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The two major portions of the Act affecting the FERC are the Natural Gas Policy Act (NGPA) and the Public Utility Regulatory Policies Act (PURPA).

In order to implement the pricing provisions of the NGPA which became effective on December 1, 1978, the FERC staff formulated and issued interim regulations. Comments from industry, the public and other government agencies are currently being evaluated in preparation for dissemination of final regulations. As a result of the preponderance of questions concerning NGPA and regulation proposals, the Commission established a "Hot Line" telephone service which will continue to answer inquiries until such time as final regulations are adopted.

Approximately half of the states have already filed with the Commission procedures by which price eligibility determinations would be made. These plans are being reviewed for consistency with the compliance provisions of the NGPA. Upon approval of individual plans, field investigations will be scheduled to review determination procedures in operation for accuracy and conformance with plans previously submitted.

In January of FY 1979, the FERC began processing and reviewing the interim price collection filings and related refund reports. An interim collection procedure was estabished under Section 273 of the NGPA, which allows a natural gas producer to charge, subject to refund, the rate it believes to be applicable prior to receiving an eligibility determination by a state or federal agency.

The FERC is currently preparing recommendations for a transitional rule for special relief and optional procedures for seeking relief from pricing categories for natural gas as established under the NGPA.

Section 101 of the NGPA requires the FERC to publish a monthly equivalent of the annual inflation adjustment factor for each month. This report relieves the producers of the necessity for filing monthly statements with FERC for price increases attributable only to the inflation adjustment factor.

The Public Utility Regulatory Policies Act expands Commission responsibilities over electric utilities, natural gas and small hydroelectric facilities. Efforts in conjunction with PURPA are intended to conserve energy supplies for a ultimate end users of electricity, increase efficiency in the use of resources by electric utilities, and insure reasonable rates for consumers. Implementation for increased authority is specifically provided for electric power regulation, to include: cost of service data gathering, new authority in interconnections, ordering of transmission services, review of opportunities to provide for energy conservation and increased efficiency through the development of pooling arrangements, collection of reports on anticipated energy shortages to wholesale customers, reviews of automatic adjustment clauses, and consultation on cogeneration and the effects on retail electric rates. Mrs. Boggs. What are the major elements of the legislation and how much do they cost?

Mr. O'LEARY. The major elements are the NGPA and PURPA. The funding requirement for implementation of NGPA in FY 1979 is $11,377,000 while PURPA is estimated at $3,693,000 for a total of $15,070,000. This includes $200,000 for reimbursement of intervenors under the Office of Public Participation.


Mrs. BOGGS. The fiscal year 1979 appropriation provided an increase of 323 additional positions from a total of 1,403 to 1,726 positions. The fiscal year 1979 supplemental reflects a 1979 base of 1,684 positions. What has happened to 42 positions and the related funding?

Mr. O'LEARY. When the Federal Energy Regulatory Commission's fiscal year 1979 Congressional Budget request was submitted by the Department of Energy in January 1978, the FERC was still in the process of identifying and transferring additional positions to the various components of DOE in compliance with the DOE Organization Act. At that point, all positions to be transferred had not been identified. Subsequent to the submission, more positions were identified requiring the transfer of an additional 42 positions to DOE. With respect to status of the funds for those positions, the funds were needed to cover increased administrative expenses and to accomplish this effort a letter requesting authorization to reprogram was forwarded to the Subcommittee on March 9, 1979.

Mrs. BOGGS. What progress has been made in hiring additional personnel? How many are actually on board?

Mr. O'LEARY. Since the start of fiscal year 1979, FERC has increased its on-board strength by 141 people. As of March 13, 1979, the level of on board full-time permanent personnel is 1,409, compared to a Congressional authorization of 1,684.

Mrs. BOGGS. What are your projections through 1979?

Mr. O'LEARY. It is anticipated that the additional 275 positions plus the 116 in the pending fiscal year 1979 supplemental will be filled by September 30, 1979, through an aggressive hiring program.


