural Gas Wellhead 
Decontrol Act of 1989. The May 18 order found that the end result of 
these statutory provisions is that the only sales of natural gas that 
the Commission currently has jurisdiction to regulate are sales for 
resale of domestic gas by pipelines, LDCs, or their affiliates.\6\
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    \6\ Also, under NGPA section 2 (21) (B), sales by those entities 
of their own production are excluded from the Commission's 
jurisdiction.
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    Within this framework, and in order to help the Commission 
understand why the disparity in the price of natural gas had occurred 
in California and continues to exist, the Commission proposed to 
collect information from sellers of natural gas to the California 
market, and from interstate pipelines and LDCs serving the California 
market. The information proposed to be reported included data relating 
to the volumes and prices of sales to the California market including 
transportation rates, the daily operational capacity of pipelines to 
and in the California market, and the actual volumes flowing to and in 
California, and the gas sales and the transportation requirements of 
California LDCs.
    The May 18 order stated that this information should assist the 
Commission in carrying out its regulatory responsibilities. First, it 
would help the Commission determine what part of the problem, if any, 
is within the scope of its jurisdiction. For example, the information 
to be collected concerning sales should enable the Commission to 
determine what percentage of the volumes sold into the

[[Page 40247]]

California market is domestically produced gas sold by marketers 
affiliated with pipelines and LDCs in sales for resales, which are the 
only sales of natural gas now being made that the Commission has 
jurisdiction to regulate.\7\ The information proposed to be collected 
would also give the Commission an accurate picture of the overall 
average gas costs being incurred by all purchasers of natural gas 
moving into the California market.
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    \7\ For the most part, interstate pipelines no longer sell 
natural gas.
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    The Commission also stated that the information to be collected 
would enable it to determine the extent to which the cost of interstate 
transportation, which is subject to the Commission's jurisdiction, 
affects the price of the gas commodity at the California border. 
Currently, the Commission establishes maximum rates for interstate 
transportation, with the exception of negotiated rates and short-term 
capacity releases for which maximum rates have been waived until 
September 30, 2002.
    The order proposed that respondents submit the information to the 
Commission on a quarterly basis, within thirty days after the end of 
the quarter. The Commission indicated that it would aggregate the data 
submitted and analyze it promptly. The Commission would then determine, 
what action, if any, is warranted.\8\
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    \8\ Because the Commission would want to receive the information 
as soon as possible, the order stated that the Commission, pursuant 
to 5 CFR 1320.13 (2000), would request the Office of Management and 
Budget for emergency processing of the proposed collection of 
information.
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    The order provided for comments on the proposed reporting 
requirement within thirty days of the date of issuance of the order, 
and stated that after receipt of the comments, the Commission would 
determine whether to proceed with the proposed reporting requirement.

Discussion

    As indicated in the May 18 order and as discussed below, we find 
that it is necessary to collect the information set forth in the 
Appendix in order for the Commission to acquire a better understanding 
of how the California natural gas market functions in light of the fact 
that the price of natural gas in the California market has, for 
substantial periods, been higher than the price in other markets and 
trading hubs throughout the country. The Commission is also concerned 
about the operation of the California natural gas market since gas-
fired electric generators in California help to establish the market 
clearing price for electric generation pursuant to the bidding system 
used by the California Independent System Operator.\9\
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    \9\ See San Diego Gas & Electric Co. et al., 95 FERC para. 
61,418 (2001), establishing a price mitigation plan for Western 
Systems Coordinating Council (WSSC) area, including California.
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    In determining the appropriate amount of information and the period 
over which to gather such information, the Commission has reviewed the 
comments filed in this proceeding. The issues raised by commenters are 
addressed below. Upon consideration of the comments, the Commission 
will modify certain questions from those proposed in the May 18 order 
and will collect the information for a limited period. As discussed 
more fully below, the Commission finds that it has the authority to 
request the information it seeks from all entities, including non-
jurisdictional parties.

1. Commission Authority to Request Information

    The May 18 order stated that ``the Commission recognizes that 
certain entities that will be required to respond to the data requests 
may not be natural gas companies subject to the Commission's NGA 
section 1 jurisdiction.'' \10\ Nevertheless, the order stated that the 
Commission has the authority to seek the information from those 
entities under NGA sections 14 and 16.\11\ The Commission held that 
section 14 authorizes the Commission to collect information from 
participants in the natural gas market without limiting the persons 
from whom information may be sought to ``natural gas companies'' 
subject to the Commission's jurisdiction. The Commission also relied on 
the fact that section 14 authorizes the Commission to obtain 
information in connection with recommending legislation, stating such 
information could include matters currently outside the Commission's 
jurisdiction. In addition the order referred to NGA section 16, which 
grants the Commission ``power to perform any and all acts . . . as it 
may find necessary or appropriate to carry out the provisions of this 
act.'' The order stated that the Commission must have an overall 
picture of what is occurring in the California market in order to 
determine the potential effectiveness of actions it may take within the 
scope of its jurisdiction. Only by collecting information concerning 
all California sales could the Commission obtain the overall picture 
and feel confident that any actions it might take within its limited 
jurisdiction would have the intended consequences.
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    \10\ 95 FERC at 61,930.
    \11\ Section 14(a) provides:
    The Commission may investigate any facts, conditions, practices, 
or matters which it may find necessary or proper in order to 
determine whether any person has violated or is about to violate any 
provision of [the NGA] or any rule, regulation, or order hereunder, 
or to aid in the enforcement of the provisions of this act or in 
prescribing rules or regulations thereunder, or in obtaining 
information to serve as a basis for recommending further legislation 
to the Congress.
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    A number of commenters question the Commission's conclusion that 
together, NGA sections 14 and 16 empower the Commission with the 
authority to require a non-jurisdictional entity to furnish the 
Commission with information that the Commission needs to carry out its 
functions. Commenters raising the jurisdictional issue point out that 
section 311 of the Federal Power Act (FPA) \12\ specifically authorizes 
the Commission to investigate non-jurisdictional transactions, while 
the NGA does not include such specific language. Nevertheless, some of 
the commenters state that they are agreeable to the reporting 
requirement in this case subject to conditions, including a guarantee 
of confidential treatment and a sunset date, but the commenters assert 
that they are not waiving their right to object to the Commission's 
action over non-jurisdictional first sales.\13\
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    \12\ 16 U.S.C. Sec. 825j. That section provides, in part, that 
``the Commission is authorized and directed to conduct 
investigations regarding * * * electric energy, however produced, 
throughout the United States, * * * whether or not subject to the 
jurisdiction of the Commission. * * *''
    \13\ See, e.g., Comment of Indicated Shippers, Pan Alberta Gas 
Ltd., et al.
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    The Commission finds that it has the authority to obtain the 
information requested from all entities. As discussed below the 
Commission is establishing the reporting requirement for a limited time 
period, and for the purpose of investigating a specific problem that is 
a matter of urgent concern both to it and the Congress.
    Among other things, NGA section 14 allows the Commission to seek 
information ``to aid in prescribing rules and regulations'' necessary 
to carry out its responsibilities under the NGA. The May 18 order 
stated that a number of complaints have been filed seeking relief from 
the high cost of natural gas in the California market, and in those 
complaints it was also alleged that the high price of natural gas in 
California is a factor contributing to the high cost of electric power 
in California. The Commission needs the information it is seeking 
through this reporting requirement to determine what actions it can and 
should take with respect to the current problem involving the high 
price of natural gas in California, which

[[Page 40248]]

would include changes in the Commission's existing rules and 
regulations. The Commission explained in the May 18 order that:

    In this case, the Commission must have an overall picture of 
what is occurring in the California market in order to determine the 
potential effectiveness of actions within the Commission's 
jurisdiction. Only by collecting information concerning all 
California sales can the Commission obtain the overall picture and 
feel confident that any actions it might take would have the 
intended consequences.

