[Federal Register: October 7, 2008 (Volume 73, Number 195)]
[Rules and Regulations]
[Page 58719-58769]
[DOCID:fr07oc08-20]

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Part II

Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Parts 41 and 141

Revisions to Forms, Statements and Reporting Requirements for Electric
Utilities and Licensees; Final Rule

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 41 and 141

[Docket No. RM08-5-000; Order No. 715]

Revisions to Forms, Statements and Reporting Requirements for
Electric Utilities and Licensees

Issued September 19, 2008.

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final Rule.

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SUMMARY: This Final Rule amends the Federal Energy Regulatory
Commission's reporting requirements for public utilities and licensees
to file financial forms, reports, and statements, including FERC Form
No. 1, FERC Form No. 1-F, and FERC Form No. 3-Q. These changes will
improve the forms, reports and statements to provide, in fuller detail,
the information the Commission needs to carry out its responsibilities
under the Federal Power Act to ensure that rates remain just and
reasonable. In addition, the changes will help provide public utility
customers, state commissions, and the public information to assess the
justness and reasonableness of electric rates.

DATES: Effective Date: This rule will become effective January 1, 2009.

FOR FURTHER INFORMATION CONTACT: David Lengenfelder (Technical
Information), Forms Administration and Data Branch, Division of
Financial Regulation, Office of Enforcement, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426, Telephone:
(202) 502-8351, e-mail<EMAIL_ADDRESS>Richard M.
Wartchow (Legal Information), Office of the General Counsel, Federal
Energy Regulatory Commission, 888 First Street, NE., Washington, DC
20426, Telephone:<PHONE_NUMBER>, e-mail<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

                               Final Rule
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                                                              Paragraph
                                                               Numbers
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I. Introduction............................................            1
II. Background.............................................            6
III. Notice of Inquiry.....................................           10
IV. Notice of Proposed Rulemaking..........................           11
V. Discussion..............................................           12
    A. Notice of Inquiry...................................           12
    B. Notice of Proposed Rulemaking.......................           13
    C. Effective Date......................................           19
    D. Proposed Revisions..................................           21
        1. Formula Rates...................................           21
        2. Filing Thresholds for Form 1....................           51
        3. Affiliate Transactions..........................           56
        4. CPA Certification for a Non-Calendar Fiscal Year           74
        5. ``Other Revenues'' (Pages 300-301)..............           78
        6. Increases to Threshold Reporting Levels.........           91
        7. Proposed Technical Corrections..................           94
        8. Additional Technical Revisions..................           98
    E. Miscellaneous.......................................          103
        1. Retaining Form 3-Q..............................          103
        2. Confidentiality Concerns........................          107
        3. Requests To Reconsider Rejected Revisions.......          111
        4. Requests for Additional Cost Data...............          116
    F. Reporting Burden....................................          121
VI. Information Collection Statement.......................          129
VII. Environmental Analysis................................          130
VIII. Regulatory Flexibility Act...........................          131
IX. Document Availability..................................          132
X. Effective Date and Congressional Notification...........          135
Revised Regulatory Text--18 CFR Parts 41 and 141.
Appendix A: Revised Form 1 Pages.
Appendix B: List of Proposed Technical Changes and
 Responses.
Appendix C: List of Commenters.
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I. Introduction

    1. This Final Rule amends the Federal Energy Regulatory
Commission's (Commission) reporting requirements for public utilities
\1\ and licensees to file financial forms, reports, and statements,
including FERC Form No. 1 (Form 1), FERC Form No. 1-F (Form 1-F), and
FERC Form No. 3-Q (Form 3-Q). These changes will improve the forms,
reports and statements to provide, in fuller detail, the information
the Commission needs to carry out its responsibilities under the
Federal Power Act (FPA) to ensure that rates remain just and
reasonable. In addition, the changes will help provide public utility
customers, state commissions, and the public the information they need
to assess the justness and reasonableness of electric rates.
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    \1\ While 18 CFR 141.1 nominally refers to ``electric
utilities,'' this regulation in fact applies to ``public
utilities.'' See 16 U.S.C. 824; accord 18 CFR Part 101, Definitions
29 and 40. The reference in 18 CFR 141.1 to ``electric utilities''
predates the 1978 addition of separate statutorily defined
``electric utilities,'' see 16 U.S.C. 796(22), when the only
utilities that were Commission regulated under the Federal Power Act
were the statutorily-defined public utilities, see 16 U.S.C. 824.
See, e.g., 18 CFR 141.1 (1977).
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    2. This Final Rule complements the Commission's recent revisions to
the reporting requirements for natural gas

companies; \2\ it revises the financial forms filed by public utilities
and licensees--specifically, Form 1, Annual report for major electric
utilities, licensees, and others; Form 1-F, Annual report for nonmajor
public utilities, licensees and others; and Form 3-Q, Quarterly report
of electric utilities, licensees, and natural gas companies.
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    \2\ 18 CFR Parts 158 and 260; Revisions to Forms, Statements,
and Reporting Requirements for Natural Gas Pipelines, Order No. 710,
Docket No. RM07-9-000, 73 FR 19389 (Apr. 10, 2008), FERC Stats. &
Regs. ] 31,267, order on reh'g, Order No. 710-A, 123 FERC ] 61,278
(2008).
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    3. Specifically, the Final Rule adopts revised reporting
requirements which will enhance the Commission's and customers' review
of formula rates; permit better understanding of non-power goods and
services transactions with affiliates, and provide additional detail of
revenues not previously specified in Form 1. In addition, the Final
Rule will expedite reporting by clarifying Form 1 instructions and
cross-references and making certain technical improvements in the form.
Finally, the Final Rule responds to the burdens faced by filers by
adopting minimum reporting thresholds for certain accounting data,
eliminating the reporting requirement for certain utilities that are
not otherwise subject to this Commission's reporting obligations or
jurisdiction, and accommodating filers whose fiscal year does not fall
in the calendar year that is used for reporting purposes.
    4. This Final Rule does not convert the submission of Form 1 and
other data into a FPA section 205 \3\ rate case filing or a cost-and-
revenue study, but is instead intended to better ensure a ready source
of data to assist the Commission and interested parties in evaluating
the justness and reasonableness of a utility's rates. The revised forms
do not limit or change an entity's rights or obligations under the FPA
and our regulations, and this Final Rule is not intended to change our
obligation to rule on complaints, petitions, or other requests for
relief based on a full record and substantial evidence.
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    \3\ 16 U.S.C. 824d.
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    5. The proposed effective date for implementation of these changes
is calendar year 2009. Accordingly, companies subject to the new
requirements would file their new Form 3-Qs following the first
calendar quarter of 2009 and their new Forms 1 and 1-F in April 2010
for calendar year 2009. In addition, this Final Rule eliminates the
filing requirement for utilities not subject to the Commission's
jurisdiction under section 201 of the FPA \4\ but required to file Form
1 solely because they met the reporting threshold in the regulations.
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    \4\ 16 U.S.C. 824.
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II. Background

    6. Under the Commission's regulations, entities classified as major
electric utilities are required to file Form 1. Entities classified as
nonmajor electric utilities are required to file Form 1-F.\5\ Sections
304, 307 and 309 of the FPA authorize the Commission to collect such
data.\6\ Form 1, in particular, requires information to be filed on an
annual basis by public utilities (and certain hydroelectric production
sources) under the Commission's jurisdiction. Form 1 collects corporate
information, summary financial information and balance sheet and income
information, as well as electric plant, sales, operating and
statistical data. Since its inception, Form 1 has been amended by the
Commission on numerous occasions to address and keep pace with the
transformation of the utility industry.
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    \5\ A major electric utility is one that had, in the last three
consecutive years, sales or transmission services that exceeded (1)
one million megawatt-hours of total sales; (2) 100 megawatt-hours of
sales for resale; (3) 500 megawatt-hours of power exchanges
delivered; or (4) 500 megawatt-hours of wheeling for others
(deliveries plus losses). Utilities and licensees that are not
classified as major and had total sales in each of the last three
consecutive years of 10,000 megawatt-hours or more are classified as
nonnmajor. See 18 CFR Part 101.
    \6\ 16 U.S.C. 825a, 825f, 825h; see also 16 U.S.C. 825j.
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    7. In 1990, the Commission issued Order No. 529, which modified
Form 1 to improve reporting of bulk power transactions.\7\ In 1993, the
Commission issued Order No. 552, which revised the Uniform System of
Accounts (USofA) to account for allowances under the 1990 Clean Air Act
Amendments, and adopted corresponding reporting schedules for Forms 1
and 1-F.\8\
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    \7\ Amendments to FERC Form Nos. 1 and 1-F, and Annual Charges,
and Fuel Cost and Purchased Economic Power Adjustment Clauses, Order
No. 529, FERC Stats. & Regs. ] 30,904 (1990).
    \8\ Revisions to Uniform System of Accounts to Account for
Allowances under the Clean Air Act Amendments of 1990 and
Regulatory-Created Assets and Liabilities and to Form Nos. 1, 1-F, 2
and 2-A, Order No. 552, FERC Stats. & Regs. ] 30,967 (1993).
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    8. In 1994, the Commission issued Order No. 574, which required the
filing of an electronic version of Form 1, along with the paper
version. The electronic version was prepared pursuant to a computer
program supplied by the Commission.\9\ In 2002, the Commission issued
Order No. 626, which eliminated the paper filing requirement, relying
solely on electronic filing of Form 1.\10\ Also in 2002, the Commission
expanded USofA accounting requirements to include monitoring for the
fair value of certain security investments, derivative instruments, and
hedging activities, and added new schedules and accounts to Forms 1 and
1-F.\11\
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    \9\ Electronic Filing of FERC Form No. 1 and Delegation to Chief
Accountant, Order No. 574, FERC Stats. & Regs. ] 31,013 (1994)
(establishing the Form 1 Submission Software (FOSS)).
    \10\ Electronic Filing of FERC Form No. 1, and Elimination of
Certain Designated Schedules in Form Nos. 1 and 1-F, Order No. 626,
FERC Stats. & Regs. ] 31,130 (2002).
    \11\ Accounting and Reporting of Financial Instruments,
Comprehensive Income, Derivatives and Hedging Activities, Order No.
627, FERC Stats. & Regs. ] 31,134 (2002).
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    9. Order No. 646 implemented quarterly reporting for entities that
filed Forms 1 and 1-F and added annual reporting requirements for
ancillary services and electric transmission peak loads.\12\ In 2005,
Order No. 668 updated the Commission's accounting requirements for
utilities and licensees, including independent system operators (ISOs)
and regional transmission organizations (RTOs).\13\ The Commission also
revised its USofA and Forms 1 and 1-F to accommodate industry
restructuring under the Commission's open-access transmission policies
and increased competition in wholesale bulk power markets.\14\
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    \12\ Quarterly Financial Reporting and Revisions to the Annual
Reports, Order No. 646, FERC Stats. & Regs. ] 31,158, order on
reh'g, Order No. 646-A, FERC Stats. & Regs. ] 31,163 (2004).
    \13\ Accounting and Financial Reporting for Public Utilities
Including RTOs, Order No. 668, FERC Stats. & Regs. ] 31,199 (2005),
reh'g denied, Order No. 668-A, FERC Stats. & Regs. ] 31,215 (2006).
    \14\ Id.
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III. Notice of Inquiry

    10. As part of Commission staff's ongoing comprehensive review of
the Commission's financial data requirements, a series of public
meetings were held in Fall 2006 with both filers and users of FERC's
financial reports (Forms 1, 1-F, 2, 2-A and 3-Q). On February 15, 2007,
the Commission issued a Notice of Inquiry (NOI) in response to those
discussions.\15\ The NOI sought comments on the need for changes or
additions to the financial information reported on these forms. In
response to the comments received, the Commission determined that each
of the forms, representing different industries subject to the
Commission's jurisdiction, merited its own separate review.
Accordingly, the Commission established a separate proceeding in Docket
No. RM07-9-000, addressing only changes, additions, and

amendments to the forms applicable to interstate natural gas
companies.\16\
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    \15\ Assessment of Information Requirements for FERC Financial
Forms, Notice of Inquiry, FERC Stats. & Regs. ] 35,554 (2007).
    \16\ Revisions to Forms. Statements, and Reporting Requirements
for Natural Gas Pipelines, Order No. 710, FERC Stats. & Regs. ]
31,267, order on reh'g, Order No. 710-A, 123 FERC ] 61,278 (2008).
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IV. Notice of Proposed Rulemaking

