datum) and backing water up to the Stark powerhouse; a short canal to a small forebay formed by an earth dam; a short penstock; a powerhouse containing a 14,400-kilowatt generating unit; and a substation.

Rainbow Falls Development. A concrete gravity dam about 80 feet high with overflow section and flanked on each side by an earth dike; a reservoir about 4 miles long with normal water surface at elevation 1181 feet (U. S. G. S. datum) and backing water up to the Blake Falls powerhouse; an intake; a penstock; a powerhouse containing a 22,500-kilowatt generating unit; and a substation. Five Falls Development. A concrete gravity dam about 50 feet high with overflow section and flanked on each end by an earth dike; a pond about 1 mile long with normal water surface at elevation 1,077 feet (U. S. G. S. datum) and backing water up to the Rainbow Falls powerhouse; an intake; a pipe line about 1,200 feet long; a surge tank; a powerhouse containing a 22,500-kilowatt generating unit; and a substation.

South Colton Development. A concrete gravity overflow dam about 45 feet high with earth abutments and concrete intake; a reservoir about 1.5 miles long with normal water surface at elevation 973 feet (U. S. G. S. datum) and backing water up to the tailrace of Five Falls powerhouse; a pipe line about 1,300 feet long; a surge tank; a penstock; a powerhouse containing a 19,350kilowatt generating unit; and a transmission line connecting the substations of the five developments to the Licensee's power system at Colton.

the location, nature, and character of which project works are more specifically shown and described by the exhibits hereinbefore cited and by certain other exhibits which also formed part of the application for license or application for amendment of license and which are designated and described as follows:

Exhibit L: Sheet No. 1A (FPC No. 2084-34) general plan and profile; Sheets Nos. 2 and 3 (FPC No. 2084-13, and -14) Stark Development; Sheets Nos. 4A and 5A (FPC Nos. 2084-35, and -36) Blake Falls Development; Sheets Nos. 6A and 7A (FPC Nos. 2084-37, and -38) Rainbow Falls Development; Sheets Nos. 8 and 9 (FPC Nos. 2084-19 and -20) Five Falls Development; Sheets Nos. 10 and 11 (FPC Nos. 2084-21 and -22) South Colton Development; Sheet No. 12 (FPC No. 2084-23) typical plan and sections powerhouse, pipeline, and surge tank. Exhibit M: Three typewritten sheets of general descriptions and general specifications of mechanical, electrical and transmission equipment and their appurtenances, filed November 9, 1953.

(c) All other structures, fixtures, equipment, or facilities used or useful in the construction, operation, and maintenance of the project and located in the project area, including such portable property as may be used or useful in connection with the project whether located on or off the project area, if and to the extent that the inclusion of such property as a part of the project is approved or acquiesed in by the Commission; also all riparian and other rights, the use or possession of which is necessary or appropriate in the maintenance or operation of the project.

(C) The horsepower capacity now specified in sub-paragraph (i) of Article 23 of the license for annual charge purpose is hereby adjusted as follows:

Article 23. (1) For the purpose of reimbursing the United States for the costs of administration of Part I of the Act, one (1) cent per horsepower on the authorized installed capacity (135,000 horsepower) plus two and one-half (22) cents per 1,000 kilowatt-hours of gross energy generated by the project during the calendar year for which the charge is made.

Order denying motion to modify suspension of proposed tariff

Tennessee Gas Transmission Co.

Docket No. G-2252

January 27, 1954

On January 11, 1954, Tennessee Gas Transmission Company (Tennessee) filed a motion requesting paragraph (D) of our order issued September 24, 1953, and paragraph (C) of our order issued November 13, 1953, in the above-titled proceeding, be modified to provide that the use of the rates suspended be deferred only until January 12, 1954. In substance, Tennessee is requesting that our order suspending its proposed rate increase of approximately $6,510,000 for a period of 5 months or until March 1, 1954, be modified to allow such rates to become effective January 12, 1954, subject to a requirement that Tennessee refund to its customers the difference between the amount collected under such rates and any lower rates which the Commission might determine to be just and reasonable. In support of its motion, Tennessee alleges that effective January 1, 1954, it will incur an annual increase in the price of gas under contracts with producers of approximately $3,600,000. Tennessee also avers that its annual cost of labor and related employees welfare and pension expenses has increased by approximately $2,000,000 as of January 1, 1954, and that the balance of the total increase claimed of approximately $900,000 is in effect. Tennessee also alleges that the grounds for the granting of the shortened suspension period are substantially identical to those upon which we relied in issuing, on December 22, 1953, our order in the matter of Colorado Interstate Gas Company, Docket No. G-2260.

We have examined the matters to which Tennessee has called our attention and the facts upon which we relied with respect to its cost of service and we have re-examined the facts which were before us at the time we issued our order relating to Colorado Interstate Gas Company (Colorado). We cannot agree with Tennessee that the grounds upon which it relies are substantially identical to those upon which we relied in the Colorado Interstate case. Although not disclosed by our order of December 22, 1953, in that docket, we had before us information which supported Colorado's claim that during the months of January and February 1954 Colorado would sustain operating losses under the rates in effect during those months. In other words, the impact of the increased field price of gas which Colorado would sustain, beginning January 1, 1954, was so great as in all likelihood to create an operating deficit for the 2 months.