    The information obtained would permit the Commission to determine 
the extent to which the high price of natural gas in the California 
market involves a matter over which the Commission has 
jurisdiction.\14\ For example, if any revised rules the Commission 
adopted would apply only to a small amount of the natural gas sales in 
the California market, the efficacy of those orders would be of limited 
value.
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    \14\ No commenter has questioned the Commission's holding that 
the only sales it now has jurisdiction to regulate are sales for 
resale of domestic gas by pipelines, LDCs, and their affiliates.
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    NGA section 14 also authorizes the Commission to seek information 
``to serve as a basis for recommending further legislation to the 
Congress * * * .'' The information being sought would be relevant in 
determining the effect of legislative proposals addressing the current 
situation. In the current session of Congress, a number of bills have 
been proposed to deal with the situation in California.\15\ The 
information would also help the Commission respond to questions from 
Congress concerning the natural gas price issue in California. For 
example, the Commission has received requests from legislators to 
investigate the ``exorbitant rise in natural gas prices in 
California,'' \16\ and for the Commission to end the suspension of the 
price cap on short term release transactions for sales to the 
California market.\17\
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    \15\ See e.g. S. 764, and H.R. 1974 which would instruct the 
Commission to require natural gas sellers of bundled sales to the 
California market to disclose the commodity portion and the 
transportation portion of the sale price.
    \16\ See letter of December 20, 2000, from Senator Dianne 
Feinstein of California.
    \17\ See letter of February 28, 2001, from Senator Dianne 
Feinstein of California.
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    In this case there is a clear need for the information being sought 
and which is not otherwise available from other sources or other means. 
Furthermore, the information request is to address a specific problem--
a problem which requires immediate attention. Accordingly, under the 
urgent and unique circumstances presented, the Commission finds that it 
has the authority to require non-jurisdictional entities to furnish the 
requested information. However, to minimize the burden on respondents 
and as discussed more fully below, the information will be collected 
for the minimum period necessary to inform the Commission regarding 
transactions affecting the price of natural gas in the California 
market.
    Section 311 of the Federal Power Act (FPA) is an additional source 
of authority for adopting these reporting requirements. On June 19, 
2001, the Commission issued an order involving price mitigation for the 
California power markets.\18\ Under that mitigation plan, generators' 
price bids during reserve emergencies must reflect the marginal cost of 
obtaining natural gas used for generation. That number is derived using 
an average of the mid-point of the monthly bid-week prices at certain 
reported California natural gas market price points. Thus, the price 
for electric power would be dependent, to some extent, on the price of 
natural gas at certain California market points.
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    \18\ San Diego Gas & Electric Co. et al., 95 FERC para. 61,418 
(2001).
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    Under these circumstances, not only is the Commission's NGA section 
14 and 16 authority applicable, but FPA section 311 also applies. That 
section authorizes the Commission, ``as a basis for recommending 
legislation,'' to request information ``regarding the generation * * * 
of electric energy, however produced * * * whether or not subject to 
the jurisdiction of the Commission * * *'' As a result the Commission 
has the authority to ``investigate nonjurisdictional sales of 
nonjurisdictional companies.'' \19\ The FPA section 311 authority 
includes authorization to secure information concerning ``the cost of 
generation.'' Since natural gas is used in many generating plants to 
produce the electricity, the cost of natural gas is obviously a crucial 
element in any investigation of the cost of generating electricity. 
Thus, in the current situation, FPA section 311 is another basis for 
the Commission's authority to issue the reporting requirement.
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    \19\ Continental Oil Co. v. FPC, 519 F.2d 31 at 34 (5th Cir. 
1975).
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    The Commission recognizes that in one decision by the Ninth Circuit 
Court of Appeals describing the more extensive language of FPA section 
311, there is language that commenters contend is inconsistent with the 
Commission's action here. In Union Oil Company of California v. 
FPC,\20\ the court addressed a challenge to a Commission order seeking 
detailed information from large natural gas producers making interstate 
sales of natural gas, and thus at that time subject to the Commission's 
NGA jurisdiction. The questions asked about all their natural gas 
reserves, including reserves solely for intrastate, non-jurisdictional 
sales. Producers argued that the NGA does not provide authority for the 
collection of intrastate reserve data. The court agreed with the 
Commission's argument that obtaining intrastate data from producers 
subject to the Commission's jurisdiction was necessary for its 
determination of proper policies and rates with respect to interstate 
commerce in natural gas. In discussing FPA section 311, the court 
stated that the NGA ``limits the gathering of intrastate data to 
gathering it from companies falling under the Commission's 
jurisdiction.'' Id. at 1039. The court noted that the Commission had 
not proposed to seek information from non-jurisdictional producers. The 
court's statement about the Commission's information gathering 
authority was only dicta since the Commission had not sought to collect 
information from non-jurisdictional producers and thus the issue of the 
Commission's authority to do so was not presented to the court.
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    \20\ 542 F.2d 1036 (9th Cir. 1976).
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    In any event, this case is distinguishable. Union Oil involved an 
ongoing reporting requirement which was to be in effect for an 
indefinite period, and the reporting requirement was not tied to 
investigating any particular problem. Here, the reporting requirement 
is to be in effect for only a limited period of time and, as discussed 
above, is intended to gather information to assist the Commission in 
determining what action it should take or propose to Congress about a 
specific problem. Moreover, in this case, the Commission invokes the 
authority of FPA section 311, which the Union Oil court held does 
authorize data collection from entities outside the Commission's 
jurisdiction. Accordingly, the Commission finds that it is authorized 
to request the information from all entities.

2. Reporting Period

    The May 18 order proposed to require submission of the information 
on a quarterly basis, within thirty days after the end of the quarter. 
The order did not indicate any termination date for the reporting 
period. Many of the comments urge the Commission to limit the reporting 
to a defined period of time.
    As explained above, the purpose of the reporting requirement is to 
enable

[[Page 40249]]

the Commission to determine what action, if any, it should take with 
respect to the California natural gas price disparity. The Commission 
requires the information to address the current problem, and it is not 
intended to be an ongoing reporting requirement. Given the emergency 
nature of this issue, and as explained above, its relation to wholesale 
electric price mitigation in California, the Commission is seeking 
emergency processing by the Office of Management and Budget (OMB) for 
the collection of information under 5 CFR 1320.13 (2000). Under that 
procedure, the authority to collect information is initially limited to 
180 days. Accordingly, because the Commission requires the information 
as soon as possible, the Commission will require submission of the 
information on a monthly basis, to be submitted 30 days after the end 
of each month, for the six months commencing August 1, 2001 and ending 
January 31, 2002. This means the first report will be due October 1, 
2001 and the last report on March 1, 2002.
    Monthly reporting is a change from the quarterly reporting proposed 
in the May 18 order. Under a quarterly reporting requirement, the first 
data would not arrive until December 1, 2001. That would not be timely 
in the emergency circumstances that exist in California.
    The Commission also believes the reporting period should cover the 
same period as the Commission's California electric power mitigation 
order. Accordingly, the Commission intends to seek approval from OMB to 
extend the reporting period to September 30, 2002, to coincide with the 
termination of that order. The Commission does not anticipate that it 
will require data after September 30, 2002, and thus would end the 
reporting period on that date. If the Commission should find that an 
extension beyond that time is necessary, the Commission would give 
notice of its intention and provide for an appropriate comment period.