    11. On January 18, 2008, the Commission issued a Notice of Proposed
Rulemaking (NOPR) that proposed to revise the Form 1 (and Forms 1-F and
3-Q) and requested comments on several issues, including: (1)
Differences between Form 1 data and costs that are reflected in formula
rate inputs, (2) the non-jurisdictional utility requirements and
revising the Form 1-F reporting threshold for nonmajor utilities, (3)
reporting for affiliate transactions, (4) filers whose reporting and
accounting systems are based on a non-calendar fiscal year, (5)
reporting for ``Other Revenues,'' and (6) the minimum threshold
reporting levels for certain line-item information.\17\ In addition,
the NOPR proposed two non-form related rule changes, concerning
notification of non-filing status and grants of extension of time for
good cause. The NOPR also invited comments on software updates,
revisions to the filing instructions, requests for additional
information for particular accounts or schedules, and suggestions to
improve the quality, completeness and consistency of data
submissions.\18\
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    \17\ Revisions to Forms, Statements, and Reporting Requirements
for Electric Utilities and Licensees, Notice of Proposed Rulemaking,
73 FR 5136 (Jan. 29, 2008), FERC Stats. & Regs. ] 32,627 (Jan. 18,
2008) (NOPR).
    \18\ These proposals were listed in an appendix to the NOPR,
which is updated here with Commission responses and provided in
Appendix B to this Final Rule.
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V. Discussion

A. Notice of Inquiry

    12. In responding to the NOI, Form 1 public utility filers
generally emphasized the difficulty and expense of Form 1 preparation,
stated that the current scope of information sought is sufficient to
evaluate jurisdictional rates, and objected to particular filing
requirements as burdensome. In contrast, Form 1 users, including
nonprofit publicly-owned utilities and state commissions, disagree--
requesting that Form 1 provide additional information to permit more
effective review to determine whether current and proposed rates are
just and reasonable.

B. Notice of Proposed Rulemaking

    13. In the NOPR, the Commission affirmed that the information
reported in Forms 1, 1-F and 3-Q is critical to the work of the
Commission and stated its expectation that all filers would continue to
follow the instructions and submit properly completed forms. The NOPR
emphasized the importance of Form 1 data to the Commission, state
commissions, utility customers and other interested persons as an
important and primary source of information to assess whether rates
charged remain just and reasonable or may be unjust and unreasonable.
The NOPR stated that the purpose of Form 1, in particular, is to
provide basic financial and operational information to allow the
Commission, customers, and competitors to monitor a utility's rates for
jurisdictional services. Form 1 is an essential tool in the
Commission's regulatory program. Form 1 makes publicly available the
financial information upon which cost-based rates are developed and
provides information on the financial operations of utilities. Form 1
and the underlying data are used in ratemaking and for customer rate
and cost monitoring. In addition, because it reflects the Commission's
USofA, Form 1 ensures that such data is uniform and comparable between
companies and reporting periods. Form 1 is not a substitute for a rate
case filing or a projection of future financial performance, however.
Instead the data enables the form's users to monitor and assess a
utility's rates.
    14. Pursuant to the Commission's comprehensive review of its
financial reporting forms and based on the responses to the NOI, the
Commission determined that wholesale changes were not justified, and
instead proposed targeted adjustments to the existing reporting
requirements.
    15. In response to the NOPR, the Commission received 13 timely
comments, one motion to submit comments out-of-time, and one set of
reply comments.\19\ These comments are summarized in the remainder of
the discussion section.
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    \19\ A list of commenters is attached as Appendix C.
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    16. After careful consideration of the comments received, the
Commission is adopting changes and revisions proposed in the NOPR with
certain modifications and clarifications, as discussed below.
    17. No comments were filed objecting to the NOPR's proposals
concerning (i) accommodating filers whose books close on a non-calendar
fiscal year, (ii) filing notifications of changes to non-filing status,
(iii) adopting a good cause requirement for reviewing requests for
extension of time, and (iv) providing for separate reporting of
emissions allowances, such as nitrogen oxide (NOX) and
sulfur dioxide (SO2). In fact, comments were received
supporting several of these proposals, including the non-calendar year
accommodation and emission allowances. Therefore, we adopt the
proposals as set forth in the NOPR.
    18. In addition, several commenters proposed additional reporting
requirements or modifications to the proposals made in the NOPR. To the
extent such comments proposed revisions that were feasible and in
keeping with the goals expressed in the NOPR, the Commission has
attempted to incorporate commenters' suggestions as discussed below.
The discussion in the ``Commission Determination'' sections addressing
each NOPR proposal provides additional detail to clarify those
proposals and respond to the comments.

C. Effective Date

    19. The NOPR proposed calendar year 2009 as the effective date to
implement these changes to the reporting requirements, stating:

    Accordingly, companies subject to the new requirements would
file their new Form 3-Qs beginning with the Form 3-Q for the first
calendar quarter of 2009 and their new Forms 1 and 1-F in April 2010
for calendar year 2009.

    20. The Commission believes that this effective date provides
sufficient time for filing companies to collect the information needed
to fulfill the reporting obligations proposed in the NOPR and adopted
in this Final Rule. Because the changes adopted here are limited in
scope, filers have sufficient opportunity to make the necessary changes
to their reporting systems to capture the necessary data in the detail
needed to complete the new requirements contained in this Final Rule.
This proposed effective date thus provides an adequate time for
utilities to revise their information collection procedures, and filers
will have several additional months before the first reporting deadline
to implement the changes needed because the first report due is the
Form 3-Q, a quarterly report, due in May 2009. Therefore, the
Commission adopts the changes provided for in this Final Rule effective
calendar year 2009, consistent with the date proposed in the NOPR.

D. Proposed Revisions

1. Formula Rates
    21. In response to comments requesting additional information to
accommodate formula rate review, the NOPR proposed the addition of

explanatory information when formula rate inputs deviate from data
reported in Form 1. Specifically, the NOPR proposed to revise the Form
1 to require that, if the inputs to a formula rate deviate from what is
currently shown in the Form 1, the filer must provide an explanation
for the deviation in a footnote to the corresponding page, line and
column where the specific data is reported. The Commission sought
comment on this proposal.\20\
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    \20\ NOPR at P 46.
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Comments
    22. Several commenters support the Commission's proposal for filing
utilities to explain departures from Form 1 data in formula rates.
SDG&E, for example, notes that many utilities with formula rates
already make periodic informational filings to explain the use of
modified Form 1 data. SDG&E supports the NOPR proposal and
characterizes the proposal as a pragmatic and narrowly-tailored effort
to provide additional information that does not duplicate publicly
available material, while avoiding a ``one size fits all'' modification
to Form 1 that does not address the varieties of formula rates
currently in effect or utilities' uses of variations from Form 1 data.
    23. APPA also supports the Commission's intent that utilities
provide all information necessary for calculating formula rates, but
questions whether the Commission's proposal will achieve the desired
effect. APPA states that the requirement that filers describe in
footnotes details on how formula rates deviate from Form 1 information
may be difficult to monitor because staff may lack the means to
identify utilities subject to the formula rate information requirement.
APPA suggests that the Commission require a new schedule for filers to
identify their status in regard to formula rates, which would require a
filer to indicate (1) whether it has formula rates; and (2) where to
find all explanations for deviations between formula rates and Form 1
information (either informational filings or footnotes in connection
with specific page, line and column numbers of Form 1). Such a schedule
would ensure that a utility does not omit a necessary footnote and
would also locate deviations from Form 1 data. APPA predicts that such
a schedule would not change any Form 1 references currently contained
in formula rates and should not add any substantial burden to
respondents, because it would not repeat the information, but would
simply reference the location of the information already compiled.
    24. BPA agrees that since formula rates routinely cite specific
accounts and page numbers, the Commission should not revise Form 1
accounts or page numbers, so as to necessitate amendments to existing
formula rates. BPA supports the use of explanatory footnotes, stating
that the footnotes are an essential aspect of Form 1 and may provide
the only means for a utility to explain, and Form 1 user to understand,
the data. BPA suggests the need for additional enforcement of Form 1
requirements, including penalties for failure to meet footnote
requirements.
    25. In addition, BPA requests clarification that a statement made
in paragraph 41 of the NOPR, ``[t]he annual rate adjustment may not
initiate a rate proceeding and the customer's recourse, if it believes
the resulting rates are unjust and unreasonable, is to file a complaint
under section 206 of the FPA,'' is not intended to change the burden of
proof in a section 206 proceeding involving a formula rate.
Specifically, BPA requests the Commission clarify that the statement
does not shift the burden of proof from the utility to establish that
the formula is correctly applied or that the correct data is being used
to populate the formula.\21\
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    \21\ BPA states its understanding that the burden of proof
otherwise remains on the party challenging a Commission-approved
formula.
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    26. Nevada Companies suggests that a transmission provider should
post the reasons for changes in formula rates on its Web site within a
prescribed period of time, which would provide immediate information to
customers on changes in rates rather than having to wait for a
quarterly or annual filing.
    27. TAPS strongly supports the NOPR's effort to further the goal of
timely transparency through inclusion of the relevant information in
Form 1. TAPS questions the level of detail in an informational filing
that would relieve a utility of the requirement to describe formula
rate differences in Form 1. TAPS states that the rule should require
that the transparency information be included in Form 1 submissions of
each utility whose Form 1 data is input into a formula rate. TAPS
proposes that waivers be considered where the utility can show that it
is legally committed to make annual informational filings that will
provide all of the data, of the same quality and reliability, that
would otherwise have to be included in its Form 1, and will do so in
time to facilitate rate monitoring by customers, regulators, and the
public. TAPS also requests that the Final Rule require annual reporting
of all historical cost, load, and revenue information that is an input
into a Form 1 filing utility's formula rate.
    28. The Michigan Commission requests that the Commission initiate a
process to address problems associated with its review of utility
transmission investment in conjunction with formula rates. The Michigan
Commission states that a lack of necessary data reporting in
combination with formula rates can shield utility investment decisions
from review. The Michigan Commission suggests that the Commission
initiate an inquiry, possibly a technical conference, to explore ways
that formula rates can be reviewed.
    29. Several utility commenters object to the requirement to add
footnotes to discuss differences between Form 1 financial information
and formula rate inputs for wholesale rates.\22\ AEP believes that the
Form 1 is a financial report and should continue to be a financial
report and not a rate verification report. AEP claims that footnoting
differences between Form 1 data and formula rate inputs would, for some
filers like AEP, be extensive, voluminous and burdensome to comply
with. AEP suggests that multiple rates will require reconciliation,
including separate wholesale customer service rates and some regional
transmission organization rates. AEP states that the Commission should
obtain such information from the seller when needed on a case-by-case
basis. AEP suggests that the additional detail need not be made public,
and states that the information is better provided as a separate rate
filing to be made whenever the formula rate is being changed or
supported.
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    \22\ See AEP, EEI, FirstEnergy, and Duke comments.
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    30. EEI encourages the Commission not to add a requirement to Form
1 to explain departures from Form 1 information used as inputs to
formula rates. EEI argues that companies should not be required to
footnote Form 1 data to explain differences in formula rates, so long
as they document changes to formula rate inputs, adhere to the approved
formula rate tariffs, and provide information to the Commission and
affected customers on request or via informational filings.
    31. EEI suggests that the Commission adopt an alternate policy,
under which companies adopting formula rates would provide information
to customers about rate inputs, including underlying costs and cost
increases, in sufficient detail to enable the customers to understand
the basis for their rates. EEI states that if the Commission does