No similar situation exists with respect to Tennessee which reported operating income for the 12 months ending November 30, 1953 of $28,800,000. Although it may be that Tennessee during the period January 12 to March 1 will, upon the basis of its actual experience, fail to earn what on an annual basis would be a fair return, its financial situation is not so serious as would, in our opinion, justify a modification of the suspension period. As we pointed out in our order of July 23, 1953, In the Matter of Northern Natural Gas Company, Docket No. G-2217:

The purpose of the suspension power is to give the Commission time to investigate the reasonableness of the proposed increase before consumers are called upon to pay increased rates, even under bond and subject to refund, without violating constitutional prohibitions against confiscation of property. Congress believed that five months was a reasonable period for that purpose and it has been held to be consistent with the constitutional

prohibition referred to. Hope Natural Gas Co. vs. F. P. C. (C. A. 4, 1952), 196 F.2d 803, 808-809.

Furthermore, shortening the suspension period at this time would create a chain reaction among numerous customer companies and present a difficult administrative problem which, in our opinion, can be avoided without working undue hardship on Tennessee.

The Commission further finds:

Good cause does not exist to shorten the period of suspension of Tennessee's proposed tariff and to allow such tariff to be put into effect under bond prior to March 1, 1954, as heretofore ordered in our orders of September 24, 1953, and November 13, 1953.

The Commission orders:

Tennessee's motion to modify the Commission's orders of September 24, 1953, and November 13, 1953, and to be allowed to make effective proposed increased rates under bond as of January 12, 1954, be and it hereby is, denied.

Order approving proposed settlement and requiring tariff revisions to be filed and fixing date for further hearing

Northern Natural Gas Co.

Docket No. G-2217

January 28, 1954

This is a rate proceeding arising from rate increases filed by Northern Natural Gas Company (Northern). The record herein has been certified to us for approval of a proposed settlement, as stated on the record by Commission Staff Counsel in open hearing and agreed to by all parties to the proceeding. Upon consideration of the record, we approve the terms of the proposed settlement, permitting the agreed-upon rate increases to become effective subject to the terms and conditions, agreed to by the parties, as hereinafter set forth.

On June 26, 1953, Northern filed with the Commission proposed Fourth Revised Sheets Nos. 5, 12, and 13 to its FPC Gas Tariff, First Revised Volume No. 2, and requested that such revised sheets become effective on July 27, 1953. Northern also filed for "information" purposes Fourth Revised Sheet No. 14 to its FPC Gas Tariff, First Revised Volume No. 2, which it proposed to make effective as of August 27, 1953. By said Fourth Revised Sheets Northern proposed to increase its rates and charges for sales of natural gas approximately $13,485,500 per year, based on estimated sales for the year 1954.

Said Fourth Revised Sheet No. 5 is Northern's proposed Rate Schedule CD-1 for "Town Border Natural Gas Delivery" on a contract demand basis; Fourth Revised Sheet No. 12 is proposed Rate Schedule G-1 for "Town Border Natural Gas Delivery" on other than a contract demand basis; Fourth Revised Sheet No. 13 is proposed Rate Schedule IND-1 for "Large Volume Industrial Sales for Resale"; and Fourth Revised Sheet No. 14 is proposed Rate Schedule IND-2 for "Large Volume Industrial Sales for Use and Not For Resale."

Fourth Revised Sheets Nos. 5, 12, 13, and 14 were filed to supersede Northern's Third Revised Sheets Nos. 5, 12, 13, and 14, which have been in effect since November 27, 1952, by virtue of orders of the United States Court of Appeals for the Eighth Circuit entered December 18, 1952, and September 15, 1953, in State Corporation Commission v. F. P. C., No. 14,704, and Northern Natural Gas

Co. v. F. P. C., Nos. 14,706, 14,733, 14,743,, staying, subject to the terms and conditions therein stated, this Commission's Opinions Nos. 228, 11 F. P. C. 123, and 228-A, 11 F. P. C. 375, and accompanying orders issued June 11, 1952, and September 26, 1952, respectively, and Opinion No. 233 and order issued July 30, 1952, 11 F. P. C. 278.

By order issued July 24, 1953, pursuant to authority contained in Section 4 of the Natural Gas Act, the Commission, upon its own motion, among other things, suspended said Fourth Revised Sheets and deferred the use of Fourth Revised Sheets Nos. 5, 12, and 13 until December 27, 1953, and of Fourth Revised Sheet No. 14 until January 27, 1954, unless otherwise ordered by the Commission, and until such further time thereafter as said Fourth Revised Sheets may be made effective in the manner prescribed by the Act.