3. Confidentiality of Submission

    A number of commenters urge that the submission of the requested 
information that gas sellers are required to report concerning their 
sales transactions must be accorded confidential treatment and should 
not be disclosed to the public. They argue that the requested 
information includes sensitive commercial data such as sales contract 
terms, identification of buyer, and specific transactions conducted at 
the California border or within the state. One commenter makes a 
similar argument about the information that LDCs are required to 
provide about their gas purchase contracts.
    In the May 18 order, the Commission recognized the commercially 
sensitive nature of much of the information to be submitted by gas 
sellers concerning their sales transactions. The May 18 order stated 
that parties furnishing information can request confidential treatment 
for the information pursuant to Section 388.112 of the Commission's 
regulations.\21\ The order did not provide for public disclosure of the 
information. The order stated that the Commission would aggregate the 
data submitted and then determine what action, if any, the Commission 
would take.
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    \21\ 18 CFR Sec. 388.112 (2000).
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    Under section 388.112, if a party requests privileged treatment of 
any material submitted, that material will be placed in a nonpublic 
file. If public release of that document is sought under the Freedom of 
Information Act (FOIA), the party submitting the document will be 
notified of the request and given an opportunity to comment on the 
request. If the Commission determines to deny the claim of privilege, 
the submitter will be notified at least five days before public 
disclosure of the material, together with an explanation why the claim 
of privilege was denied. If the privilege claim is upheld, and the FOIA 
requester brings suit to compel disclosure, the Commission will notify 
the submitter of the suit.
    FOIA contains nine exemptions from its general policy of mandating 
disclosure of government documents. The fourth exemption is for: trade 
secrets and commercial or financial information obtained from a person 
and privileged and confidential.\22\
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    \22\ 5 U.S.C. Sec. 552(a)(b)(4). This is the fourth of the nine 
exemptions from mandatory disclosure permitted by FOIA.

Information qualifies as ``confidential'' under FOIA Exemption 4, if 
one or more of several conditions is met, one of which is that 
disclosure is likely ``to cause substantial harm to the competitive 
position of the person from whom the information was obtained.'' \23\ 
FOIA Exemption 4 is incorporated in the Commission's regulations in 
section 388.107(d). However, even though certain information may 
qualify as exempt from mandatory disclosure under FOIA, the Commission 
can require its disclosure, where the public interest in disclosure 
outweighs any harm from disclosure, for example because disclosure 
would significantly aid the Commission in carrying out its statutory 
responsibilities.\24\
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    \23\ National Parks and Conservation Association v. Morton, 498 
F.2d 765, 770 (D.C. Cir. 1974).
    \24\ Pennzoil Co. v. FPC, 534 F.2d 627 (D.C. Cir. 1976).
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    Certain questions adopted by this order require information about 
individual sales or purchase transactions. These include Questions 2, 
3, and 4 directed to natural gas sellers, and Questions 4 and 8 and 
that part of Question 7 relating to prices directed to LDCs. For the 
reasons discussed below, the Commission finds that information about 
individual transactions provided in response to these questions falls 
under FOIA Exemption 4 as ``trade secrets and commercial or financial 
information obtained from a person and privileged or confidential.'' 
The Commission also finds that, in the context of the instant inquiry 
into the operation of the California natural gas market, the potential 
competitive harm from public disclosure outweighs any public interest 
in disclosure of data concerning individual sales transactions. 
Therefore, the Commission will not disclose information concerning 
individual transactions obtained in response to the above listed 
questions. This holding, as discussed below, does not apply to 
transportation information obtained from pipelines and LDCs.\25\
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    \25\ To the extent a respondent believes information sought by 
the other questions should be exempt from disclosure, it may request 
that the Commission treat that information as privileged pursuant to 
the procedures in section 388.112 of the Commission's regulations.
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    The commercial sensitivity of information about individual sales 
transactions has been addressed in court and Commission rulings. In 
Continental Oil, the United States Court of Appeals for the Fifth 
Circuit reviewed a Commission collection of sales data from interstate 
natural gas companies, including the names of purchasers, dates and 
locations of sales, pressure bases, annual sales volumes and price 
terms. The court upheld the Commission's right to that data but vacated 
the Commission's refusal to keep the data confidential. The court 
stated:

    The likelihood that delivery of these intimate facts would be 
harmful is apparent. * * * The compilation and disclosure to 
petitioners' competitors, purchasers and suppliers of information as 
to extent of supply and competitive prices in each market area would 
alter industry custom and existing relationships to the disadvantage 
of petitioners' competitive positions.\26\
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    \26\ Continental Oil Co. v. FPC, 519 F.2d 31 at 35 (5th Cir. 
1975).

    The same is true here. In Order No. 636, the Commission held that, 
with the

[[Page 40250]]

regulatory changes there ordered, the market for the sale of the gas 
commodity would be competitive.\27\ The gas purchase and supply data 
the Commission is requesting, if disclosed to the public, would 
significantly disadvantage the competitive position of the gas sellers 
supplying that information. Gas sellers compete not only with each 
other, but also with other marketers. Competitive injury would thus 
occur with regard to the gas seller's relationships with its customers. 
In addition, disclosure could make apparent various proprietary 
marketing strategies and trade secrets, including how sales 
transactions are structured. In the highly competitive gas supply 
environment, such disclosure could cause competitive injury. The 
information furnished is entitled to protection from public disclosure 
if there is a ``likelihood'' of competitive injury-there need not be a 
showing of actual competitive ``harm.'' The individual sales 
transaction data are proprietary, not only from the perspective of the 
seller, but also from the buying entity's perspective.\28\ For example, 
the data could show the prices a particular gas purchaser is willing to 
pay.
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    \27\ Pipeline Service Obligations and Revisions to Regulations 
Governing Self-Implementing Transportation under Part 284 of the 
Commission's Regulations, III FERC Stats & Regs. para. 30,939 at 
30,437-43 (Order No. 636); III FERC Stats & Regs. para. 30,950 at 
62,024-25 (Order No. 636-A); 61 FERC para. 61,272 at 62,024-5 (Order 
No. 636-B) (1992); aff'd in relevant part, United States 
Distribution Companies v. FERC, 88 F.3d 1105 (D.C. Cir. 1996).
    \28\ See Regulation of Natural Gas Pipelines after Partial 
Wellhead Decontrol, 50 FERC para. 61,391 (1990), in which the 
Commission held that information provided by interstate pipelines 
about individual settlements resolving their take-or-pay liability 
under gas purchase contracts was exempt from public disclosure 
because commercially sensitive.
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    The Commission also finds that, in this case, there is no 
overriding public interest in disclosure of information about 
individual sales transactions. The Commission is seeking information 
here to understand the operation of the market for gas sales into 
California, not to investigate the conduct of particular participants 
in that market. Indeed, many of the sales in question are not subject 
to the Commission's NGA jurisdiction, and the Commission does not wish 
to impose more burdensome disclosure requirements on jurisdictional 
sellers, than on the non-jurisdictional sellers with whom they compete. 
In these circumstances, the Commission concludes that publication of 
aggregated information is sufficient to accomplish the purposes for 
which the Commission is seeking the information.
    Accordingly, consistent with the ruling in Continental Oil, the 
Commission finds exempt from public disclosure the individual sales or 
purchase transaction data furnished pursuant to Sellers of Natural Gas 
Questions 2-4, and California LDCs Questions 4 and 8 and that part of 
Question 7 to relating to prices, adopted by this order. In regard to 
the LDC questions mentioned above, Sempra Energy Utilities states that 
the CPUC has found similar information to be exempt from public 
disclosure, due to its commercially sensitive nature.
    On the other hand, the information the Commission is requesting 
concerning transportation contracts with pipelines, such as capacity 
release transactions, would not be entitled to privileged treatment 
because pipelines are required to post that type of information on 
their web sites. Nevertheless, if privileged treatment is sought with 
respect to any information submitted, the Commission will follow the 
procedures of Sec. 388.112, and apply the appropriate principles 
governing the particular information.