impose a formula rate footnote requirement in Form 1, the Commission
should: (1) Clarify that the footnote is necessary only to explain
departures from Form 1 data when a formula rate tariff calls for
specific Form 1 data as inputs and different input data are used; (2)
clarify that the footnote requirement applies only to cost-based rates,
not to market-based rates (MBR); (3) specify that, if a seller files
informational filings containing information about inputs to its
formula rates, a footnote is not required; (4) specify that if
customers have audit rights under a formula rate tariff, a footnote is
not required; (5) specify that if a company has explained departures
from Form 1 data as inputs to a formula rate elsewhere in information
available to the Commission and customers on request, it is not
required to do so again in Form 1; (6) specify that, if the footnote
cannot be added before Form 1 is filed, it can be added at the next
reporting cycle; and (7) address how the footnote should be prepared
when multiple operating companies or gas and electric companies are
involved and not all of those companies are reflected in a given Form
1.
    32. FirstEnergy requests that the Commission clarify that its
proposal is not a blanket requirement on companies filing the Form 1 to
include any changes on inputs to formula rates in a footnote to the
relevant page in Form 1. Similarly, the Commission should also clarify
that its proposed requirement would not preclude companies from
submitting the formula input information in filings other than Form 1.
    33. FirstEnergy states that companies should not be required to
submit informational filings or otherwise report situations in which
formula rate inputs differ slightly from what is shown in Form 1, and
requests the Commission to clarify whether such disclosures will now be
required. To the extent that such information will be required,
FirstEnergy does not believe that Form 1 is an appropriate vehicle for
reporting information concerning a utility's formula rates. FirstEnergy
states that Forms 1 and 3-Q are financial statements providing
information in accordance with the USofA and argues that the forms are
not, and should not be, considered ratemaking documents to be used for
ratemaking purposes.
Commission Determination
    34. In this Final Rule, as we explain below, we adopt the NOPR
proposal that Form 1 filers should provide explanatory information when
formula rate inputs differ from Form 1 reported amounts.\23\ That is,
with regard to formula rates for which no informational filings are
required to be regularly submitted to this Commission, we revise the
Form 1 to require that, if the formula rate relies on Form 1 data and
if the input amounts to that formula rate differ from what is shown in
the Form 1, the filer must provide a narrative explaining the reason
for the difference. The explanation must be provided in a footnote on
the same page, line and column where the specific data is reported.
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    \23\ Other than comprehensive formula rates, the Commission's
regulations provide for automatic adjustment of only those costs
specified in section 35.14 of our regulations (fuel adjustment
clause). See Public Service Company of Oklahoma, 40 FERC ] 61,215,
at 61,733 (1987).
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    35. As described above, EEI states that companies which provide
service under formula rates should make additional information
available if requested by customers, on an as-needed basis, if such
information is not already being provided in the informational filings.
EEI recommends that the Commission adopt an alternative policy, under
which companies using formula rates would provide information to
customers about rate inputs, including underlying costs and cost
increases, in sufficient detail to enable the customers to understand
any deviations to the inputs used in calculating the formula rates.
    36. With respect to EEI's requests for various clarifications, we
adopt portions of EEI's recommendations as follows. Consistent with the
NOPR proposal we limit the footnoting requirement so that it will only
apply to utilities with formula rates that do not make regular (i.e.,
at least annual) informational filings of cost data with the Commission
pursuant to the requirements of their formula rates (or for example,
pursuant to the requirements of a Commission-approved settlement or a
Commission directive). We believe it is unnecessary to require
companies that are required to make regular informational filings to
include a footnote in Form 1 because any difference from any Form 1
inputs used in formula rates should already be described in sufficient
detail in their informational filings.\24\
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    \24\ Thus, utilities that are required to make regular
informational filings by their formula rates, a Commission-approved
settlement, or other Commission order need not provide footnotes.
These filers must nevertheless complete the new schedule provided in
page 106.
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    37. In addition, EEI requests clarification of the treatment of
formula rates accepted under our MBR policies. We clarify that a rate
is subject to the footnoting requirement if it relies on Form 1 data
and is on file with the Commission. Such rates may be featured in
tariffs of general applicability or individual rate schedules.\25\ We
further adopt EEI's suggestion that, if companies have formula rates
but do not make such informational filings with the Commission, they
must maintain sufficient records that explain the changes made to those
inputs \26\ (and, of course, must adhere to the approved formula rate
tariffs on file) and provide that information to the Commission, state
commissions and affected customers on request. Furthermore, we clarify
that if customers have audit rights under a formula rate, a footnote is
still required, so that utilities can describe how the rate was derived
(as described herein).
---------------------------------------------------------------------------

    \25\ We clarify that we do not seek the explanatory information
for fuel adjustment clauses, which are governed by separate policies
established in the Commission's regulations and which typically
would not reference Form 1. See 18 CFR 35.14.
    \26\ This recordkeeping requirement is in addition to any other
Commission recordkeeping requirement, see, e.g., 18 CFR Parts 101,
125, including the footnoting requirement adopted in this Final
Rule.
---------------------------------------------------------------------------

    38. With respect to EEI's request that the Commission specify that
footnote information that cannot be added before Form 1 is filed may be
added at the next reporting cycle, we clarify that if the necessary
information is not available at the time for filing (given that Form 1
is an annual report), the utility must provide the information in its
next Form 1 filing.
    39. As stated in the NOPR, we do not propose to convert the Form 1
filing process into a rate proceeding. As noted by several commenters,
Form 1 is an historical financial reporting document. However, Form 1
provides cost and revenue data that aids in evaluating the justness and
reasonableness of rates in a ratemaking proceeding, and Form 1 serves
as a ready source of public information to assess on an ongoing basis
the justness and reasonableness of utility rates. In particular, for a
formula rate, Form 1 identifies costs that result in annual
fluctuations in rates as costs rise and fall. Thus, Form 1 plays an
important role in the Commission's rate review process.
    40. A key component of this rate review process is the transparency
provided by requiring utilities to make information on costs underlying
rates publicly available. This cost information is, in turn, used by
the Commission, state commissions, and customers to review and monitor
a utility's rates, which, as appropriate, may ultimately result in an
investigation or a complaint proceeding. Thus, Form 1 is a valuable
tool. Commenters' attempts to establish a bright line between financial
reporting

and rate making are insufficient for the Commission to withdraw its
proposals to seek information that will assist the Commission in
carrying out its statutory obligations to ensure that rates are just
and reasonable, and to assist others--including customers--with
monitoring rates charged.
    41. The NOPR did not propose to revise the Commission's USofA
accounting requirements to track specific costs or cost estimates for
future projects as suggested by TAPS and the Michigan Commission.
Therefore, we will not adopt proposals to track additional costs that
would require changes to the Commission's accounting requirements.
    42. In response to APPA's comments concerning how Commission staff
will determine whether a utility is subject to a regular informational
filing requirement for its formula rate, we note that the existence of
such a filing requirement is a matter of public record for each formula
rate. That is, the requirement that a utility make a regular
informational filing describing the information that will be used to
populate the formula rate is typically established in the rate
proceeding accepting the formula rate. If an interested entity believes
that a utility has failed to include the required footnotes, or that a
utility has not responded in a timely manner to a request for an
explanation of the applicable formula rate and the inputs to that rate,
it should discuss the matter with the utility and, if not satisfied,
may, among other things, notify the Commission through our enforcement
Hotline and the Commission's Office of Enforcement will take
appropriate action.
    43. Based on the record in this proceeding, the Commission does not
anticipate that this reporting requirement will be unduly burdensome
because the information is already available and can be transposed to a
footnote.
    44. Several filing utilities request the Commission to clarify the
scope of the formula rate footnoting requirement. Initially, as noted
above, the Commission clarifies that a filing company should footnote
differences from Form 1 data in formula rates that are on file with
this Commission and that rely on Form 1 data, and that such rates may
be featured in tariffs of general applicability or individual rate
schedules.\27\ The Commission also clarifies that it is not necessary
to provide a detailed reconciliation. The Commission anticipates that
the footnotes would contain a simple narrative explaining how the
``rate'' (or billing) was derived if different from the reported amount
in the Form 1. For instance, differences could be due to: (i)
Application of a percent allocation factor for gross transmission plant
that is OATT related; (ii) excluding particular items such as step-up
transformer investment; (iii) deducting amounts for transmission for
others from total transmission expenses or applying an OATT
transmission factor; or (iv) excluding particular cost items from
administrative and general expenses or application of an OATT labor
factor. This list is not exhaustive, we caution, but is strictly for
illustration purposes; the Commission anticipates that similar issues
would be footnoted in Form 1. The description should describe the
difference, including any reference to a Commission proceeding
approving the difference. Such an explanation should be sufficient to
alert interested parties of the deviation and to permit them to
estimate and evaluate the impact of the departure on rates.\28\ In this
fashion, interested entities should be able to, with reasonable
accuracy, monitor rates in light of current costs and available
financial data.
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    \27\ As noted above, we do not seek the explanatory information
for fuel adjustment clauses, which are governed by separate polices
under the Commission's regulations and typically do not reference
Form 1. See 18 CFR 35.14.
    \28\ The information contained in a formula rate footnote (as
for any Form 1 footnote) should be specific to the data provided in
the form, and not simply transferred from consolidated financial
statements that may reflect different assumptions and reporting
requirements.
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    45. In response to suggestions that formula rate information be
centralized, a new schedule (page 106) will be incorporated in Form 1
on which filers will (1) indicate whether they have formula rates; (2)
provide details about the formula rates; (3) indicate whether the filer
makes regular informational filings and the location of the filings
(e.g., accession numbers) on the Commission's eLibrary Web site; and
(4) summarize, if required,\29\ the differences between the Form 1
amounts and any amounts included in a formula rate as described
above.\30\
---------------------------------------------------------------------------

    \29\ Whether or not a public utility or licensee must provide
this information is addressed above.
    \30\ Revised Form 1 pages affected by this Final Rule are
provided in Appendix A.
---------------------------------------------------------------------------

    46. AEP is concerned that reporting may be difficult because of the
number and variety of rate schedules and tariffs that may be covered by
this requirement. As stated above, we do not anticipate that this
requirement need rise to the level of an accounting reconciliation; a
narrative description (with reference to a rate proceeding adopting the
difference) may suffice.
    47. In addition, a utility is not precluded from filing
modifications to its formula rates to make cost references consistent
with Form 1 reporting requirements as they are updated.\31\
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    \31\ The Commission reiterates that utilities that are required
to make regular informational filings by their formula rates, a
Commission-approved settlement, or other Commission requirement
(e.g., a Commission requirement imposed as a condition of acceptance
of the formula rates) need not provide footnotes. These filers must
nevertheless complete the new schedule provided in page 106.
---------------------------------------------------------------------------

    48. In response to BPA and the Michigan Commission, we clarify that
this Final Rule does not change our policies with respect to the burden
of proof associated with challenges to previously approved formula
rates under section 206.\32\ Form 1 is not filed pursuant to sections
205 or 206 of the FPA and, therefore, its submittal will not initiate a
rate proceeding or investigation. A rate proceeding is initiated by a
rate filing under section 205, or an investigation initiated either in
response to a complaint or pursuant to a notice of Commission
investigation under section 206. Additional information to assess
jurisdictional rates may be requested from the utility or sought
through discovery in an appropriate proceeding; the Commission's
actions here do not, for example, affect the scope of discovery in
litigated proceedings.
---------------------------------------------------------------------------

    \32\ See Order No. 710 at P 12 (noting that despite changes made
to gas reporting forms, a party filing a complaint has the burden to
show why the information in the Commission's financial forms
supports an allegation that the existing rates are not just and
reasonable, and that the changes adopted in Order No. 710 do not
limit an entity's rights under governing law and the Commission's
regulations, nor change the Commission's obligation to rule on
complaints, petitions, or other requests for relief based on a full
record and substantial evidence).
---------------------------------------------------------------------------