Pursuant to Commission order, hearings herein were held on October 26, 27, and 28, 1953, at which Northern presented evidence purporting to support its proposed increased rates and charges. Following a recess, the hearings were reconvened on January 18, 1954. Immediately upon such reconvening, pursuant to motion of Staff Council and with concurrence of all parties to the proceedings, the hearing was recessed from day to day to permit the parties, including the Staff, to confer respecting the possibility of agreement on or simplification of the issues in the proceeding.1

On January 21, 1954, final agreement was reached by the parties to the proceeding respecting all matters involved and issues presented in this proceeding, excepting the single issue respecting service zones and differentials in rates in areas served by Northern as presented by petitions for leave to intervene herein filed by Council Bluffs Gas Company and Central Electric & Gas Company. Among items included in the agreement are the rate increases to which Northern is entitled, the rates and schedules to be observed by Northern, and the terms and conditions under which the settlement is acceptable to the parties.

The Commission's Staff computed a net investment rate base of $226,197,315 for the year 1954, including an allowance of $1,296,565 for cash working capital computed in recognition of the availability of accruals for Federal taxes on income. Allowing a 6 percent return upon this rate base, the Staff developed a total cost of service of $91,979,330 for the year ending December 31, 1954. Of this total, $73,625,545 was allocated by the Staff to jurisdictional sales. This cost of service estimate was presented to all parties to this proceeding in the conference and an agreement was reached that rates which would yield revenues of $73,083,254 from Northern's sales in interstate commerce for resale, based upon estimated operations for the year 1954, would be fair and reasonable and acceptable to all parties."

It was agreed that Northern will, as soon as possible, file revised rate schedules to be made effective by Commission order as of 8:00 a. m., December 27, 1953, thereby superseding the proposed Fourth Revised Sheets Nos. 5, 12, 13, and 14, as filed on June 26, 1953; and Northern shall file such other revised tariff sheets as may be necessary to conform its FPC Gas Tariff to the provisions of the order accompanying the aforementioned Opinion No. 228, with particular reference to Appendix A attached thereto and made a part thereof, excepting only the level of rates.

1 By letter dated December 28, 1953, Staff Counsel had advised each of the parties to this proceeding of the intention to move for a recess of the hearing to permit conferring for this purpose.

2 Computed on Northern's and utilities' estimates of total annual sales of 234,588,200 Mcf for the year ending December 26, 1954, and 9,541,453 Mcf of billing demand units, based upon an 80 percent ratchet of contract demand.

The rate levels of Northern to be embodied in the schedules to be filed, as agreed upon by all parties, are as follows:

These rates would produce an estimated increase of $6,006,254 in revenues from Northern's jurisdictional sales over the estimated revenues which would be produced under the rates in effect on December 26, 1953.

Northern agreed that the revised rate schedules to be filed pursuant to the agreement and this order to be effective on and after December 27, 1953 shall continue in effect through December 26, 1954, at least, unless prior to December 27, 1954, the price payable by Northern, or its subsidiaries, Permian Basin Pipeline Company (Permian) and Independent Natural Gas Company (Independent), to present suppliers of natural gas shall be increased by proper order of the Corporation Commission of Oklahoma, the State Corporation Commission of Kansas, or other State authority having comparable jurisdiction. In such event it is agreed that Northern may file with the Federal Power Commission in accordance with Section 154.63 of the Commission's General Rules and Regulations proposed revised schedules containing increased rates designed solely to provide increased revenues during the test period ending December 26, 1954, sufficient only to off-set the reasonably estimated additional cost of gas purchased during that period and to be effective prior to December 27, 1954. It was also agreed that if a filing is made by Northern pursuant to and in accordance with this part of the agreement, no party to these proceedings will interpose any objection to such filing.

It was further agreed by all parties in the proceedings:

(a) That, in the event that the average effective Federal income tax rate payable is less than 52 percent for the year 1954, which was the rate used for computing this tax in the cost of service agreed upon, Northern will forthwith: (1) file revised schedules covering its Contract Demand (CD-1) and Interruptible Over-Run (R-1) Service, subject to the jurisdiction of the Commission, which revised schedules will reflect the decrease in Federal income taxes computed by reason of a change in the tax rate of 52 percent used in this settlement; and (2) refund to those entitled thereto monies representing the difference between Federal income tax computed at 52 percent on revenues received under the rates specified to be filed pursuant to this settlement, subject to the jurisdiction of the Commission, and the Federal income tax recomputed on such revenues, for the period commencing December 27, 1953, and ending on the effective date of the revised schedules filed pursuant to this part of the agreement. Such decrease attributable to utility customers shall be apportioned between said two rate schedules and said refunds shall be distributed pro rata among the utility customers according to the revenues contributed by them during the period covered by such refunds.

(b) That the rates to be made effective as of December 27, 1953, pursuant to the agreement have been computed on the basis of the so-called Texas Gathering Tax in the amount of 41⁄2 mills per Mcf of gas purchased by Northern, or its subsidiaries Permian and Independent, in the State of Texas. That, if said