4. General Issues as to Proposed Questions

    A number of commenters assert that compilation of the data will be 
burdensome, and others assert that the data requested is not likely to 
``tell the whole story.'' \29\ Thus, while some commenters would limit 
the requested data to the Southern California market,\30\ others urged 
the Commission to expand it to cover all 48 states, and require reports 
for each state identical to that specified for the California market in 
the May 18 order.\31\ Some commenters contend that to some extent the 
data to be submitted is duplicative of data being supplied to the 
Commission in other Commission proceedings,\32\ and thus is not 
necessary. Finally, many commenters assert that some questions are 
ambiguous or not readily answered in the form proposed, and should be 
clarified.\33\
---------------------------------------------------------------------------

    \29\ See, e.g., Comments of AEC Storage and Hub Service, Inc., 
and Electric Power Supply Association.
    \30\ See, Canadian Association of Petroleum Producers, Alberta 
Department of Energy and Pacific Gas and Electric Company.
    \31\ See, National Association of Gas Consumers.
    \32\ See, e.g., Comments of Dynegy Marketing and Trade, 
Occidental Energy Marketing, Inc.
    \33\ See e.g., Comments of Indicated Shippers, and of 
Undersigned Producers.
---------------------------------------------------------------------------

    As explained above, the Commission is imposing the reporting 
requirement to help determine what actions it should take with respect 
to the substantial disparity that has arisen in the past year between 
natural gas prices at the California border and in the rest of the 
country. The relatively high natural gas prices also may be a factor in 
the extraordinary increases in the cost of electric power in 
California, since many generators consume natural gas. The Commission 
recognizes that the reporting requirement will require responders to 
expend time and manpower. Nevertheless, the data are necessary for the 
Commission to carry out its regulatory responsibilities with respect to 
the natural gas market, since the information will help the Commission 
determine what actions it can and should take to address a problem with 
serious adverse effect in California. Because of the immediacy of the 
problem, the Commission has decided to require reporting on a monthly 
basis, with the first submission due by October 1, 2001.
    While some commenters point out that currently prices at the 
northern California border have decreased to levels approximating those 
in other areas of the country, the Commission will not narrow the 
reporting requirement to cover only the southern California market. 
During much of the last year, prices at the northern California border 
have been significantly higher than in other areas of the country, and 
it is not clear whether the current decrease in those prices is 
temporary. The Commission therefore continues to believe that 
information must be gathered with respect to the entire California gas 
market.
    However, the Commission will not expand the reporting requirement 
to cover other areas of the country. While there have been natural gas 
price increases in the rest of the country, it is only in California 
that prices have been significantly different from prices elsewhere. As 
the May 18 order stated, ordinarily in a competitive, seamless national 
market for natural gas, where gas can flow to wherever it can command 
the highest price, price disparities between different regions would 
not be expected to continue for sustained periods of time. Higher 
prices in one region would cause more sellers to direct gas towards 
that region, thereby increasing the supply in that region, which would 
in turn lower the price in that region and bring it in line with the 
national average. It is only in California where, contrary to what 
should occur in a competitive market, significant price disparities as 
compared to the rest of the country have occurred for sustained periods 
of time. Therefore,

[[Page 40251]]

the Commission will limit the reporting requirement to the California 
market.
    Some commenters have suggested that the reporting burden could be 
reduced (and greater assurance of confidentiality be provided) if 
respondents were permitted to provide only aggregated data concerning 
all their sales during a month or a quarter. Also, some commenters 
suggest that they be permitted to report data in the format in which 
they currently keep such data, rather than be required to provide data 
in a standardized format. The Commission does not adopt these 
suggestions. While the Commission intends to aggregate the data itself, 
transaction by transaction data is necessary to ensure that the 
Commission obtains a full picture of how the California market is 
working and to enable the Commission to verify the accuracy of any 
aggregated data. The Commission also must have the data filed in a 
consistent format to enable it to aggregate the data in a meaningful 
fashion. The Commission, as discussed above, will protect the sensitive 
nature of the data concerning individual sales transactions.
    The Commission recognizes, as argued by some commenters, that some 
of the information may be in the Commission's possession through other 
filings, for example the reports pipelines are required to make to the 
Commission. However, requiring all the information to be filed here in 
a consistent format is necessary to speed the Commission's analysis of 
the data, so that it can take any actions indicated by the data 
promptly.
    We shall now address concerns raised with respect to the specific 
information questions posed to the three different groups (interstate 
pipelines, sellers of natural gas, and local distribution companies) 
that serve California natural gas markets. As discussed below, the 
Commission is revising some of the questions, to address the concerns 
raised in the comments. In this connection, the May 18 order did not 
include the specific period for which the questions request data but 
merely stated ``period --to--''. Consistent with the discussion above 
limiting the reporting period to six months at least initially, that 
phrase has been changed to read ``August 1, 2001, to January 31, 2002'' 
in each of the questions.
1. Questions to Interstate Natural Gas Pipelines
    Proposed Question 1 addressed to interstate pipelines asked that 
the pipelines provide, on a daily basis starting on August 1, 2001, 
certain information for each contract for transportation to the 
California border. The Public Utilities Commission of the State of 
California (CPUC) urged that this daily information should be provided 
for the period starting January 1, 1999 through the effective date of 
the order, with subsequent quarterly reports for future days. The 
Commission will not require pipelines to supply the information 
requested in Question 1 for periods before August 1, 2001. The 
Commission is seeking to minimize the burden of these reporting 
requirements, consistent with achieving the purpose of the reporting 
requirement of monitoring what is currently occurring in California to 
determine what actions can or should be taken on a prospective basis. 
For this purpose, detailed information concerning transportation 
contracts in effect during past periods is unnecessary.
    Question 1, as proposed, also requests pipelines to identify the 
daily volumes scheduled by, and delivered to each shipper for the 
period August 1, 2001 to January 31, 2002. CPUC asserts that pipelines 
should also be required to report daily nominated volumes by shipper to 
provide corroboration on reported information between pipelines and 
sellers. It also urges that prices should be reported on an $$/MMBtu 
basis, and the term and effective date of each contract should be 
provided as well.
    The Commission agrees with CPUC that daily nominated volumes should 
be reported to ensure that the Commission can cross-check the 
information supplied. The Commission will also require that prices be 
reported on an $$/MMBtu basis to ensure consistency of answers, and 
require the pipeline to report the term and effective date of each 
contract.
    Independent Petroleum Association of America (IPAA) requests that 
pipelines be required to report what gas actually flowed the previous 
day. IPAA contends that this information is important because nominated 
capacity which has not been scheduled or confirmed appears as capacity 
already used and, as such, effectively takes that capacity off the 
market. Question 1, as revised by the Commission in response to the 
CPUC, will provide this information on a contract-by-contract basis for 
the August 2001 through January 2002 period, since pipelines must 
report daily nominated, scheduled, and delivered volumes. In addition, 
in response to IPAA's comment, the Commission is modifying proposed 
Questions 3(c) and 4(c), which requested each pipeline's ``daily 
scheduled system volume'' for the periods August 2001 through January 
2002 and May 1999 through May 2000, respectively. As adopted, Questions 
3(c) and 4(c) will require each pipeline to report its ``daily 
scheduled and delivered system volume.''
2. Questions to Sellers of Natural Gas
    Commenters requested a number of clarifications concerning the 
proposed questions addressed to ``Sellers of Natural Gas to the 
California Market'', including what sales are intended to be covered by 
the proposed questions. The Commission clarifies the questions as 
discussed below.