    49. In addition, we reject TAPS' proposals to change the
Commission's accounting as beyond the scope of this proceeding, which
relates to reporting requirements for the various accounts defined by
the USofA, and we reject the Nevada Companies' proposal to revise our
OASIS Web site posting requirements; both should be addressed in more
appropriate proceedings reviewing the Commission's accounting and OASIS
regulations.
    50. With respect to the Michigan Commission's suggestion that the
Commission initiate an inquiry into the Commission's formula rate
policies and whether formula rates can shield future utility investment
decisions from review, the Commission declines to initiate such an
investigation. The NOPR rejected calls for reporting

information on future transmission investments, stating that Form 1 is
intended to provide information on a utility's financial activities for
the reporting year, but does not include projections of future
costs.\33\ Comments filed in response to the NOPR have not persuaded us
to change our views. Should an entity desire to question the prudence
of a utility's transmission investment decisions, it may file a
complaint with the Commission.\34\
---------------------------------------------------------------------------

    \33\ NOPR at P 54.
    \34\ Preventing Undue Discrimination and Preference in
Transmission Service, Order No. 890, 72 FR 12,266 (March 15, 2007),
FERC Stats. & Regs. ] 31,241 at P 435 (2007), order on reh'g, Order
No. 890-A, 73 FR 2984 (Jan. 16, 2008), FERC Stats. & Regs. ] 31,261
(2007), order on reh'g, Order No. 890-B, 123 FERC ] 61,299 (2008).
---------------------------------------------------------------------------

2. Filing Thresholds for Form 1
    51. The NOPR proposed to eliminate the filing requirement for
utilities that are not subject to the Commission's jurisdiction because
they are not public utilities under Part II of the FPA, but make sales
that meet or exceed the threshold for meeting the Commission's Forms 1
and 3-Q reporting requirements.\35\ The NOPR also sought comment on
whether to revise the definitions for major and nonmajor utilities,
inviting specific suggestions for how this might be done with
justifications for proposed thresholds.\36\ The NOPR mentioned that the
Commission was aware of five non-jurisdictional utilities that
otherwise met or exceeded the threshold for reporting: Alaska Electric
and Power Co.; CenterPoint Energy Houston Electric, LLC; Hawaii
Electric Light Co., Inc.; Hawaiian Electric Co., Inc.; and Maui
Electric Co., Ltd.
---------------------------------------------------------------------------

    \35\ NOPR at P 50.
    \36\ Id. P 48.
---------------------------------------------------------------------------

    52. The NOPR cited an order where the Commission recently granted
waiver of the financial form filing requirements under such
circumstances. In Morenci Water and Electric Co., the Commission
granted a waiver from the requirement of Sec. Sec.  141.1 and 141.400
of the Commission's regulations that utilities who are not public
utilities under Part II of the FPA but who otherwise meet the threshold
filing requirements for Forms 1, 1-F and 3-Q must comply with the
reporting requirements established in the regulations.\37\
---------------------------------------------------------------------------

    \37\ Morenci Water and Electric Co., 121 FERC ] 61,024 (2007).
---------------------------------------------------------------------------

Comments
    53. No commenter objected to these proposals. International
Transmission proposes, however, that non-major electric utilities and
non-jurisdictional utilities that belong to a joint rate zone be
required to file Form 1 and that, for purposes of the filing
thresholds, all of the electric utilities in a joint rate zone should
be deemed major electric utilities. International Transmission thus
proposes that, in addition to the numerical filing thresholds, the
General Instructions to Part 101 be revised to require that: (1)
Nonmajor electric utilities in joint rate zones with major electric
utilities be required to file Form 1; and (2) non-jurisdictional
utilities in joint rate zones with jurisdictional public utilities also
be required to file Form 1.
Commission Determination
    54. In this Final Rule we are removing the words ``whether or not
the jurisdiction of the Commission is otherwise involved'' from
Sec. Sec.  141.1(b) and 141.400(b), which establish the filing
requirements for Form 1 and Form 3-Q, respectively. With this change,
companies that are not subject to the Commission's jurisdiction because
they are not public utilities (or licensees) need no longer file Form 1
or 3-Q. If a company is concerned that it may still fall within the
revised requirements of Sec. Sec.  141.1(b) or 141.400(b), but
nevertheless should be exempted from filing Forms 1 and 3-Q, it may
continue to seek an individual waiver from the Commission. No
commenter, we add, objected to the proposal to cease requiring filing
by companies that do not otherwise fall under the Commission's
jurisdiction, but meet the minimum filing requirements found in
Sec. Sec.  141.1 and 141.400 of the Commission's regulations.
    55. The Commission rejects International Transmission's proposal to
revise the definitions that distinguish major and nonmajor utilities,
to require utilities that participate in joint rate zones with major
utilities to also file Form 1. International Transmission's proposal
expands the reporting requirement so that it would apply to non-
jurisdictional entities and also would require small utilities to file
Form 1, regardless of the reporting threshold. International
Transmission's proposal would unreasonably increase the reporting
burdens on small utilities. Therefore, we reject the proposal.
3. Affiliate Transactions
    56. To provide further transparency and improve the detection of
cross-subsidization, the NOPR proposed to add a new schedule and page
429, ``Transactions with Associated (Affiliated) Companies,'' providing
information concerning affiliate transactions. The NOPR proposed that
filers would report the following: (1) A description of the good or
service charged or credited; (2) the name of the associated
(affiliated) company; (3) the USofA account charged or credited; and
(4) the amount charged or credited.\38\
---------------------------------------------------------------------------

    \38\ NOPR at P 51-52.
---------------------------------------------------------------------------

Comments
    57. Several commenters support the proposal,\39\ and some include
proposals to expand the reporting requirement.\40\ Others object to the
affiliate transaction reporting requirement \41\ or argue that such a
requirement would be duplicative of other reporting obligations,
unnecessary and burdensome.\42\
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    \39\ APPA and Michigan Commission comments.
    \40\ International Transmission, and SDG&E comments.
    \41\ See AEP, EEI, MidAmerican, and Nevada Companies comments.
    \42\ FirstEnergy and Duke comments.
---------------------------------------------------------------------------

    58. APPA supports the Commission's proposal to add the new schedule
to collect information on affiliate transactions. The Michigan
Commission states that detailed descriptions of costs allocated to
jurisdictional operations from affiliates are essential to detect
cross-subsidization. It also requests clarification whether the
Commission intends that an allocation for common facilities that are
billed to one or more affiliates be reported as an affiliate
transaction. The Michigan Commission requests that the Commission
require additional detail, consisting of a description of all
allocation factors used by the utility and its affiliates and an
explanation of how ``direct'' and ``common'' costs are defined and
implemented.
    59. Nevada Companies states that affiliate transactions should be
reported by type of service provided and goods transferred. The Nevada
Companies note that reporting amounts by types of services provided
would link this report to master service agreements entered into by
many affiliated companies. They also request a definition of good or
service.
    60. SDG&E recommends that the Commission clarify that the affiliate
transaction information required to be provided is limited to
transactions between a jurisdictional utility and its affiliates and
does not include transactions solely between or among the affiliates.
    61. Nevada Companies requests that affiliate transaction
information only be reported annually for companies that prepare
similar information to fulfill state requirements, suggesting the
proposed reporting requirement could be met by state oversight. AEP
objects to an affiliate transaction reporting

requirement and suggests that the issue is a state regulatory
matter.\43\
---------------------------------------------------------------------------

    \43\ See also Nevada Companies comments.
---------------------------------------------------------------------------

    62. Duke requests that the Commission clarify that the new page 429
is not intended to require the reporting of affiliate transactions
between the electric utility and centralized service companies, as this
information is already reported in FERC Form No. 60 (Form 60).
FirstEnergy states that the new page would result in a duplication of
effort since the same information is already reported to the Commission
in other FERC forms, including the Form 60, and other places in Form 1,
such as page 332, Transmission of Electricity by Others and pages 326-
327, Purchased Power. At a minimum, FirstEnergy requests that a set of
parameters be established for reporting the information requested, and
suggests filers be permitted to report the information by general
category rather than by individual transactions.
    63. MidAmerican objects to detailed reporting of each affiliate
transaction as unnecessarily burdensome and states that the information
is already being provided in other publicly available documents.
MidAmerican requests that the Commission limit any affiliate
transaction reporting requirement and (1) establish an aggregate annual
transaction reporting threshold of the greater of (a) $250,000 per
affiliate or (b) one one-hundredth of one percent (.01%) of the
electric utility's operating revenues \44\ and (2) exempt transactions
based on regulator-approved tariffs.\45\ The Nevada Companies request
that $100,000 be set as a reasonable minimum amount to report the
transfer of a good, or an aggregate amount of service.
---------------------------------------------------------------------------

    \44\ SDG&E also supports a $250,000 reporting threshold for
affiliate transactions.
    \45\ In particular, MidAmerican notes that it is bound to serve
affiliates due to its provision of service to 2.5 million retail
customers. MidAmerican argues that provision of service in
accordance with a state-regulator-approved tariff precludes the
opportunity for cross-subsidization or preferential service.
MidAmerican states that the same holds true where MidAmerican
purchases tariff services from an affiliate of its parent (Berkshire
Hathaway).
---------------------------------------------------------------------------

    64. EEI states that the affiliate transaction reporting proposal is
inconsistent with the Commission's decisions in Orders No. 707 and 708
not to require additional reporting.\46\ International Transmission and
Nevada Companies object to an affiliate reporting requirement that
would apply to transactions between regulated public utilities.
International Transmission cites the Commission's proposal that page
429 is to ``provide further transparency and improve the detection of
cross-subsidization.'' \47\ International Transmission states that a
broad, one-size-fits-all requirement that includes reporting of
transactions between affiliated regulated public utilities would not
produce useful information for detecting improper cross-subsidization
for the benefit of non-utility affiliates. International Transmission
argues that the regulated affiliates' Form 1 filings already provide
ample transparency and that the affiliate transaction reporting
requirement is therefore not necessary for affiliate transactions
between regulated public utilities.
---------------------------------------------------------------------------

    \46\ Cross-Subsidization Restrictions on Affiliate Transactions,
Order No. 707, 73 FR 11013 (Feb. 29, 2008), FERC Stats. & Regs. ]
31,264, order on reh'g, Order No. 707-A, 73 FR 43072 (Jul. 24,
2008), FERC Stats. & Regs. ] 31,272 (2008); Blanket Authorization
Under FPA Section 203, Order No. 708, 73 FR 11003 (Feb. 29, 2008),
FERC Stats. & Regs. ] 31,265, order on reh'g, Order No. 708-A, 73 FR
43066 (Jul. 24, 2008), FERC Stats. & Regs. ] 31,273 (2008).
    \47\ Citing NOPR at P 52.
---------------------------------------------------------------------------

Commission Determination
    65. Consistent with our natural gas reporting requirements
established in Order No. 710, we will adopt the NOPR proposal and
incorporate new page 429, Transactions with Associated (Affiliated)
Companies. Consistent with the reporting threshold established in Order
No. 710, the schedule instructions incorporate a $250,000 threshold for
reporting individual transactions. While some commenters suggested
alternative thresholds, we find that the threshold we adopt here
reasonably balances the burden while still reporting needed
information. Therefore, we will not adopt the suggested alternative
proposals.
    66. In response to requests that the Commission specify the
affiliated or associated company transactions to which new page 429
applies, we clarify that the schedule applies to all affiliated/
associated company non-power goods and services transactions including
those with other regulated public utilities, centralized and other
service companies, and other affiliated or associated companies
providing non-power goods and services to the respondent or receiving
non-power goods or services from the respondent. However, we also
clarify that page 429 does not apply to transactions between affiliate
or associate companies that do not include the respondent utility.
    67. We disagree with EEI that the ``affiliate transaction reporting
proposal is inconsistent with the Commission's decisions in Orders No.
707 and 708 not to require additional reporting.'' We note that,
although Order No. 707 did not adopt a reporting requirement, at the
same time the NOPR in this proceeding alerted interested persons that
the Commission was separately proposing the additional affiliate
transaction reporting requirements that are adopted in this Final Rule.
Order No. 707 was intended to update our rate filing regulations to
reflect our expanded authority following the repeal of the Public
Utility Holding Company Act of 1935 (PUHCA 1935).\48\ In Order No. 707,
the Commission codified in its rate regulations \49\ restrictions on
affiliate transactions between franchised public utilities that have
captive customers or that own or provide transmission service over
jurisdictional transmission facilities, on the one hand, and their
market-regulated power sales affiliates or non-utility affiliates, on
the other. Order No. 707 addressed both power and non-power goods and
services transactions between the utility and its affiliates and
specifically power sales affiliates. This proceeding provides expanded
affiliate/associate transaction reporting to facilitate monitoring
affiliate/associate non-power goods and services transactions as part
of a comprehensive proceeding to update our reporting requirements.
Thus, while Order No. 707 did not expand reporting to implement the
revised rate filing regulations adopted in the wake of the repeal of
PUHCA 1935, this proceeding is based on the need for data to monitor on
an ongoing basis utility rates to ensure that they remain just and
reasonable. On the basis of the record in this proceeding, we find that
the additional reporting requirement adopted here is appropriate
because it will assist the Commission and the public in monitoring a
utility's rates.
---------------------------------------------------------------------------