Mrs. BOGGS. How much have you spent to date of the $37,245,000 which the Committee provided in 1979 for personnel compensation? Mr. O'LEARY. Payroll information indicates that the Commission has spent $13,066,000 through February 10th. This includes both salaries and benefits as well as overtime and terminal leave payments. Mrs. BOGGS. What are your projections with and without the supplemental ?

Mr. O'LEARY. Current budget estimates for total salaries and benefits for fiscal year 1979, including the supplemental and pay raise increase, amounts to $41,750,000. Expenditures estimates, including an aggressive hiring plan by the Commission, indicate that $41,500,000 will be obligated in fiscal year 1979. The remaining $250,000 has been set aside to cover unanticipated overtime for NEA activities.


Mrs. BOGGS. You are requesting 116 additional positions for FY 1979. How many equivalent staff years did you assume and what is the average cost?

Mr. O'LEARY. The 116 positions are expected to be filled, on the average, for about half of FY 1979. This would equate to 58 staff years. The average cost per year is approximately $30,000 per position,

consisting of $23,000 for compensation and $7,000 for benefits and support costs.

Mrs. BOGGS. What is the total requested for personnel compensation and benefits?

Mr. O'LEARY. The amount requested for personnel compensation for half of FY 1979 is $1,370,000 and benefits for the same period amount to $130,000.

Mrs. BOGGS. Discuss briefly the supplemental contracts listing in your request. Why is it necessary to contract out for these services rather than using federal personnel? What savings are contemplated, if any?

Mr. O'LEARY. The contracts mainly represent limited or one-time efforts designed to support specific requirements placed on the FERC. In most cases, the contracts are necessitated due to the urgency of time constraints mandated by legislation, or because of insufficient on-board expertise to accomplish the tasks with the Federal Energy Regulatory Commission.

Although specific figures by contract are not available, it is estimated. that approximately 100 positions could be saved through contractual efforts, representing about $2.5 million. However, it is important to note that the additional personnel which would be required to perform in-house the tasks for which contract funding is requested would be long-term additions to Federal government employment levels. The savings resulting from using contract support to perform this type of limited-term function will continue in fiscal years since, as the tasks performed under contract are completed, there will be no requirement to retain and reassign permanent employees elsewhere in the government.


Mrs. BOGGS. What items other than personnel compensation and contractual support are included in the request?

Mr. O'LEARY. Besides salaries and contracts, the request includes such items as travel, building rental for the additional employees, printing, postage, supplies and equipment. Also, $200,000 for intervenor funding discussed earlier.

Mrs. Boggs. Give us a breakdown in object class format and a brief explanation of why the increase is needed?

Mr. O'LEARY. I would like to submit a table for the record which shows the Commission's request by object class excluding compensation and contractual support.

[Table follows:]

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These funds are needed to implement NEA activities and support the additional positions the Commission is asking for as a result of the NEA. At the time the regular FY 1979 budget was being formulated, a year ago, legislation concerning the NEA was still pending, and therefore budgetary requirements were not included at that time. Excluding salaries, benefits, and contracts, FERC was appropřiated about $9.5 million for operating expenses for FY 1979. The accounting records for this fiscal year are in the process of being updated and an exact figure for expenditures to date is not available. An estimated expenditure for the first five months approximates $5 million.


Mrs. BOGGS. What progress are you making in reducing your case backlog? What is the current status compared to 1978 levels?

Mr. O'LEARY. The FERC has made significant progress in reducing its case backlog. On October 1, 1977 the FERC had 13,801 filings pending within the Commission. The number of receipts in Fiscal Year 1978 rose to 28,422 from 22,627 the previous year, and pending filings on October 1, 1978 had risen to 16,286. However, during the first quarter of Fiscal Year 1979, a number of actions which the Commission has taken to reduce backlog began to take effect. On February 1, 1979, 12,873 filings were pending, a reduction of 3,413 cases in four months. Compared to the Fiscal 1978 year end, the FERC has reduced cases on hand by about 21 per cent through the end of January, 1979.


