Recent Highlights

October 20, 2016 - Item G-1: FERC Seeks Comment on Potential Changes to Oil Pipeline Rate Index Methodology, Data Reporting Requirements News Release | Presentation | ANOPR | eFile your Comments by December 19, 2016

The Form No. 6 is designed to collect financial and operational information from oil pipeline companies subject to the jurisdiction of the Commission.

The following is a list of important Commission Orders and/or decisions regarding the Form No. 6:

  • Order No. 620 issued December 13, 2000, requires all jurisdictional oil pipeline companies to use the Commission's software to electronically file Form 6 commencing with reporting year 2000, due on or before March 31, 2001;
  • Order No. 606 [38K], issued August 4, 1999, revises regulations governing oil pipelines. The regulations to be modified or deleted are located in 18 C.F.R. Parts 3, 341, 342, 343, 346, 357, 362, and 385. These revisions are intended to clarify the Commission's regulations and bring them up to date;
  • Order No. 572 [83K], issued October 28, 1994, amended regulations to adopt filing requirements and procedures with respect to an application by an oil pipeline for a determination that it lacks significant market power in which it proposes to charge market-based rates.

This rule adopts procedural rules in order to implement the Commission's Order No. 561 market-based ratemaking policy, which was published in the Federal Register on November 4, 1993. In that order, the Commission adopted a simplified and generally applicable ratemaking methodology for oil pipelines, which is an indexing system to establish ceilings on those rates.

The Commission also continued its policy of allowing an oil pipeline to attempt to show that it lacks significant market power in which it proposes to charge market-based rates. However, an oil pipeline may not charge market-based rates until the Commission concludes that the oil pipeline lacks significant market power in the relevant markets.

  • Order No. 561-A [97K], issued July 28, 1994, amended regulations to revise the requirements for filing suspension supplements of oil pipeline tariffs in order to provide additional time to file suspension supplements; to modify the circumstances under which oil pipelines may use the cost-of-service methodology for changing rates in order to more closely track the standard for shipper protests to an indexed rate, and to modify the requirements to protests to oil pipeline tariff filings in order to require that a protestant file a verified statement to support its claim of a substantial interest in the proceeding.

The effects of these actions will be to provide a more accurate, timely, and balanced approach to oil pipeline ratemaking under the Energy Policy Act of 1992 and the Interstate Commerce Act.

  • Order No. 561 [192K], issued October 22, 1993, provides a simplified and generally applicable approach to changing just and reasonable oil pipeline rates. The simplified and generally applicable approach, adopted in this final rule, for changing oil pipeline rates is an indexing system that will establish ceiling levels for such rates.

The Final Rule permits cost-of-service proceedings to establish just and reasonable rates, with regard to initial rates for new service, and also with regard to changes to existing rates where appropriate.

The Final Rule retains the Commission's current policy of encouraging settlements of rate issues at any stage.

The Final Rule does not disturb current Commission practice, which permits a pipeline to seek Commission authorization to charge market-based rates. However, until the Commission makes the finding that the pipeline does not exercise significant market power, the pipeline's rates cannot exceed the applicable index ceiling level or level justified by the pipeline's cost of service.

  • Opinion 154-B [38K], issued June 28, 1985. On March 9, 1984, the United States Court of Appeals for the District of Columbia Circuit affirmed in part and remanded in part the Commission's opinion in Phase I of this proceeding.

The purpose in Phase I was to devise generic principles for the setting of just and reasonable oil pipeline rates. One essential ingredient in this task is to adopt rate base and rate of return methodologies which will operate together to produce a just and reasonable return allowance.

The Commission concluded that with the exception of the starting rate base, a rate base methodology derived from original cost rate-making models should be adopted. As the court observed, original cost is a "proven alternative". As the Commission has observed, "the language of American finance is an original cost language", for American industry reports its earnings on net book investment.

Hence, original cost is the best yardstick to compare an oil pipeline to other oil pipelines, to other industrial companies, to other industries, and to the entire American economy in order to approximate the oil pipeline's cost of capital.

Therefore, the Commission adopted the Trended Original Cost (TOC) as the model for calculating rate-based, and therefore, determining revenue requirements.


This page was last updated on February 24, 2021