    \48\ 15 U.S.C. 79a, et seq.
    \49\ 18 CFR Part 35.
---------------------------------------------------------------------------

    68. Order No. 708 adopted a blanket authorization permitting
certain dispositions under section 203, such as the disposition of less
than 10 percent of public utility voting securities to a holding
company that does not thereby exceed certain voting interest
thresholds. The requirements in Order No. 708 to report security
dispositions made pursuant to blanket authorizations were designed to
implement the new authorizations. Order No. 708 does not establish
general reporting requirements or policies and the requirements
established there are not relevant to the proposal adopted in this
Final Rule.
    69. The Form 60 requirements are limited to total direct costs,
total indirect costs and total costs of goods and services provided to
each associate company by centralized service

companies. The new reporting requirement provides more detailed
information (in the form of individual transactions) about non-power
goods and services provided by utilities to other affiliated/associated
companies and non-power goods and services provided by affiliated/
associated companies to utilities which is lacking in the Form 60
requirements. While the proposed Form 1 information requirement might
be part of the total reported in Form 60, at least for transactions
where centralized service companies provide non-power goods and
services to the respondent utility, it is not duplicative. As compared
to the other information in Form 1, we clarify that the new
requirements apply only to non-power goods and services and thus do not
apply to power sales. Therefore, we find that the new reporting
requirements have not been shown to be duplicative of other
requirements.
    70. The Michigan Commission requests clarification whether the
Commission intends that an allocation of common facilities that are
billed to one or more affiliates be reported as an associate/affiliate
transaction. We clarify that apportionment of costs of a common
facility should be reflected on page 429. Some examples of items that
could be reported as an associate/affiliate transaction include the
amount of rent or property apportioned to a utility for a common
building; the apportioned cost of a computer network along with costs
to maintain such network, the apportioned cost of a garage used to
house common trucks; the apportioned cost of phone networks and other
phone costs. The allocation should also be disclosed as required in
Instruction 3 of page 429 which requires the basis of the allocation.
    71. Nevada Companies requests that affiliate transaction
information need only be reported annually for companies that prepare
similar information to fulfill state requirements, suggesting the
proposed reporting requirement could be met by state oversight. AEP
objects to an affiliate transaction reporting requirement and suggests
that the issue is a state regulatory matter. We disagree that this
information is a state regulatory matter; the information is needed for
monitoring Commission-jurisdictional rates. Also, more generally, not
all states provide oversight. Furthermore, as noted above, this action
is consistent with the Commission's adoption of a similar requirement
for natural gas companies in Order No. 710.
    72. International Transmission asserts that a broad, one-size-fits-
all requirement that includes reporting of transactions between
affiliated, regulated public utilities would not produce useful
information for detecting improper cross-subsidization for the benefit
of non-utility affiliates. While the Commission appreciates that
additional requirements may be useful to address concerns in particular
cases, the Commission believes that the reporting requirement adopted
here will provide useful information and will aid in detecting improper
cross-subsidization.
    73. We clarify, for purposes of page 429, that by ``goods'' we mean
any goods, equipment (including machinery), materials, supplies,
appliances, or similar property (including coal, oil, or steam, but not
including electric energy, natural or manufactured gas, or utility
assets) which is sold, leased, or furnished, for a charge. Similarly,
for purposes of page 429, by ``service,'' we mean any managerial,
financial, legal, engineering, purchasing, marketing, auditing,
statistical, advertising, publicity, tax, research, or any other
service (including supervision or negotiation of construction or of
sales), information or data, which is sold or furnished for a
charge.\50\ These definitions should address the concerns of commenters
who are uncertain whether a particular charge or arrangement need be
reported as an affiliate transaction.
---------------------------------------------------------------------------

    \50\ See 18 CFR 366.1; 18 CFR 367.1(a)(20) and (44); Repeal of
the Public Utility Holding Company Act of 1935 and Enactment of the
Public Utility Holding Company Act of 2005, Order No. 667, FERC
Stats. & Regs. ] 31,197 (2005), order on reh'g, Order No. 667-A,
FERC Stats. & Regs. ] 31,213, order on reh'g, Order No. 667-B, FERC
Stats. & Regs. ] 31,224 (2006), order on reh'g, Order No. 667-C, 118
FERC ] 61,133 (2007) (incorporating definitions from Securities and
Exchange Commission, Public Utility Holding Company Act of 1935
Release No. 125 (1936) (codified at 17 CFR 250.80)).
---------------------------------------------------------------------------

4. CPA Certification for a Non-Calendar Fiscal Year
    74. The NOPR noted that, although Form 1 is filed on a calendar
year basis, some reporting companies operate on a non-calendar fiscal
year. In response to comments describing the burden to prepare two sets
of audited statements faced by companies that do not use a calendar
fiscal year, the NOPR proposed to eliminate the burden by requiring
public utilities using non-calendar fiscal years to continue to file
annual reports each April, and file a certified set of financial
statements following the end of the fiscal year.\51\ The second,
certified set of financial statements is to be independently audited
and accompanied by a certified public accountant (CPA) certification as
required by the Commission's regulations.\52\ This revision will permit
non-calendar year public utilities to avoid duplicative audits.
---------------------------------------------------------------------------

    \51\ NOPR at P 56.
    \52\ 18 CFR 41.11.
---------------------------------------------------------------------------

    75. This approach is consistent with the Commission's existing
practice; i.e., the Commission's historical practice of granting
individual requests for waiver of the CPA certification requirement for
Forms 1 and 1-F filers so long as the certification accompanies the
fiscal year-end financial information filed after the annual Form 1 or
1-F is submitted.\53\
---------------------------------------------------------------------------

    \53\ See, e.g., PacifiCorp, Docket Nos. AC00-20-000 and AC00-20-
001 (Apr. 14, 2000) (unpublished letter order).
---------------------------------------------------------------------------

Comments
    76. No commenter objects to the proposal. EEI encourages the
Commission to clarify that, with adoption of the NOPR's proposed
amendment to 18 CFR 41.11, companies will no longer need to seek a
waiver, or if a company must continue to seek a waiver they need do so
only once and the waiver would then apply in perpetuity barring a
subsequent filing by the company or notice by the Commission.
Commission Determination
    77. We adopt the NOPR proposal to revise Sec.  41.11 to accommodate
filing parties who follow accounting and reporting practices under
which their fiscal year does not match the calendar year. Companies
seeking waiver of the calendar-year independent accountant
certification requirement must request authority to file the
independent accountant certification based on their fiscal year
information. Once the request is granted, however, we will not require
the company to annually renew the request. Instead, the company must
annually notify the Commission in writing at the time that it files its
initial annual report that it will continue to file the certification
based on fiscal year information (or is returning to a calendar year
reporting). The certification for fiscal year companies must be filed
no later than 150 days after the end of their fiscal year which is a
period comparable to calendar year filers.
5. ``Other Revenues'' (Pages 300-301)
    78. The NOPR proposed to expand the reporting of ``Other Revenue''
data referenced in pages 300 and 301 to enable the Commission and the
forms' users to achieve a meaningful understanding of the nature of the
business activities from which the

revenues are derived.\54\ Greater detail concerning these revenue
accounts could provide data that would enable the Commission and
utility customers to identify revenues received by the filing companies
and to understand how these transactions may affect the companies' cost
of service. To that end, the NOPR proposed to revise the instructions
on page 300 to require that details of items included in Other Revenues
be reported in a footnote to pages 300-301.
---------------------------------------------------------------------------

    \54\ NOPR at P 57. NOI commenters coined the phrase ``Other
Revenue'' to refer to the unspecified revenues referenced on pages
300 and 301. In response to comments on the NOPR proposal, the scope
of the Other Revenue reporting requirement is more precisely defined
in the discussion below.
---------------------------------------------------------------------------

    79. Page 300 itemizes total electric operating revenues, composed
of various types of sales of electricity (consisting of accounts 440-
449), less provision for rate refunds, in addition to Other Operating
Revenue. The data provided on page 300 on Other Operating Revenue
includes accounts 450 (forfeited discounts), 451 (miscellaneous service
revenues) and 453-457.2 (including water and water power sales, rents,
other electric revenues, regional control service revenues and
miscellaneous revenues). Because Form 1 contains only a cumulative
total for the reporting year of the various Other Revenues, the NOPR
proposed that filers include a detailed breakdown of the various
sources of other revenues in a footnote to page 300 for any revenues
not otherwise specified on pages 328-330, Transmission of Electricity
for Others (including transactions referred to as ``wheeling'').
    80. Form 1 reports Total Other Operating Revenues (page 300, line
26), which include Revenues from Transmission of Electricity for Others
(page 300, line 22, account 456.1). The details of account 456.1 are
reported on pages 328-330, (Transmission of Electricity for Others
(including transactions referred to as ``wheeling'')). The NOPR
proposed two changes and requested comment. First, the NOPR proposed to
revise the instructions on page 300 to require that for any revenues
reported on line 26, excluding amounts reported on line 22, the filer
must in a footnote report details on the other line items to page
300.\55\ Second, the NOPR asked for specific comment on a New York
Commission proposal to clarify the instructions on pages 300-301 to
indicate that delivery-only revenues shall be recorded as Other
Electric Revenues (Account 456), while sales of electricity shall be
recorded on a full-service basis (Accounts 440 through 448), to reflect
that the USofA does not unbundle electric operating revenues.\56\
---------------------------------------------------------------------------

    \55\ Id.
    \56\ The New York Commission proposal is provided as line item
36 of Appendix B (corresponding to Appendix C of the NOPR).
---------------------------------------------------------------------------