Question 1

    Proposed Question 1 requires gas sellers to identify any 
affiliation they have with interstate and intrastate pipelines or LDCs. 
One commenter \34\ suggests that sellers should only be required to 
report affiliations with pipelines and LDCs the seller uses to ship gas 
to and within California. It asserts sellers into the California market 
may have affiliations with pipelines and LDCs in other areas of the 
country who perform no business in California and such affiliations are 
not relevant to Commission's inquiry concerning California gas prices.
---------------------------------------------------------------------------

    \34\ Comments of PPL.
---------------------------------------------------------------------------

    The Commission adopts Question 1 as proposed and will require 
sellers to identify their affiliations with all pipelines and LDCs 
wherever located. A primary purpose of the reporting requirement is to 
determine what proportion of sales in California are subject to the 
Commission's jurisdiction. The Commission has jurisdiction over all 
sales for resale of domestic gas by gas sellers affiliated with 
pipelines or LDCs, regardless of where they are located. Therefore, all 
such affiliations are relevant to the Commission's inquiry.

Scope of Proposed Questions 2 and 5

    Proposed Question 2 required sellers to provide certain information 
concerning ``each sales contract under which the gas is physically 
delivered at or into the California market.'' Proposed Question 5 
required sellers to provide certain information concerning each ``gas 
purchase contract under which the gas is physically delivered at or 
into the California market.''
    A number of commenters question the type of sales and purchase 
contracts that are covered by these questions, namely, whether the 
Commission is seeking information only regarding sales and purchases 
when the gas is delivered at the California border or inside 
California, or whether the questions also cover sales and purchases 
when

[[Page 40252]]

deliveries are made at locations outside California, but the gas may 
ultimately be destined to be delivered to and consumed in 
California.\35\
---------------------------------------------------------------------------

    \35\ Comments of Pan Alberta Gas, Ltd., et al., and Indicated 
Shippers.
---------------------------------------------------------------------------

    The Commission clarifies that in Question 2 it is only requiring 
sellers to report information with respect to sales they make when the 
gas is delivered at points on the California border or within 
California. When a sales contract requires deliveries at some point 
outside California, the seller cannot be expected to know in all cases 
whether the gas is ultimately destined for California. Therefore, the 
Commission recognizes that sellers making sales in which the deliveries 
takes place outside California should not be required to report those 
sales.
    Proposed Question 5 \36\ is also addressed only to natural gas 
sellers who make sales with deliveries at points on the California 
border or within California. However, proposed Question 5 requires 
those sellers to report certain information concerning their gas 
purchase contracts. Since the gas sellers may have purchased the gas 
sold in sales subject to Question 2 at delivery points outside 
California, Question 5 is not limited solely to gas purchase contracts 
with delivery points at the California border or within California. 
However, it is limited to the gas purchase contracts in which gas 
sellers obtained the gas they sold at points on the California border 
or within California. The Commission is satisfied that, together, the 
proposed questions as constituted will yield data that will enable the 
Commission to obtain a full picture of how sales are currently being 
made in California, and to determine what action, if any, is required.
---------------------------------------------------------------------------

    \36\ Proposed seller's Question 5 will be Question 4 in the 
reporting requirement as adopted because, as discussed below, the 
Commission is eliminating Proposed Question 4.
---------------------------------------------------------------------------

    Commenters also seek clarification on whether the Commission 
intends sellers not only to report information regarding the sale, but 
also to report the details of the transactions in which they acquired 
the gas being sold.\37\ Consistent with the above discussion, the 
Commission will grant the requested clarification. Question 5 is 
intended to obtain that information.
---------------------------------------------------------------------------

    \37\ See e.g., Comments of Pan-Alberta Gas, Ltd. et al.
---------------------------------------------------------------------------

Question 2

    The Commission's proposed Question 2, among other things, requests 
sellers of natural gas to include in their responses the names of the 
buyers and whether such entities are energy marketers, local 
distribution companies, or end users. Several commenters raised a 
concern about identifying the buyer by name with a suggestion to permit 
respondents to code buyer identities.\38\ They claim that this is the 
most sensitive information sought by the proposed reporting 
requirements.
---------------------------------------------------------------------------

    \38\ See e.g., Comments of Sempra Energy Trading Corp.
---------------------------------------------------------------------------

    The name of the buyer is necessary because without it the 
Commission will not be in a position to analyze the data, especially 
where the same gas may be sold a number of times at the California 
border. The Commission does recognize the commercial sensitivity of a 
seller's identification of its purchasers. For this reason, as 
discussed above, the Commission has found that such information is 
exempt from public disclosure. Thus the concern of the commenters about 
confidentiality has been addressed because the information is entitled 
to protection in accordance with the rule in Continental Oil.
    The Commission's proposed Question 2, among other things, also 
requests that sellers of natural gas identify whether the buyer is 
affiliated with a pipeline. Several commenters assert that sellers do 
not have access to the buyer's affiliate information and therefore 
should not be placed in the position of having to research and report 
the pipeline affiliation or industry ``category''.\39\ The Commission 
agrees, and will grant the requested clarification. Part (e) of 
proposed Question 2 will be eliminated from the reporting requirements 
for sellers of natural gas.
---------------------------------------------------------------------------

    \39\ See e.g., Comments of Indicated Shippers and Natural Gas 
Supply Association.
---------------------------------------------------------------------------

    El Paso Merchant Energy, LP (Merchant) suggests that the Commission 
should include collection of data on the financial market as well as 
the physical market. The Commission believes that, for the purpose that 
it is instituting the reporting requirement, data is only necessary 
concerning sales in which actual physical deliveries are made at the 
California border or within California. Therefore, the Commission will 
not require information about sales where there are no physical 
deliveries. However, if Merchant wishes to furnish such information 
covering its own transactions, the Commission would accept such 
information.
    The Commission is also modifying proposed Questions 2(e) and 5(e) 
with respect to the price paid so respondents shall answer ``whether 
the price is fixed or indexed (identify the index).'' This makes these 
questions similar to Question 4 (e) to LDCs which also asks for price 
information.