Mrs. BOGGS. What progress are you making toward your administrative improvements?

Mr. O'LEARY. Major Commission objectives during Fiscal Year 1978 were to reduce backlogs, expedite action on projects involving new energy supply, streamline the regulatory process, improve caseload management, and institute in-depth issue analysis on cases that contribute to energy regulatory policy formulation. To accomplish these objectives, several new initiatives were undertaken.

One of the most important accomplishments in Fiscal Year 1978 was the development and institution of a comprehensive Management Information System. Through a series of reports that track workload areas, the FERC has been able to define problems and delays as well as areas for improvement and greater efficiency. Probably the most important aspect of this system has been identification of critical projects in terms of their impact on the Nation's energy supply. This system is providing FERC management with a means of evaluating the various procedures and controlling the available manpower and resources.

Another initiative was the project manager system. Problems involved in staff coordination and accountability have been addressed through development of a Project Manager concept whereby a technical or legal staff member is given lead responsibility for coordinating staff review of priority items. This method replaces the "Baton Concept" under which casework was passed from office to office with little control over scheduling and final determination.

To facilitate reorganization efforts, the Office of Enforcement was established. Representing a major step toward improving the integrity of the regulatory process and making FERC regulation more respon

sive to the public interest, the Office of Enforcement is intended to cut through existing regulatory processes on enforcement cases. The reorganization efforts of the 1978 Fiscal Year also allowed the Commission to improve its public service efforts through increased public information and involvement efforts on FERC decisionmaking, and the institution of new and simplified procedures for responding to Freedom of Information requests.

An Agency Priorities Committee composed of senior staff from all Commission offices was established by Chairman Curtis last year to improve the total FERC approach to carrying out its activities. The committee meets on a regular basis with the Chairman to identify both short and long-range objectives and priorities for the Commission.

To help streamline the regulatory process the Commission is now allowing all uncontested settlements to be placed on the consent agenda rather than receive consideration at a full Commission meeting. In addition, new procedures are being devised for consideration of settlements in which limited opposition is present or where only a few issues remain undecided by the parties. The initiative is designed to free the Commission to handle the more critical, sensitive and important issues at formal Commission meetings. Also, strict timeframes for the preparation of the technical memorandum and other steps involved in placing settlements on the Commission consent agenda are being established. This increased efficiency should expedite the issuance of Commission orders, encourage more uncontested settlements, and save considerable staff resources.

The FERC's last major initiative deals with delegations of authority. A total of more than 8,000 decisionmaking transfers have been proposed, some 1,000 from the Commissioners and more than 7,000 from the Office of the Secretary. It is expected that the transfer of these functions will benefit the Commission by reducing the size of its formal agenda, thus allowing it to devote more time to the discussion of more significant and complex cases and to focus more of its attention to policy matters. The redelegations from the Office of the Secretary are expected to relieve that office of a portion of the tremendous volume of paper that is handled on a daily basis, to allow more direct involvement by the major program offices in decisionmaking process, and to ensure orderly resolution of pending cases. The FERC currently is examining ways to delegate additional functions now performed by the Commission and the Office of the Secretary.

Mrs. BOGGS. Thank you very much, Mr. Secretary.

Mr. MYERS. I have one question. I hate to belabor it much further.


But back to our old intervenor funding, is there any money in the 1979 budget available now for intervenors?

Mr. O'LEARY. So far as FERC is concerned, Mr. Myers?

Mr. MYERS. Yes.

Mr. O'LEARY. My understanding is that they do not regard their current budget as authorizing intervenor funding, so this is a discrete item.

Mr. MYERS. How much did you request in the 1980 budget for intervenors?

Mr. McDONALD. The Federal Energy Regulatory Commission requested $750,000.

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