Comments
    81. The New York Commission supports the proposal, stating that the
Commission should require electric utilities to report other income and
other income deductions in order to assess whether rates are just and
reasonable. The Michigan Commission also supports the proposal,
describing Form 1 as currently reporting a cumulative total for only
two broad categories of revenue: ``Revenue from Transmission of
Electricity for Others'' and ``Other Electric Revenues.'' The Michigan
Commission requests that the Commission require filers to provide
additional details, i.e., revenue for wholesale distribution, retail
distribution, opportunity sales, and retail sales (with a breakout of
bundled and customer choice sales); breakouts by state jurisdiction and
rate schedule; and reporting of the value of ``unbilled sales.'' The
Michigan Commission also requests that the Commission require a
breakout of ``Revenue from Transmission for Others'' by rate schedule.
    82. Nevada Companies suggest $500,000 as a reasonable minimum
threshold for reporting Other Revenues and also suggests, as with
affiliate transactions, that the items be reported by category and not
by transaction.
    83. EEI requests that the Commission clarify that the requirement
for additional details on page 300 applies only to FERC account 456,
Other Electric Operating Revenues, and specify whether the requirement
applies to account 457.2, Miscellaneous Revenues used by RTOs and ISOs.
EEI requests that the Commission establish a threshold of $500,000 or
10 percent of the balance in the FERC account, whichever is greater.
    84. Duke is opposed to the Commission's proposal to add a footnote
to page 300 in order to provide users with additional detail related to
all Other Revenues not otherwise specified on pages 328-330, arguing
that the benefit from the proposed requirement is outweighed by the
additional burden placed on filers. Duke proposes that any breakout
requirement should only apply to the two accounts that are truly
``miscellaneous'' in nature, account 451, Miscellaneous Service
Revenues, and account 456, Other Electric Operating Revenues, and
should only require categorization of the types of charges included in
these two accounts.
    85. FirstEnergy objects to the New York Commission's proposed
revision. FirstEnergy generally notes that reporting practices should
follow accounting practices. If, however, the Commission is proposing a
change in accounting practice, FirstEnergy submits that this proceeding
is not the appropriate forum to propose such a change, which should be
addressed in a separate rulemaking preceding that does not relate
solely to proposals on reporting requirements.
    86. APPA supports the proposal to clarify the pages 300-301
instructions to distinguish unbundled, delivery-only transactions from
the remainder of the transactions and provide consistency in filer
data. Cogentrix supports the New York Commission proposal that
delivery-only revenues be recorded in Other Electric Revenues (account
456), while sales of electricity (including bundled sales) be recorded
in accounts 440 through 448.
Commission Determination
    87. In this Final Rule, we adopt the NOPR proposals to revise the
instructions on pages 300 and 301. Several commenters requested
clarifications to the scope of the additional reporting requirement for
Other Revenues. In response, we clarify that a filing company shall
provide in a footnote information on ``any revenues'' not otherwise
specified in the breakdowns of Other Revenues provided on page 300 or
on pages 328-330.\57\ The Commission clarifies that the information
provided on these pages should be comprehensive, meaning that any and
all revenues should be described for each source of income in the same
degree of detail as for the specific items for which a breakout is
already required. For example account 456, Other Electric Revenues
would include, among other items, commission on sale or distribution of
electricity of others when sold under rates filed by such others;
compensation for minor or incidental services provided for others such
as customer billing, engineering,

etc.; profit or loss on sale of material; and supplies not ordinarily
purchased for resale and not handled through merchandising and jobbing
accounts. The Commission anticipates that the additional information
should provide details on the amounts included in the general accounts
(account 451, Miscellaneous Service Revenues, line 17 of page 300;
account 456, Other Electric Revenues, line 21; and account 457.2,
Miscellaneous Revenues, line 24) and that such reporting, along with
the detail on page 300, should account for all sources of the filing
company's other revenue.
---------------------------------------------------------------------------

    \57\ Page 300 already tracks various specific sources of other
revenue, including Forfeited Discounts (account 450), Sales of Water
and Water Power (account 453), Rent from Electric Property (account
454), Interdepartmental Rents (account 455), Revenues from
Transmission of Electricity of Others (account 456.1) and Regional
Control Service Revenues (account 457.1). These accounts are not
subject to the additional reporting requirement (or the $250,000
reporting threshold). Page 300 also incorporates three general
accounts, Miscellaneous Service Revenues (account 451), Other
Electric Revenues (account 456), and Miscellaneous Revenues (account
457.2).
---------------------------------------------------------------------------

    88. In the NOPR, the Commission did not propose a threshold for
disclosing ``Other Revenues.'' Nevada Companies suggest $500,000 as a
reasonable minimum threshold guideline for reporting Other Revenues.
EEI requests that the Commission establish a threshold of $500,000 or
10% of the balance in the USofA account, whichever is greater.
Consistent with the statements the Commission made in Order No. 710-A
when adopting the threshold amounts for grouping natural gas items, we
find that the absence of a minimum threshold could add a substantial
burden to the forms' filers.\58\ We find that an alternative threshold
of $250,000 is reasonable and not unduly burdensome, and will,
nevertheless, provide meaningful data to this Commission, state
commissions, and customers. We also note that the threshold here is
consistent with that used in FERC Form No. 2 (Form 2). In keeping with
this analysis, the Commission adopts a minimum threshold of $250,000
per source of income, consistent with the amounts reported on page 308
of Form 2, which reports other operating revenues.
---------------------------------------------------------------------------

    \58\ See Order No. 710-A at P 7.
---------------------------------------------------------------------------

    89. The Michigan Commission requests that the Commission require
filers to provide additional breakouts of revenue for wholesale
distribution, retail distribution, opportunity sales, and retail sales
(with a breakout of bundled and customer choice sales); breakouts by
state jurisdiction and rate schedule; and reporting of the value of
``unbilled sales.'' Michigan Commission also requests that the
Commission require a breakout of ``Revenue from Transmission for
Others'' by rate schedule. The requests by Michigan Commission would
require changes to the Commission's accounting requirements. We are not
prepared to, and did not propose in the NOPR to, revise our accounting
requirements at this time; the Michigan Commission proposals are beyond
the scope of our original proposal and so we decline to adopt them at
this time.
    90. With regard to commenters' suggestions that a delivery-only
transaction be separately disclosed, rather than included in electric
sales (accounts 440-447), such an accounting requirement would require
revision to the USofA, which is beyond the scope of this proceeding and
which we decline to do at this time. Therefore, we will not require
companies to separate out delivery-only transactions in their Form 1.
6. Increases to Threshold Reporting Levels
    91. The NOPR found that it is reasonable to increase certain
threshold levels for reporting specific cost items and invited comment.
Specifically, the NOPR proposed to increase the threshold reporting
levels for (i) page 216 (Construction Work in Progress) to $1 million,
(ii) pages 232, 233 and 278 (Other Regulatory Assets, Miscellaneous
Deferred Debits and Other Regulatory Liabilities) to group items
featuring an aggregate outstanding balance of $100,000 or less, (iii)
page 269 (Other Deferred Credits) to $100,000, and (iv) pages 352 and
353 (Research and Development) to $50,000.\59\
---------------------------------------------------------------------------

    \59\ NOPR at P 60.
---------------------------------------------------------------------------

Comments
    92. Several commenters support the proposals to increase the
threshold reporting levels.\60\ BPA, however, states that Form 1 should
contain more information and detail rather than less and that no
accounts or level of detail should be removed from the current Form 1
requirements. Duke and Nevada Companies each proposes alternative
thresholds as detailed in the following table.
---------------------------------------------------------------------------

    \60\ See AEP, EEI, and FirstEnergy comments.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Page No.            Title of schedule        NOPR proposal               Duke             Nevada companies
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..................................  216...................  Construction Work in    $1,000,000 or less     Graduated scale based  Report projects
                                                              Progress--Electric      may be grouped.        on total assets base.  $10,000,000 or more.
                                                              (Account 107).
2..................................  232...................  Other Regulatory        Amounts less than      $1,000,000, or a       $1,000,000.
                                                              Assets (Account         $100,000 may be        graduated scale
                                                              182.3).                 grouped by classes.    based on total asset
                                                                                base.
3..................................  233...................  Miscellaneous Deferred  Amounts less than      $1,000,000, or a       $1,000,000.
                                                              Debits (Account 186).   $100,000 may be        graduated scale
                                                                                grouped by classes.    based on total asset
                                                                                base.
4..................................  269...................  Other Deferred Credits  Amounts less than      $1,000,000, or a       $100,000.
                                                              (Account 253).          $100,000 may be        graduated scale
                                                                                grouped by classes.    based on total asset
                                                                                base.
5..................................  278...................  Other Regulatory        Amounts less than      $1,000,000, or a       $1,000,000.
                                                              Liabilities (Account    $100,000 may be        graduated scale
                                                              254).                   grouped by classes.    based on total asset
                                                                                base.
6..................................  353...................  Research, Development,  Group items under      Graduated scale based  n.a.
                                                              and Demonstration       $50,000.               on total asset base.
                                                              Activities.
--------------------------------------------------------------------------------------------------------------------------------------------------------

Commission Determination
    93. We are not persuaded to adopt the alternate thresholds or
graduated reporting requirements proposed by some commenters. The
Commission believes that the proposed thresholds are reasonable and not
unduly burdensome. The thresholds balance the burden on utilities, and,
in fact, in raising the thresholds, lessen the burden while continuing
to provide meaningful data to this Commission, state commissions, and
customers that wish to review a utility's rates. Furthermore, the
uniformity of the reporting

requirement helps ensure that comparable data is available for all
major utilities. Therefore, we adopt the revised reporting thresholds
proposed in the NOPR \61\ and reject the alternative threshold
reporting levels and proposals for graduated reporting requirements.
---------------------------------------------------------------------------

    \61\ Filers that use Form 1 to meet more specific reporting
requirements for incentive rate treatment for construction work in
progress (CWIP) or other costs must continue to meet the obligations
arising with the approval of such incentive rates, despite these
thresholds. Cf., e.g., Potomac-Appalachian Transmission Highline,
LLC, 122 FERC ] 61,188, at P 155-56 (2008); Trans-Allegheny
Interstate Line Co., 119 FERC ] 61,219, at P 45 (2007) (requiring
reporting of financial details in Form 1 footnotes as condition of
approval for CWIP rate incentive).
---------------------------------------------------------------------------

7. Proposed Technical Corrections
    94. In response to the NOI, the Commission received a number of
suggested technical changes and instruction revisions. The Commission
listed the suggestions that showed merit in the NOPR, Appendix C and
invited comment on specific proposals. The proposals are reproduced in
Appendix B to this Final Rule along with the Commission's responses.
The NOPR specifically sought comment on the proposals in Appendix C,
line 25 (RTO accounting on pages 310-311, 326-327, 332, 397-398), line
32 (measuring sales for resale as financial transactions, pages 310 and
326), line 34 (designating reporting hours and accounting for financial
transactions, page 401A), and line 35 (utility of column (b), pages 301
and 326).\62\
---------------------------------------------------------------------------

    \62\ An additional proposal concerning consistency in
distinguishing delivery revenues and electricity sales (pages 300-
301) has already been addressed in the discussion of Other Revenues,
above.
---------------------------------------------------------------------------

Comments
    95. SDG&E believes many of the proposed revisions and technical
corrections are appropriate and provide needed information for rate
review without imposing undue burdens on the filer.\63\
---------------------------------------------------------------------------

    \63\ BPA and FirstEnergy also generally support the corrections.
---------------------------------------------------------------------------

    96. In regard to the proposal to measure sales for resale as
financial transactions (pages 310 and 326) on line 32 of Appendix C,
APPA supports providing guidelines on how to report volume information
on the sales for resale and purchased power schedule on pages 310 and
326. The proposal asks the Commission to address the reporting of
financial transactions; APPA believes that the Commission should also
address the reporting of negative volumes on these schedules.
Commission Determination
    97. The comments received did not offer specifics in response to
the NOPR requests for comments on the proposals in Appendix C, line 25
(RTO accounting on pages 310-311, 326-327, 332, 397-398), line 34
(designating reporting hours and accounting for financial transactions,
page 401A), or line 35 (utility of column (b), pages 301 and 326). In
addition, with respect to APPA's proposal to address reporting of
negative volumes, we decline to adopt such a proposal at this time;
APPA has not adequately explained how negative volumes arise in
purchase or sales transactions. Due to the lack of specific proposals,
the Commission will not implement the remainder of these changes at
this time. In addition, for Appendix C, line 32, no commenter provided
a specific proposal for reporting volume information; consequently, we
will not revise our reporting requirements at this time.
8. Additional Technical Revisions
    98. EEI's comments include a number of additional suggested
improvements, clarifications and corrections to the forms and software:
(1) General--on various pages, EEI requests the Commission to ensure
that all data, descriptions, and amounts roll over from one period to
the next, to avoid companies having to re-enter the data; (2) General--
standardize the number formats used to represent credits throughout the
form--for example, on page 119, column (c), the format is ``-50,500,''
while in column (d) the format is ``(50,500);'' (3) pages 120-121--EEI
requests a correction to ensure that all footnotes print to identify
which column is involved when footnotes are added to columns (b) or
(c); (4) pages 122a-122b and 231-EEI requests the instructions be
revised to reflect Commission staff guidance that these schedules are
to be presented on a year-to-date basis; (5) pages 122a-122b--EEI
requests the row heights on the two pages be adjusted to be the same,
making information easier to follow; (6) pages 329-330--EEI states that
the page title should reference account 456.1, not 456; (7) pages 352-
353--correct the printing parameters so that the dollars for line 47
print on the same page as the description for that line; (8) page 398--
clarify whether a standard unit of measure should be applied to Number
of Units Sold in column (e), and, if not, how dissimilar units of
measure are to be totaled on line 8; and (9) pages 426-427--the Form 1
submission software (FOSS) should calculate totals for column (f) by
Substation Classification.
    99. In addition, EEI supplements the technical revisions proposed
in the NOPR and requests that the Commission address the following
issues: \64\ (a) The ability to load data more cleanly into the
software, including Excel data; (b) the ability to copy and paste
information from Microsoft Word and other native-format documents
without losing formatting such as underlines, paragraphs, and headers;
(c) the ability to print preview for Notes to Financials and Important
Changes pages; (d) corrections to the ``total amount'' functions in the
software, in particular on pages 224, 320-323, 336, 354-355; (e)
corrections to improper page references, in particular on pages with
footnotes; (f) corrections to the software's cross-checking function;
and (g) corrections to text on various pages of the forms, as noted in
NOI comments.
---------------------------------------------------------------------------

