the plan. Approval by the Commission of a five-year plan constitutes approval for rate treatment of all projects identified as starting during the first year of the approved plan. Continued rate treatment will be dependent upon review and evaluation of subsequent annual reports.

(v) A natural gas pipeline company may submit a research, development and demonstration cost adjustment provision to flow through changes in its expenditures for research, development and demonstration. Changes permitted hereunder include both expenditures chargeable to operations as well as rate base treatment of the balances in account 188 as hereinafter defined. No RD&D adjustment provision shall become effective until authorized by the Commission. No request for RD&D adjustment provision will be considered by the Commission unless the proposed clause indicates the following terms and conditions:

(a) The RD&D expenditures adjustment shall be reflected in the company's rates only when it amounts to at least one-tenth of 1 mill ($0.0001) per thousand cubic feet of annual jurisdictional sales. Rate changes shall be applied to the commodity component of the existing rates of a pipeline company's two-part rates and to the volumetric rates of a pipeline company's onepart rates.

(b) Rate changes shall be computed and filed not more frequently than semi-annually. Rate changes by companies having Commission approved PGA clauses should be computed and filed to the extent practicable to coincide with the proposed effective date of a PGA rate change.

(c) Except in the case of expenditure approval pursuant to § 154.38(d)(5)(ii) RD&D expenditures chargeable to operations which may be tracked and reflected in rates shall be the amount which actual RD&D expenditures during the 12-month period ending 3 months prior to a proposed rate adjustment exceed or are less than (1) the amount allowed in the companies

'For purposes of this subsection, RD&D expenditures represent those cost includable in Account 188, Research, Development and Demonstration expenditures.

last rate proceeding or the average of 3 years RD&D expenditures if such rate adjustment is an initial filing under the subsection; or (2) the actual RD&D expenditures in the company's last prior rate adjustment under this section.

(d) RD&D expenditures in account 188 which are eligible to receive rate base treatment and which may be tracked and reflected in rates shall be the amount which the actual balances in such account during the 12-month period ending 3 months prior to the proposed rate adjustment exceed or are less than the balances in such account as of the date of this regulation, if an initial filing under this section, or the balances in account 188 included in the company's last prior rate adjustment under this subsection. For the purpose of determining the balance which may be tracked the company shall reduce the balance in account 188 by all moneys recorded in account 495 related to its RD&D expenditures and shall increase or reduce such account balance, as appropriate, by the applicable accumulated deferred income taxes. The rate of return used by the company to determine the rate effect of the rate base treatment of the balance in account 188 shall be the rate of return last allowed by the Commission during the previous 3year period. If there has been no such rate of return allowed during the previous 3-year period, then, in the absence of evidence submitted to the contrary, the return utilized shall be the present interest rate used for computing refunds as specified in § 154.67.

(e) Any tariff filing made by the company to increase its rates to its customers shall meet the notice requirements of § 154.22, which provide, in pertinent part, that the filing be filed with the Commission and posted (as defined in § 154.16) at least 45 days prior to the date on which any change(s) in its existing rates is to become effective. Simultaneously with the above filing, the company shall furnish the Commission, jurisdictional customers, and interested State Commissions a report containing detailed computations which clearly show the derivation of the proposed rate adjust

ment. The effect upon jurisdictional rates shall be determined by computing the unit change (either increase or decrease) based upon jurisdictional sales volumes for the 12-month period ending 3 months prior to the proposed rate adjustment. Any RD&D expenditure for which the company has been allowed to track by other regulatory body shall be clearly designated and treated in such a manner so as to avoid double recovery. Each rate adjustment shall become effective on the proposed effective date without suspension provided that except in the case of rate adjustments based on expenditure approval pursuant to § 154.38(d)(5)(ii) any rate increase shall be subject to reduction and refund of any portion found after hearing to be unjustified by a final Commission order.

In addition to the above required report containing the derivation of the proposed rate, the following additional data shall be submitted as part of the application: A statement as to the anticipated scope and objective of the RD&D and the relationship of such objective to the jurisdictional service for which the tracking is to apply. If the tracking is not to apply to certain jurisdictional service but is to apply to others, a statement as to the reasons for such determination.

(g) No company shall be required to reduce its rate under this subsection by an increment exceeding the aggregate increases allowed thereunder.

(e) Minimum bill. The minimum bill heading shall appear on every rate schedule followed by the word "none" if no minimum bill is provided.

(f) Other provisions. All other major provisions governing the application of the rate schedule, such as determination of billing demand, contract demand, heat content, measurement base, shall be set forth similarly with appropriate headings, or if appropriate, they may be incorporated by reference to the applicable general terms and conditions.