Question 3

    Proposed Question 3 requires the seller of natural gas to state the 
transportation component and the gas component of the sales price, and 
if these are not specifically indicated in the contract, the seller is 
to provide a valuation of each component, together with an explanation 
of how that was determined. Some commenters point out that sales 
contracts typically provide only for a single, overall delivered price. 
The seller and purchaser never agree on separate prices for the 
transportation and commodity components. Commenters therefore argued 
that this question is flawed, since it would require each seller to 
make an after-the-fact ``artificial'' and ``subjective'' valuation of 
each component since there is no established standard for dividing the 
delivered price into separate components \40\ and that parties should 
not be required to ``force fit'' a delivered price into a 
transportation and commodity component.\41\ Several commenters state 
that there is the potential for differing responses upon which no 
meaningful conclusions can be made and that the Commission should 
clarify how it anticipates the parties to value each component.\42\
---------------------------------------------------------------------------

    \40\ See, Comments of Dynegy Marketing and Trade.
    \41\ See, Comments of Natural Gas Supply Association.
    \42\ See e.g., Comments of Indicated Shippers, Reliant Energy 
Services, Inc. and Sempra Energy Trading Corp.
---------------------------------------------------------------------------

    If the seller's sales contract does specify the transportation 
component of the price, then the seller should report the amount so 
specified. If the sales contract does not specify the transportation 
component but only includes an overall price, then the seller should 
report the transportation cost it incurred in moving the gas from the 
point where it purchased the gas to the point where it delivered the 
gas to its buyer and how it determined that amount. If the seller 
delivered the gas at the same point where it purchased the gas, then 
there is no transportation element in the sale and the seller should 
respond ``n.a.''

Question 4

    The Commission's proposed Question 4 requires that sellers of 
natural gas provide information concerning their contracts for 
transportation to the California border, including volumes nominated 
and volumes scheduled by the pipeline. Several commenters state that 
they do not maintain nomination

[[Page 40253]]

and scheduled volume information in their records. They believe that 
this information is more easily obtained from the pipeline.\43\
---------------------------------------------------------------------------

    \43\ See e.g., Comments of Indicated Shippers, and Sempra Energy 
Trading Corp.
---------------------------------------------------------------------------

    The Commission has determined to eliminate Question 4 in its 
entirety from the reporting requirements for sellers of natural gas. 
The questions to interstate pipelines provide the Commission with the 
same information, and therefore there is no need for a duplicative 
question to gas sellers.

Question 5

    The Commission's proposed Question 5, among other things, requests 
that sellers of natural gas identify the pipeline associated with a 
particular gas purchase contract. Sempra Energy Trading Corp. seeks 
clarification that the Commission intends respondents to identify the 
interstate pipeline on which gas is shipped either to the California 
border or to a delivery point within California. Sempra Energy Trading 
Corp. states that some purchase contracts may specify a single pipeline 
on which the sales transaction takes place while other gas purchase 
contracts may indicate more than one pipeline, i.e., the pipeline 
upstream of the point of delivery and the pipeline downstream of the 
point of delivery.
    The Commission will grant the requested clarification and will 
require respondents to identify the pipeline upstream of the point 
where the gas is delivered to them and the pipeline the respondents use 
to the take the gas away from the delivery point responding to Question 
5(b).
    Natural Gas Supply Association requests that the Commission clarify 
Question 5 to determine whether volumes will be reported on a daily or 
other basis. The Commission will grant the requested clarification and 
require respondents to report volumes on a daily basis.
    The Commission is also adding to proposed Question 5 a requirement 
that gas sellers identify the entity from whom they purchase the gas 
under each gas purchase contract.

3. Questions to California LDCs

    In order to ensure that there is no misunderstanding, the 
Commission intends that intrastate pipelines and Hinshaw pipelines 
should respond to the reporting requirement either as sellers of 
natural gas, or as LDCs, depending upon which group they fall under.

Questions 1 and 2

    The Commission's proposed LDC Question 1, among other things, 
requests that LDCs provide information concerning system gas sales and 
transportation requirements (i.e., contract demand and daily demands) 
delineated by core, non-core, electric generation and non-utility 
loads. Question 1 also requests a breakdown of these loads by type of 
service (e.g., sales or transportation) and quality of service (firm or 
interruptible). Proposed Question 2 requests LDCs to provide 
information concerning each contract they have with transportation 
customers, including contract demand by shipper, daily scheduled and 
delivered volumes, whether the service is firm or interruptible, the 
rate charged, and the receipt and delivery points associated with the 
contract.
    Southern California Gas Company and San Diego Gas & Electric 
Company (Sempra Utilities) states that daily estimated demand can be 
provided. However, Sempra Utilities contends that concepts such as 
``firm'' and ``interruptible'' and ``contract demands'' for sales and 
transport are inapplicable to the services currently provided by them 
and therefore that information is not available. If Sempra Utilities 
use different terms for the types of services identified in the 
question such as firm and interruptible, then they should report the 
required information in the terms they use. To the extent customers do 
not have contract demands, then Sempra Utilities may respond to 
questions about contract demands by setting forth any contractual terms 
that limit a customer's usage.\44\
---------------------------------------------------------------------------

    \44\ The problems incident to the lack of firm service for 
customers of Sempra Utilities has been evident in a number of 
Commission proceedings. See, e.g., Kern River Gas Transmission 
Company, 95 FERC para. 61,022 at 61,060-61 (2001).
---------------------------------------------------------------------------

Question 3

    The Commission's proposed Question 3 seeks information on a daily 
basis concerning each contract the LDC has with a sales customer. The 
requested information includes contract demand, term, volume and price 
for each sales contract. The Sempra Utilities state that they do not 
have individual contracts with their approximately 6 million core 
customers and that they only meter those core customers on a monthly, 
rather than a daily, basis. Sempra Utilities suggest that even on a 
monthly basis, information concerning each individual core customer's 
consumption would not be useful to the Commission. Sempra Utilities 
assert that the information to be provided in response to Question 1 
should be sufficient for the Commission.
    Question 1 requests only that the LDC provide its system's gas 
sales and transportation requirements solely by customer class and does 
not ask for information concerning volumes sold or prices charged. 
Question 3, by contrast, requests information relative to sales 
contracts with individual customers, including volumes sold and prices 
charged. The Commission recognizes that the Sempra Utilities do not 
have contracts with, or daily information concerning consumption by 
their individual core customers. Therefore, Sempra Utilities may 
provide the information requested by Question 3 for the core customer 
class as a whole, without breaking the information down by individual 
core customer. The Sempra Utilities may also respond to the question 
concerning contract demands as it relates to core customers by stating 
``N/A.''
    Sempra Utilities have not stated that they do not have contracts 
with the individual customers in their other customer classes, 
including non-core, electric generation, and non-utility loads. Nor 
have they stated they do not meter such customers on a daily basis. 
Therefore, there appears no reason why Sempra Utilities cannot provide 
all the information requested by Question 3 with respect to all 
individual customers other than the core customers.