    \64\ AEP supports the software improvements proposed by EEI to
enable them to load data efficiently into the FERC software.
---------------------------------------------------------------------------

Commission Determination
    100. With respect to EEI's new suggestions, the Commission
confirms: (1) The copy forward feature is available for many page
schedules, and if additional pages need such a feature, filers may make
requests to<EMAIL_ADDRESS>(copying on these pages is an
option and not mandated); (2) the printing of negative numbers on page
119, column (d) will be corrected; (3) the footnote printing issues on
pages 120-121 will be addressed; (4) the instructions on pages 122a,
122b and 231 will be updated; (5) the row heights on pages 122a and
122b will be changed, as requested; (6) the page title on pages 329 and
330 will be corrected (consistent with page 328); and (7) printing
parameters on pages 352-353 will be corrected to address text
continuity. As for the two remaining suggestions from the list, we
clarify: (8) that a standard unit of measure on page 398 is not
appropriate, because the unit of measure should instead be that used in
the filer's billing determinants; \65\ and (9) consistent with EEI's
request the software already permits filers to calculate totals on
pages 426-427, column (f) by substation.\66\
---------------------------------------------------------------------------

    \65\ To facilitate reporting, we will revise the software so
that a total can be entered on line 8, columns (b) and (e), number
of units, if filers wish to use a standard unit of measure
(otherwise there will be no total).
    \66\ This feature can be accomplished by entering either
``Subtotal'' or ``Total'' as the first characters in column (a),
which will result in the system calculating values for other
columns, accordingly.
---------------------------------------------------------------------------

    101. With respect to EEI's request that the Commission ensure
compatibility between the Form 1 reporting software and commonly used
commercial products such as spreadsheet, word processing and accounting
software, the

Commission is mindful of the continual upgrading of commercial software
and strives to ensure that the Commission's forms can accommodate the
changes. However, we note that several comments concerning the eForm
software (FOSS) appear to be based on a misunderstanding of the
software's capability. The Commission encourages filing companies to
contact the Commission's Online Support (via e-mail or phone) to
resolve technical issues concerning the FOSS software. Through calls to
Online Support, issues may be addressed in a direct and timely manner
that is specific to an individual filing company's concerns. In this
manner, the Commission, the regulated entities, and the public in
general will be best and most efficiently served.
    102. As to the specific issues described in the comments, the
Commission notes that the software incorporates the ability to import
data from any spreadsheet program (including Excel or Open Office) that
is able to export the data using the ``dbf'' format. Many schedules
support this capability and also support (but do not require) data
roll-over from past reports. If importing or data roll-over capability
is desired for other pages, filing companies should contact
<EMAIL_ADDRESS>In addition, the software includes the
capability to import word processing files in the Word format into Form
1, Notes to the Financial Statements. It is possible compatibility
issues with specific versions of word processing software (such as
Microsoft Word) may result in some formatting being lost. Users
experiencing technical difficulties may contact the Commission at
<EMAIL_ADDRESS>The software also features print preview
capability and data roll-over functions. As for corrections to the
``total amount'' functions on various pages, we have been unable to
duplicate the errors referred to in the comments. If a filing company
is having difficulty with a particular calculation, assistance is
available by contacting<EMAIL_ADDRESS>Finally, steps have
been taken to include data cross-checking in the 2008 Form 1 submission
software, and we will make corrections to the text on various pages of
the forms to address EEI's suggested editorial changes.\67\
---------------------------------------------------------------------------

    \67\ Absent reference to particular pages, the Commission is
unable to address EEI's remaining request that the Commission
correct unspecified improper page references and footnotes.
---------------------------------------------------------------------------

E. Miscellaneous

1. Retaining Form 3-Q
    103. In the NOPR, we rejected requests that the Commission
eliminate Form 3-Q as being unnecessary. The Commission believes that
the quarterly reports are important because they allow more timely
evaluations of existing rates and improve the transparency and currency
of financial information.
Comments
    104. AEP, EEI, and Nevada Companies suggest that the Commission
reconsider whether the burden of completing the Form 3-Q is warranted
when compared to the limited value of data it provides.

Commission Determination

    105. We decline to adopt this change for the reasons stated in the
NOPR: \68\
---------------------------------------------------------------------------

    \68\ NOPR at P 61.

    The Commission believes that the increased frequency of
financial information provided in Form 3-Q is important. The
quarterly reports allow for more timely evaluations of existing
rates and improve the transparency and currency of financial
---------------------------------------------------------------------------
information submitted to the Commission.

    106. The comments provide no compelling reason to eliminate Form 3-
Q.
2. Confidentiality Concerns
    107. In response to NOI comments, the NOPR rejected calls that
certain financial data should be considered confidential because of
concerns raised regarding competitive risks and harm to critical
infrastructure. The NOPR affirmed the Commission's commitment to
maintaining the public availability of financial data filed in Form 1
and other reports and found that additional precautions or protection
of financial data are not necessary.
Comments
    108. APPA commends the Commission for continuing to improve its
collection of financial data and for its commitment to maintaining the
public availability of the data. AEP recommends the Commission
reconsider its position and cease to require the release of what it
characterizes as competitively sensitive commercial information to
potential competitors that could disadvantage sellers in competitive
markets.
    109. EEI encourages the Commission to protect commercially
sensitive information, in the interest of promoting fair competition
and the development of robust competitive markets. EEI further
encourages the Commission to reconsider its handling of commercially
sensitive information in the financial forms, to ensure that
information is not released at a plant or company level if such
information may harm companies, either in their competition with others
or in their negotiations with suppliers. In particular, EEI requests,
as it has done in previous efforts to revise the reporting requirements
that the Commission cease releasing in discrete form individual
generating plant costs and operating performance information, and
instead release such information only in aggregated form that,
according to EEI, avoids commercial harm.
Commission Determination
    110. As stated in the NOPR and elsewhere, the Commission remains
committed to the public availability of cost-of-service data for public
utilities. Since 1937, Form 1 data have provided a critical component
of the Commission's regulatory program and that of its predecessor, the
Federal Power Commission.\69\ While the electricity market is changing,
regulated public utilities still provide jurisdictional power and
transmission services for which information is needed in connection
with the Commission fulfilling its statutory responsibilities. Because
transmission service is a critical component in electricity service and
most transmission rates are cost-based, Form 1 data are critical to
evaluating the underlying costs of providing transmission service and
the resulting rates. In addition, Form 1 data provide the basis for
many rates for generation service (both cost-based and market-based),
which may be determined on a unit by unit basis. Making this cost data
publicly available provides customers with a means to monitor the
reasonableness of their rates, and thus assists the Commission's
efforts to ensure that rates remain just and reasonable. The Commission
also has previously reviewed and rejected suggestions that it should
adopt non-public status for Form 1 data.\70\ Consistent with our long-
standing precedent, and in light of the commenters' failure to convince
us

otherwise, we decline to adopt non-public status for such data here.
---------------------------------------------------------------------------

    \69\ See generally Connecticut Light and Power Co., 2 FPC 853
(1944).
    \70\ See PECO Energy Co., et al., 88 FERC ] 61,330 (1999);
Consolidated Edison Co., 72 FERC ] 61,184 (1995). See also Alabama
Power Company v. FPC, 511 F.2d 383, 390-91 (DC Cir. 1974) (upholding
fuel purchases reporting requirement, and rejecting claims that
disclosure would lead to bargaining disadvantages in future fuel
contract negotiations as outweighed by benefits of disclosure).
---------------------------------------------------------------------------

3. Requests To Reconsider Rejected Revisions
    111. Duke suggests that the Commission misconstrued its proposal in
Docket No. RM07-9-000, proposing to eliminate the requirement to report
executive officers' salaries on page 104 and argues that the
information is not relevant and may be obtained elsewhere.\71\ Duke
also renews its objection that the requirement to footnote amounts
reported in pages 328-330, column (m), is unduly burdensome, because
the detail largely concerns ancillary services data and filers must
insert repetitive footnotes that do little to further the user's
understanding of the charges.
---------------------------------------------------------------------------

    \71\ See NOPR at P 14 (summarizing Duke's comments responding to
the NOI).
---------------------------------------------------------------------------

    112. Further, Duke believes the Commission misinterpreted Duke's
suggested revisions related to pages 422-425. Duke does not request
eliminating the pages, but states rather that it is proposing a means
by which the burden on the filer could be reduced, without diminishing
the usefulness of the data reported. Duke believes that reporting miles
of transmission lines by state and legal entity, as well as the totals
of the different type of supporting structures by voltage, would be
sufficient and far less burdensome for filers than current practice.
Duke questions the claim, cited in the NOPR, stating that pages 422-425
(as well as pages 426 and 427) provide valuable information on
transmission lines and substations that allows commenters to track rate
base amounts on a facility-by-facility basis. Duke disagrees and
questions the necessity of the ``to'' and ``from'' level of detail.\72\
According to Duke, the necessary data to calculate transmission rates
for RTO members that file Form 1 is already largely available in
various RTO filings or available upon request. Second, Duke states that
the ``to'' and ``from'' level of detail for filers that are not members
of RTOs is insignificant because transmission rates for these filers
are based on average system cost.
---------------------------------------------------------------------------

    \72\ Duke comments at 5. Pages 422-425, col. (a) and (b) provide
information on transmission lines (132 kV and above), which are
designated as running ``from'' location A ``to'' their destination
at location B. Transmission lines below 132 kV are grouped together
by voltage.
---------------------------------------------------------------------------

    113. Duke proposes that the information contained on pages 426 and
427 be updated in its entirety every three years, and that in all other
years a filer only be required to report additions, retirements and
changes to the substations. Duke believes that typically there are few
changes year-by-year to the amount of information presented on pages
426 and 427. According to Duke, this change would be beneficial not
only to filers, but also to users because the changes would be more
apparent to users.
    114. APPA supports the Commission's determination that pages 422-
423 and 426-427 should remain in Form 1. BPA states that Form 1 should
contain more information rather than less, and that no accounts or
level of detail should be removed from the current Form 1 requirements.
Commission Determination
    115. The Commission affirms its decision to retain the existing
requirements. The information is useful to the Commission's oversight,
and is relied upon for the monitoring, review and modification of
rates. The Commission disagrees that alternate approaches of seeking
the information, i.e., on request or seeking comparable information in
various rate, tariff and informational filings, are a substitute for
consistent and uniform reporting of the data in Form 1. The Form 1
format ensures that the data is available, is consistent from year to
year and is comparable among filing utilities. In addition, this
information is valuable because of the increasing demand, and
accompanying scrutiny, being placed on the transmission grid; there is
a continuing need for information to assess changes and improvements
(both existing and new) to transmission infrastructure.
4. Requests for Additional Cost Data
    116. In the NOPR, we rejected requests for the collection of
additional Form 1 data, finding that additional detail may be
unnecessary. In light of the comments received and given the
Commission's experience with reporting requirements, the Commission
determined that wholesale changes to Form 1 were unnecessary especially
in light of the targeted changes proposed. Therefore, the NOPR did not
propose that filers provide a cost and revenue study or the type of
detailed information needed in a rate case, or detailed information on
pensions and other employment benefits.\73\
---------------------------------------------------------------------------

