[Federal Register Volume 80, Number 94 (Friday, May 15, 2015)]
[Notices]
[Pages 27944-27945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-11736]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. PR15-26-000]


Enterprise Texas Pipeline LLC; Notice of Staff Protest To 
Petition for Rate Approval

    1. Commission staff hereby protests pursuant to the section 
284.123(g)(4)(i) of the Commission's regulations,\1\ the Petition for 
Rate Approval pursuant to section 284.123(b)(2) filed by Enterprise 
Texas Pipeline LLC (Enterprise) on March 13, 2015, in the above 
referenced docket. Pursuant to the Stipulation and Agreement approved 
by the Commission in Docket Nos. PR10-14-000 and PR10-14-001,\2\ 
Enterprise filed a new petition for rate approval pursuant to 18 CFR 
284.123(b)(2) proposing a new rate applicable to its Natural Gas Policy 
Act (NGPA) section 311 service. Enterprise elected to use the 
Commission's new optional notice procedures set forth in section 
284.123(g). Enterprise proposes to increase its firm and interruptible 
transportation services for Rate Zone 1--Legacy Assets and Rate Zone 
2--Sherman Extension. Enterprise also proposes to revise its Statement 
of Operating Conditions (SOC) applicable to its transportation services 
performed pursuant to NGPA section 311, which it states is updated 
solely to reflect the new proposed rates. Enterprise states it has not 
proposed any changes to the operating terms and conditions of its SOC.
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    \1\ 18 CFR 284.123(g)(4)(i) (2014).
    \2\ Enterprise Texas Pipeline LLC, Delegated Letter Order, 
December 16, 2010.
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    2. Commission staff notes that Enterprise has not adequately 
supported its filing and shown that the proposed rates are fair and 
equitable. For instance, Enterprise has not provided sufficient support 
for the discount adjustment used in calculating the billing 
determinants. In addition, Enterprise has not provided adequate 
explanation and support for its proposed cost of service, rate base, 
cost of capital, and cost allocation, among other issues.
    3. Commission staff's specific concerns include, in particular, 
Enterprise's development of its discount adjustment in designing rates. 
For example, in Zone 2 the proposed rates are significantly higher than 
the rates Enterprise proposed in its prior rate case, Docket No. PR10-
14-000, even though the cost of service for Zone 2 is 20 percent lower 
and the throughput is 55 percent higher using the same rate design 
methodology and imputed billing determinants from its prior case. 
Similarly, using the same methodology to design rates for Zone 1, 
Enterprise proposes a rate of $0.7636 per Dth, yet the unit cost prior 
to any discount adjustment is $0.2006 per Dth.
    4. Commission staff has concerns that Enterprise has not classified 
any costs as variable costs when calculating its rates. Enterprise 
calculated straight-fixed variable rates for Zone 2 but did not 
classify any costs as variable cost rates. However, since Enterprise 
included $91.6 million in Account No. 368, Compressor Station 
Equipment, it follows that there should be variable costs associated 
with operating and maintaining compressors. Moreover, Account No. 855, 
Other Fuel and Power for Compressor Stations, typically

[[Page 27945]]

contains only variable costs. Similarly, for Zone 1, Enterprise did not 
classify any costs as variable costs, even though Enterprise booked 
over $509 million to Compressor Station Equipment.
    5. Commission staff has concerns regarding the allocation of 
Administrative and General (A&G) Expenses between Enterprise's two 
delivery zones. Exhibit H-1 shows that Enterprise allocated only 7.5 
percent of A&G Expenses to Zone 2 which seems low considering that over 
15 percent of Operating and Maintenance (O&M) Expenses, 15 percent of 
gross plant and over 14 percent of revenues were derived from Zone 2.
    6. Enterprise proposes to include both gathering and storage plant 
in rate base. This is inconsistent with prior cases, where Enterprise 
has sometimes included gathering in rate base (see Docket No. PR07-12-
000) and also excluded it from rate base (see Docket No. PR10-14-000). 
Enterprise has provided little to support its proposed treatment of 
gathering plant. In addition, Commission staff notes that Enterprise 
has market-based rate authority to provide storage services. Enterprise 
has not provided sufficient support to include storage plant in rate 
base for the first time. Further, Enterprise has not included any 
storage related O&M expenses to operate the plant.
    7. Finally, Enterprise has requested a weighted average cost of 
capital of 10.41 percent without adequate support for either the 
proposed capital structure or the individual capital cost components.

    Dated: May 8, 2015.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2015-11736 Filed 5-14-15; 8:45 am]
 BILLING CODE 6717-01-P