Question 4

    Proposed Question 4 asks LDCs for information concerning each of 
their gas purchase contracts. Included in the information requested is 
whether the price in each gas purchase contract is fixed or indexed. 
Sempra Utilities state that the Commission has not requested other gas 
sellers to provide such information about their gas purchase contracts, 
and they assert that LDCs should not be required to provide more 
information than other gas sellers.
    The Commission will adopt this question as proposed. In this order 
the Commission is modifying the questions to gas sellers to require 
them to state whether the price in their contracts is indexed. 
Therefore LDCs are not being treated differently with respect to this 
question.

Question 5

    The Commission's proposed Question 5 seeks daily information 
identifying, by interstate pipeline, the type and quantity of 
transportation service each LDC system has under contract. 
Additionally, Question 5 requests that each LDC provide, at each 
receipt point, maximum peak day design capacity, the

[[Page 40254]]

daily maximum flowing capacity, and the daily scheduled volumes of the 
local distribution system.
    The Commission is modifying this question to also require 
respondents to provide daily nominated capacity at each point.

Question 6

    The Commission's proposed Question 6 seeks daily storage 
information including capacity and deliverability rights, daily storage 
balances, and injections and withdrawals. Question 6 also seeks this 
information by each storage facility. The Sempra Utilities state that 
information is not available by storage field but that it can provide 
system-wide daily storage balances, injections and withdrawals.
    The Commission will grant the requested clarification. Responders 
can provide the daily storage information on an aggregated basis, 
without separating the data by storage facility.

Question 7

    The Commission's proposed Question 7 requires the California LDCs 
to provide information on how much of their system's supply was gas 
supply from intrastate production sources. The question further 
requires LDCs to identify the source, volume, receipt point and price. 
The Sempra Utilities state that they can provide the information 
requested except that they do not have pricing information and 
therefore cannot provide it.
    The question requires information with regard to all gas flowing on 
the LDCs' system, not only the gas they purchase. The Commission 
recognizes that the LDCs will not have pricing information for gas that 
they may transport on behalf of others. However, for gas that the LDCs 
purchase, they should have pricing information, and that information 
should be reported. As discussed above, the Commission will treat such 
pricing information as confidential.

5. Information Collection Statement

    The following collection of information has been submitted to the 
Office of Management and Budget (OMB) for review under Sec. 3507(d) of 
the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d) and OMB's 
emergency processing procedures at 5 CFR 1320.13 (2000). The Commission 
has requested emergency processing because of the unanticipated events 
that have occurred in California with respect to natural gas prices 
that have raised serious concerns.
    Estimated Annual Burden:

----------------------------------------------------------------------------------------------------------------
                                                 Number of        Number of        Hours per       Total annual
               Data collection                  respondents       responses         response          hours
----------------------------------------------------------------------------------------------------------------
FERC-721....................................              89              534              208           19,847
----------------------------------------------------------------------------------------------------------------

Total Annual Hours for Collection: (Reporting + Recordkeeping, (if 
appropriate))= 19,847
Initial Reports: 178 hours Per respondent for data collection = 15,842 
hours
    30 hours Per respondent for utilizing Information technology = 
2,670 hours
    Subtotal = 18,512 hours
Subsequent reports: 3 hrs. Per respondent = 1,335 hours
    Total = 19,847 hours

    Information Collection Costs:

------------------------------------------------------------------------
 
------------------------------------------------------------------------
Annualized Capital/Startup Costs.....................        $300,480.00
                                                      ------------------
Annualized Costs (Operations & Maintenance)..........       1,933,090.00
    Total Annualized Costs...........................       2,233,570.00
------------------------------------------------------------------------

    Average cost per respondent = $25,096.00.
    OMB's regulations \45\ require it to approve certain information 
collection requirements, other than those contained in either proposed 
rules published for public comment in the Federal Register, or in 
current rules that were published as final rules in the Federal 
Register. The Commission has submitted as noted above, this information 
collection to OMB under their emergency processing procedures.
---------------------------------------------------------------------------

    \45\ 5 CFR 1320.10 and 5 CFR 1320.13 (2000).
---------------------------------------------------------------------------

    Title: FERC-721, Reporting of Natural Gas Sales to California.
    Action: Proposed Collection.
    OMB Control No: 1902-(to be determined).
    Respondents: Business or other for profit.
    Frequency of Responses: Monthly.
    Necessity of Information: The information is needed in order for 
the Commission to acquire a better understanding of how the California 
natural gas market functions in light of the fact that the price of 
natural gas in the California market has, for substantial periods, been 
higher than the price in other markets and trading hubs throughout the 
country, and because gas-fired electric generators in California are 
used to establish the market clearing price for electric generation 
pursuant to the bidding system used by the California Independent 
System Operator. The information provided so far to the Commission has 
not been adequate to permit that understanding.
    Internal Review: The Commission has reviewed the requirements 
pertaining to FERC-721 and determined the proposed information is 
necessary because the Commission needs to understand the fluctuations 
that have occurred in the price of natural gas in California, and its 
variance from the price markets in the rest of the country. The 
information to be collected will assist the Commission to determine 
what percentage of the volumes sold into the California market is 
domestically produced gas sold by marketers affiliated with pipelines 
and LDC in sales for resales, which are currently the only sales in 
California that is the subject of the Commission's jurisdiction. The 
information proposed to be collected will also give the Commission an 
accurate picture of the overall gas costs being incurred by all 
purchasers of natural gas moving into the California market.
    The requirements conform to the Commission's plan for efficient 
information collection, communication, and management within the 
natural gas industry. The Commission has assured itself, by means of 
internal review, that there is specific, objective support for the 
burden estimates associated with the information requirements.
    For submitting comments concerning the collection of information, 
please refer to the Commission's Federal Register notice requesting OMB 
approval under emergency processing procedures. That notice elaborates 
on where the public should direct comments on the need and practical 
utility of this information collection, accuracy of the burden 
estimates, ways to enhance the quality, clarity of the information to 
be collected, and suggested methods to minimize the respondent's 
burden.

The Commission Orders

    All interstate natural gas pipelines that deliver gas at points on 
the California border or within California, and sellers of natural gas 
at points on the California border or within California, and Local 
Distribution

[[Page 40255]]

Companies within California are directed to file under oath the 
information identified in the appendix to this order for the period 
August 1, 2001, to January 31, 2002, 30 days after the end of each such 
month in that period.

By the Commission.
David P. Boergers,
Secretary.

Appendix

    Answers to all questions below that require a statement of 
volumes should set forth the requested volumes on an MMBtu basis.

For Interstate Natural Gas Pipelines:

    1. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide the following information for each contract for 
transportation to the California border:

a. the transaction or contract identification number;
b. the terms and effective date of the contract;
c. contract demand by shipper;
d. the daily scheduled volume by shipper;
e. the daily nominated volume by shipper;
f. the daily delivered volume by shipper;
g. whether the service is firm or interruptible;
h. the rate charged in $$/MMbtu;
i. primary receipt and delivery points associated with the contract; 
and,
j. whether the shipper is affiliated with the pipeline.