    \73\ NOPR at P 35.
---------------------------------------------------------------------------

Comments
a. Pension Information
    117. The New York Commission renews its request that the Commission
require electric utilities to file information regarding pensions and
other employee benefits in order to assess whether rates are just and
reasonable, and states that this need outweighs the burden of imposing
an incremental reporting requirement upon utilities. The New York
Commission indicates that the Commission's proposal appears
inconsistent with its position in Order No. 710.
b. Transmission Investment
    118. The Michigan Commission requests that the Commission clarify
whether additional detail on new transmission plant in service is
required. TAPS proposes that the Commission require subdivision of
account 353 in order to distinguish account 353 costs associated with
the transmission and generator step-up functions. This requirement
would apply irrespective of whether a Form 1 filing utility uses a
formula rate. TAPS states that for the Form 1 to work as a basis for a
preliminary rate assessment and serve its other rate-regulatory
purposes, it should break out the costs of facilities associated with
generator step-up transformation and report any methodology used to
divide account 353 between the transformation and transmission
functions. According to TAPS, the Commission's accounting practices
should reflect rate functionalization for both stated and formulaic
rates so that customers and regulators may monitor rates and understand
how the utility functionalizes costs.
Commission Determination
    119. Contrary to the New York Commission's view, our decision to
rely on existing reporting requirements with respect to pension
information in this proceeding is not inconsistent with our
determination in Order No. 710. In that proceeding, which adopted
changes to our reporting requirements in Form 2 for gas pipelines, we
found that insufficient information was available because details about
the types and costs of employee benefits were not readily available due
to the pipelines' participation in multi-employer benefit plans in
which they are assigned a portion of the total cost and there was
flexibility in the way in which information was described in a footnote
disclosure.\74\ However, in contrast, there was no evidence of a
widespread impediment to understanding public utilities' pension
obligations. Therefore, we will not impose similar reporting
requirements here, but instead will rely on our existing reporting
requirements.
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    \74\ Order No. 710 at P 38.

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    120. As stated in the NOPR, we are not persuaded to expand the
scope of this proceeding, as would be necessary to grant TAPS' request
to revise our accounting requirements and provide in this Final Rule
the additional information requested. This determination is consistent
with our holdings elsewhere in this Final Rule with respect to requests
for additional information related to formula rates and, in particular,
transmission investment.

F. Reporting Burden

    121. In the NOPR, the Commission estimated that the proposed new
affiliate transaction and other information will take respondents 14
hours to collect and report on an average annual basis per
respondent.\75\
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    \75\ NOPR at P 66.
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Comments
    122. EEI comments that, recognizing that reporting does involve
substantial costs, the Paperwork Reduction Act (PRA) requires federal
agencies to strive to minimize the reporting burden and avoid
duplicative reporting requirements.\76\ In prior triennial reviews, EEI
has asked the Commission to review the Forms 1, 1-F, and 3-Q as well as
other FERC forms to determine if all the information contained in the
forms is truly needed and whether it is needed in as much detail.\77\
EEI reiterates that general request here and encourages the Commission
to minimize the reporting burden to the maximum extent possible.
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    \76\ EEI cites 44 U.S.C. 3501, et seq.
    \77\ EEI states that the Paperwork Reduction Act requires each
agency to undertake a triennial review in consultation with the
Office of Management and Budget (OMB) to demonstrate that
information collections are as reasonable and streamlined as
possible. EEI comments at 2-3.
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    123. Duke estimates a burden greater than 14 hours to meet the
requirements associated with the proposed Form 1, page 429 alone;
similarly, EEI suggests that compiling the proposed affiliate
transaction information will take longer than 14 hours.\78\ MidAmerican
suggests that the proposed Form 1 affiliate transaction reporting
requirement is duplicative of existing federal and state affiliate
reporting requirements.
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    \78\ EEI estimates that the proposed affiliate transaction
schedule alone would require on the order of 100 to 300 hours per
company to compile in the proposed format. AEP similarly argues that
the affiliate transaction reporting would be voluminous and
burdensome.
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    124. SDG&E on the other hand believes that the proposed revisions
to the financial reporting obligations in the NOPR generally are
appropriately balanced to fulfill the Commission's stated goal of
obtaining necessary information without imposing undue burdens on the
filer.
Commission Determination
    125. The Commission's estimate of the reporting burden refers to
the Commission's estimate of the additional amount of time needed to
comply with the Form 1 revisions on an annual basis, over and above the
time needed to prepare the Form 1 under existing requirements. Thus,
while the Commission is sensitive to filing parties' individual
expectations that becoming familiar with the new reporting
requirements, compiling and reporting certain information may initially
take more time than the annual estimate, these parties will not need to
invest a similar effort in subsequent years. Furthermore, the revisions
adopted in this Final Rule are not extensive, and largely consist of
material that is already required to be maintained for other purposes.
Therefore, although the initial preparation to meet new reporting
requirements established in this Final Rule may be greater, the
Commission believes that the total increase in the time to meet all of
the Form 1 requirements, existing as well as those adopted in this
rule, is not unduly burdensome. Furthermore, the Final Rule also
relieves some parties of their reporting obligations, and lessens the
reporting burden for all parties through the increase in the threshold
reporting requirements for certain items.
    126. FirstEnergy, AEP, MidAmerican, and SDG&E comment on the
estimated burden of the affiliate transaction reporting requirement;
however, they do not offer an alternative estimate. Likewise,
International Transmission and MidAmerican challenge the total 14 hour
estimate but fail to offer alternative estimated burden hours.
    127. While Duke cites how they would have to review 187,700 lines
of accounting related to transactions for its four respondent
companies, Duke does not specify what such a ``review'' would entail,
nor what the estimated burden would be. Nevada Companies argue that 40
hours per quarter would be needed or 160 hours annually for the
affiliate transaction reporting requirement. EEI states it would take
anywhere from 100 to 300 hours, according to its members, to fulfill
the affiliated transaction requirement.
    128. In response to Nevada Companies' burden estimate, the
Commission notes that the Final Rule only requires a reporting of
transactions on an annual basis, not quarterly. Therefore, we believe
that Nevada Companies' have overestimated the amount of time needed to
comply with the requirements. In addition, EEI's estimate likewise
appears to be excessive and does not take into account clarifications
made in this Final Rule. EEI makes several assumptions that have been
resolved in a manner that would significantly decrease its estimate,
including: (1) Similar to Nevada Companies, EEI assumes that the
revised reporting requirements are to be met on a quarterly basis,
while the Final Rule largely imposes annual reporting requirements;\79\
(2) EEI assumes that power transactions are included, while the Final
Rule clarifies, that power transactions are excluded from the new page
429 affiliated transaction reporting requirement; \80\ (3) EEI requests
reporting by service type category rather than by transaction; \81\ and
(4) EEI's estimate does not account for the $250,000 affiliate
transaction reporting threshold of transaction/service type adopted in
response to comments. In response to concerns raised by the commenters,
however, the Commission has adjusted its estimate as reflected below.
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    \79\ See EEI comments at 6.
    \80\ EEI comments at 10.
    \81\ The Commission does not object so long as the service is
ongoing, and is not undertaken in response to a particular, non-
recurring event.
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VI. Information Collection Statement

    129. The collections of information contained in this Final Rule
have been submitted to the Office of Management and Budget for review
under section 3507(d) of the Paperwork Reduction Act of 1995; \82\ the
Commission is revising the reporting requirements for public utilities
and licensees (and for Form 3-Q, also natural gas companies) contained
in the above financial and operational information collections.
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    \82\ 44 U.S.C. 3507(d).
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    Title: FERC Form No. 1, ``Annual Report of Major Electric
Utilities, Licensees, and Others''; FERC Form No. 1-F, ``Annual Report
for Nonmajor Public Utilities and Licensees; FERC Form No. 3-Q,
``Quarterly Financial Report of Electric Utilities, Licensees, and
Natural Gas Companies.''
    Action: Final Rule.
    OMB Control Nos. 1902-0021 (Form 1); 1902-0029 (Form 1-F); 1902-
0205 (Form 3-Q).
    Respondents: Businesses or other for profit.
    Frequency of responses: Annually and quarterly.
    Necessity of the information: The information collected under the
requirements of Part 141 is essential to the Commission's fulfilling
its statutory responsibilities under the FPA. The information collected
is used in

ratemaking and rate monitoring, for oversight of company finances and
operations, and for adjudication and regulation. The data currently
reported in the forms lack the information that would allow the
Commission to assess and keep pace with changes in the industry and the
changes adopted here better permit the Commission and the public to
evaluate the filers' jurisdictional rates and operations. The
additional information to be collected by the Final Rule will increase
the forms' usefulness to both the Commission and the public. Without
this information, it would be more difficult for the Commission and the
public to assess costs and operations, and thereby ensure that rates
are just and reasonable.
    Burden Statement: In light of comments from larger transmission-
owning public utilities that it may take additional time to comply with
the new affiliate transaction reporting requirement added to Form 1 in
this Final Rule, the Commission is revising its information collection
estimates. Taking into account the comments received, the Commission
estimates that on average it will take large respondents 28 hours
annually to comply with the requirements adopted in the Final Rule and
smaller respondents 11 hours. There are an estimated 211 major and 4
nonmajor electric utilities that will be affected by the changes
adopted for Form 1 in the Final Rule, for a total of 215
respondents.\83\ Larger utilities with more affiliate transactions may
face a greater burden in reporting affiliate transaction, other
revenues and formula rate information. However, the Commission believes
that most of the additional information required to be reported is
already maintained by the utilities.
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    \83\ These numbers are based on the most recent filings.
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    The Commission's estimate has taken into account the commenters'
proposed burden estimates. However, the Commission has adjusted these
numbers to reflect the clarifications made in the Final Rule. Thus,
commenters' proposed affiliated transaction burden estimates of 100 to
300 hours are better considered to be 25 to 75 hours, to account for
the fact that quarterly reporting is not required. Furthermore, because
the Final Rule does not require reporting of affiliate power
transactions on new page 429, the affiliate transaction reporting
estimate was halved to reflect the Commission's estimate of the
transactions to be reported. In addition, the Final Rule adopts the
$250,000 threshold for affiliate transaction reporting, which will
result in a further reduction of the initial estimates. The Commission
finds that a range of 8 to 20 hours is appropriate to estimate the
annual burden of affiliate transaction reporting, and, based on its
understanding that smaller entities will face a lower burden, estimates
the typical burden to prepare the affiliate transaction schedule to be
12 hours. Assuming a similar burden for the formula rate footnote
disclosure, the Commission estimates the total burden, including other
reporting, for the revised Form 1 reporting requirements adopted in
this Final Rule to be 25 hours. The Commission adopts the Form 3-Q
burden of one hour as proposed in the NOPR, since neither the formula
rate or affiliate transaction reporting requirements are adopted for
Form 3-Q.
    The resulting total hours for the following collections of
information will be:

----------------------------------------------------------------------------------------------------------------
                                                       Change in the
       Data collection form            Number of     number of  hours   Filing  periods    Change in the  total
                                      respondents     per  respondent                         annual  hours
(a)                                             (b)               (c)               (d)    (e) = (b) x (c) x (d)
----------------------------------------------------------------------------------------------------------------
FERC Form 1......................               211                25                 1                    5,275
FERC Form 3-Q....................               199                 1                 3                      597
FERC Form 1-F....................                 4                11                 1                       44
----------------------------------
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    Total Annual Hours for Collection: (Est. Reporting + Recordkeeping
(if appropriate)) = 5,916.
    Information Collection Costs: The Commission estimates the costs to
comply with these requirements as follows:
    The Commission estimates that the additional hours to complete the
additional reporting requirements will be divided among a utility's