(g) Applicable general terms and conditions. This paragraph shall list by reference the general terms and conditions set forth in the following

section which apply to the particular rate schedule.

[Order 144, 13 FR 6372, Oct. 30, 1948, as amended by Order 452, 37 FR 8377, Apr. 26, 1972; Order 452-A, 37 FR 12489, June 24, 1972; Order 483, 38 FR 12116, May 9, 1973; Order 535, 40 FR 43891, Sept. 24, 1975; Order 566, 42 FR 30157, June 13, 1977; Order 567, 42 FR 30615, June 16, 1977]

§ 154.39 General terms and conditions.

(a) This section shall contain provisions which apply to all or any of the rate schedules and which may more conveniently be arranged in a separate section of the tariff. Subsections and paragraphs shall be numbered for convenient reference.

(b) The general terms and conditions of the tariff shall contain a statement of the company's policy with respect to the financing and/or construction of sales laterals serving resale customers. For the purposes of this section, the term "sales lateral" is defined as any pipeline extension (other than a main line extension) built from an existing pipeline facility to deliver natural gas to one or more customers of the company inclusive of both new and present purchasers, and, for present purchasers, inclusive of new delivery points and enlargements or replacements of present sales lateral pipelines.

(1) If it is the company's policy to build or contribute to the construction of any sales laterals to resale customers, the statement shall contain the following elements:

(i) An explicit statement in measurable quantitative terms (e.g., estimated revenues, estimated cost of service, estimated sales volumes, pipeline system capacity, or other specific quantitative factors) of the method(s) or formula(s) by which the company determines the amount of its or the purchaser's contribution to the construction of any sales lateral pipeline. If the company's policy contemplates subsequent adjustment of initial contributions to construction to reflect actual operating experience, the statement shall set forth the method by which the adjustment is computed, and shall indicate (a) when the adjustment is determined, and (b) how the company disburses or collects addi

tional contributions. The statement required by this subparagraph shall be formulated so as to facilitate ready computation of the respective contributions to sales lateral construction of the pipeline company and its purchaser. Reference to imprecise criteria (e.g., "economic feasibility") will be unacceptable.

(ii) The following statement: "Nothing in this policy statement shall require (the company) to file an application for a certificate of public convenience and necessity under section 7(c) of the Natural Gas Act. Nothing in this policy statement, further, shall prevent (the company) from contesting an application for service filed pursuant to section 7(a). (The company) reserves the right to seek a waiver of the policy set forth herein, for good cause shown, during any proceeding before the Commission instituted under section 7 of the Natural Gas Act."

(2) If it is the company's policy not to build or contribute to the construction of any sales laterals to resale customers, the policy statement shall read as follows: "(The company) will not build or contribute to the cost of building any sales lateral pipelines to resale customers." This statement shall be followed by the provision required by subdivision (ii) of subparagraph (1) of this paragraph.

(Secs. 5, 7, 52 Stat. 823, 824; 15 U.S.C. 717d, 717f)

[Order 328, 31 FR 13721, Oct. 25, 1966 as amended by Order 365, 33 FR 10140, July 16, 1968]

§ 154.41 Index of purchasers.

(a) The index of purchasers shall contain an alphabetical list of all purchasers under the tariff, showing for each the rate schedule or schedules under which service is rendered, and the following information concerning the contract: (1) the date of execution, (2) the effective date and (3) the term.

(b) The index of purchasers shall be kept current by filing new or revised sheets within 60 days of any change.

SPECIAL PERMISSIONS

§ 154.51 Waiver of notice requirements.

Upon application and for good cause shown, the Commission may by order provide that a tariff, contract, or part thereof shall be effective on less than 30 days notice. The Commission, upon request and for good cause shown, may permit a tariff, contract, or part thereof to be filed prior to sixty days before the proposed effective date.

§ 154.52 Exception to form and composition of tariff.

(a) Upon application and for good cause shown, the Commission may permit special rate schedules to be filed in the form of an agreement in the case of special operating arrangements such as for exchange or transportation of natural gas; or for the sale of gas at charges computed on a cost-formula basis, which charges need not be stated in cents or in dollars and cents per unit. Such rate schedules shall conform to the form, type and size specified in § 154.32 and shall contain on each sheet the marginal notation specified in § 154.33. In addition each such rate schedule shall contain a title page which shall show its designation, the parties to the agreement, the date of agreement and a brief generalized description of services to be rendered. Such rate schedules shall not contain any supplements. Any modifications shall be by revised or insert sheets.