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    2. For the period August 1, 2001 to January 31, 2002, please 
provide the following information for each capacity release 
transaction for transportation to the California border:

a. the transaction or contract identification number, or offer 
number; (This number should tie to contract number reported in 
Question 1,a., above)
b. the name of the releasing shipper;
c. the name of the acquiring shipper;
d. the contract quantity;
e. the acquiring shipper's contract rate; and,
f. the releasing shipper's contract rate.

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    3. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide the following system information:

a. the maximum peak day design capacity;
b. the daily maximum flowing capacity;
c. the daily scheduled system volume;
d. the daily delivered system volume;
e. the daily scheduled volume at each California delivery point;
f. an explanation of each instance that the daily maximum flowing 
capacity is below the maximum peak day design capacity; and,
g. an explanation of any daily variance in the maximum flowing 
capacity.

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    4. On a daily basis for May 1999 and May 2000, please provide 
the following system information:

a. the maximum peak day design capacity;
b. the daily maximum flowing capacity;
c. the daily scheduled system volume;
d. the daily delivered system volume, and,
e. the daily scheduled volume at each California delivery point.

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.

For Sellers of Natural Gas to the California Market:

    1. State whether the seller is affiliated with an interstate or 
intrastate natural gas pipeline company or local distribution 
company, and, if so, give the name and address the affiliated 
company.
    2. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide the following information for each contract in 
which you sold natural gas and the gas is physically delivered at 
points on the California border or in California:

a. the sales contract's identification number;
b. the term of the sales contract (beginning and ending dates);
c. the name of the buyer identifying whether the buyer is an energy 
marketer, local distribution company, or end user;
d. the volumes sold (on a MMBtu basis);
e. the price paid by buyer, and
f. whether the price is fixed or indexed (identify the index).

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    3. For each sales contract, identify separately the 
transportation component and the gas commodity component of the 
price. If the sales contract specifies the transportation component 
of the price, the seller shall report that amount. If the sales 
contract only includes an overall price, then the seller shall 
report the transportation cost it incurred in moving the gas from 
the point where it purchased the gas to the point where it sold the 
gas and how it determined that amount. If the sale was made at the 
same point where the gas was purchased, and there is no 
transportation element in the sale, the seller shall respond 
``n.a.''
    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    4. For the period August 1, 2001 to January 31, 2002, please 
provide the following information on a daily basis for each of your 
gas purchase contracts associated with the sales contracts you 
identified in response to Question 2:

a. the purchase contract's identification number;
b. the pipeline upstream of the point of delivery; and the pipeline 
downstream of the point of delivery;
c. the term of the purchase contract (beginning and ending dates);
d. the daily volumes (on a MMBtu basis) purchased;
e. the price paid;
f. whether the price is fixed or indexed (identify the index),
g. identify the entity from whom the responder purchased the gas; 
and,
h. identify the point where responder took title to the gas.

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.

For Local Distribution Companies In California

    1. Provide your system's gas sales and transportation 
requirements, (i.e, contract demands and daily demands) by core, 
non-core, electric generation, and non-utility loads. Provide a 
break down of these demands by type of service (e.g., sales and 
transportation) and quality of service(firm/interruptible).
    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    2. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide the following information for each contract the 
local distribution company has with a transportation customer:

a. contract demand by shipper;
b. the daily scheduled volume by shipper;
c. the daily delivered volume by shipper;
d. whether the service is firm or interruptible;
e. the rate charged; and,
f. receipt and delivery points associated with the contract.
    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    3. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide the following information for each contract the 
local distribution company has with a sales customer:

a. the contract demand by purchaser;
b. the term of the sales contract (beginning and ending dates);
c. the volumes (on a MMBtu basis) sold; and,
d. the price paid by purchaser.

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    4. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide the following information for each gas purchase 
contract:

a. the purchase contract's identification number;
b. the term of the purchase contract (beginning and ending dates);

[[Page 40256]]

c. the volumes (on a MMBtu basis) bought;
d. the price paid;
e. whether the price is fixed or indexed (identify the index); and,
f. identify the point where (name of local distribution company) 
took title to the gas.

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    5. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide by interstate pipeline the type and quantity of 
transportation service your system has under contract. At each 
receipt point, provide maximum peak day design capacity, the daily 
maximum flowing capacity, the daily nominated capacity and the daily 
scheduled volumes of the local distribution system.
    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    6. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide on a system-wide basis your storage service 
rights i.e., capacity and deliverability rights. Additionally, 
provide daily storage balances, injections and withdrawls.
    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    7. On a daily basis for the period August 1, 2001 to January 31, 
2002, please provide how much of your system's gas supply was from 
intrastate production sources. Separately identify the sources, 
volumes, receipt points, and prices. Include the total system supply 
in your response.
    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.
    8. Provide a summary of your system's gas purchases in the 
following categories:

a. daily spot purchases;
b. monthly;
c. short-term (more than 1 month and less than 1 year);
d. medium-term (1-3 years); and,
e. long-term (more than 3 years).

    by month for each of the last three years in the following 
format:

a. price;
b. volume; and,
c. identify, by name, where these purchases were made (producing 
basin or at the California border).

    Along with the hard copy response, please provide a CD-ROM 
containing the response to this question. Please provide this 
information in Excel version 97 or 2000 or comma separated value 
(CSV) format.

BILLING CODE 6717-01-P

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BILLING CODE 6717-01-C

Attachment

Commenters

AEC Storage and HUB Services
American Public Gas Association
California Electricity Oversight Board
The Canadian Association of Petroleum Producers and the Alberta 
Department of Energy
Duke Energy
Dynergy Marketing and Trade
Electric Power Supply Association
El Paso Merchant Energy, L.P.
Enron North America Corp. and Enron Energy Services, Inc.
Independent Petroleum Association of America
Indicated Shippers-Aera Energy, LLC, Amoco Production Company, 
Burlinton Resources Oil & Gas Company LP, Conoco Inc., Coral Energy 
Resources LLC, Marathon Oil, Texaco Natural Gas Inc.
National Association of Gas Consumers
The Natural Gas Supply Association
Nevada Attorney General's Bureau of Consumer Protection
Occidental Energy Marketing
Pacific Gas and Electric Company
Pan-Alberta Gas LTD., Pan-Alberta Gas (U.S.) Inc., Mirant Americas 
Energy Marketing Canada, LTD., and Mirant Americas Energy Marketing, 
LP.
PG&E Nation Al Energy Group Companies
PPL Energyplus, LLC
Process Gas Consumers Group, the American Iron and Steel Institute, 
the Georgia Industrial Group, American Forest and Paper Association 
and United States Gypsum Company
The Public Utilities Commission of the State of California
Northwest Industrial Gas Users
Reliant Energy Services, Inc.
Sempra Energy Trading Corp.
Southern California Gas Company and San Diego Gas & Electric Company
Tractabel Power, Inc. and Tractabel Energy Marketing, Inc.
TXU Energy Trading Company
Undersigned Producers-Exxon Mobil Corporation, Conoco Inc., and 
Chevron U.S.A. Inc
The Williams Companies, Inc.

[FR Doc. 01-19267 Filed 8-1-01; 8:45 am]
BILLING CODE 6717-01-P