(b) Such rate schedules may be included in a separate volume of the tariff, which shall contain a table of its contents. This table of contents shall also be incorporated with the table of contents of other volumes.

(c) Purchased gas cost tracking under special operating arrangements filed pursuant to this section shall conform to the requirements set forth in § 154.38(d)(4).

[Order 144, 13 FR 6372, Oct. 30, 1948, as amended by Order 452-B, 38 FR 1505, Jan. 13, 1973]

METHOD OF SUBMISSION FOR FILING

§ 154.61 Application.

Sections 154.62 through 154.65, except as otherwise specifically provided in this part, apply to all tariffs, executed service agreements, or parts thereof which are filed after December 1, 1948.

§ 154.62 Material submitted with initial rate schedule or executed service agreement.

(a) With the filing of any initial rate schedule or executed service agreement not superseding or making any change in a rate schedule, executed service agreement, or part thereof already on file, there shall be included a letter of transmittal containing a list of the material inclosed, the date on which such filing is proposed to become effective, and a list of the purchasers to whom it has been mailed: Provided, however, That the provisions of this section shall not be applicable to filings made pursuant to §§ 154.81 through 154.86.

(b) In addition, the following material shall be submitted where applicable:

(1) Statement of the reasons for initial rate schedule. A statement of the nature, and the reason for such proposed initial rate schedule. Data submitted in response to subsequent items may be included by reference as a part of the response to this item.

(2) Estimate of sales and revenues under an initial rate schedule or executed service agreement. An estimate of sales or transportation performed and revenues thereunder, by months, for the 12 months immediately succeeding the proposed effective date. The estimate shall be subdivided by rate schedules, classes of service, customers and delivery points, when more than one is involved. Such data shall include estimates of actual and billing

quantities, that are to be used to compute the charges, such as actual demands, billing demands, volumes, heat content, and other determinants.

(3) Basis of the rate or charge proposed in initial rate schedule. A statement shall be submitted explaining the basis used in arriving at the proposed rate or charge. Such statement shall clearly show whether such rate or charge results from negotiation, cost of service determination, competitive factors, or others, and shall give the nature of any studies which have been made in connection therewith. If all or any portion of such information has already been submitted to the Commission, specific reference thereto should be made.

§ 154.63 Changes in a tariff, executed service agreement or part thereof.1

(a) Definitions-(1) Changes other than in rate level. Rate filings for changes other than in rate level include inter alia changes in service agreements (changed contract demand, new delivery points, etc.), tariff provisions (changed penalty provisions, changed delivery pressures, etc.), rate form (where no change in revenue is contemplated).

(2) Major rate increase. (i) Rate changes that will result in a general increase in revenues for the stated purpose of obtaining a fair rate of return on jurisdictional sales,

(ii) Rate changes that extend to all, or substantially all, of the jurisdictional sales, or

(iii) Rate changes associated with the delivery of substantially changed volumes of gas to existing customers.

(3) Minor rate increase. Minor rate increases usually relate to a few schedules and are designed to bring such schedules into harmony with general tariff policy, to eliminate inequities and to achieve other formal adjustments, in cases where any increase in revenue is subordinate to some other purpose. They include changes that are not designed to provide general

'The provisions of this section shall not be applicable to filings made pursuant to §§ 154.81 through 154.86, unless such filing results in a change in rate, charge, classification or service.

revenue increases such as to offset increased cost or otherwise achieve a fair return on the overall jurisdictional business. For the purpose of compliance with this subchapter, proposed increases in rates or charges which, for the test period, do not exceed the smaller of $100,000 or 5 percent, of the revenues under the jurisdiction of the Commission shall be considered minor.

(4) Rate decrease. Changes in rate level no part of which directly or indirectly result in any increased charge to a customer or class of customers will be considered as a rate decrease.

(b) Material to be submitted—(1) Allfilings. With the filing of any tariff, executed service agreement or part thereof which changes or supersedes any tariff, contract or part thereof on file with the Commission, there shall be included the following:

(i) A letter of transmittal containing a list of the material enclosed, the date on which such filing is proposed to become effective, the docket number, if any, of the proceeding in which the change was authorized and a list of the names and addresses of the purchasers and State Commissions to whom it has been mailed.

(ii) A statement of the nature, the reasons, and the basis for the proposed change.

(2) Changes other than in rate level. In addition to the material required by subparagraph (1) of this paragraph there shall be submitted a comparative statement of sales made, or transportation, exchange, etc., performed, and revenues therefrom, by months and in totai, under the present and proposed tariff, contract, or part thereof, setting forth the transactions for the twelve months immediately preceding and for the twelve months immediately succeeding the proposed effective date of the change in tariff, contract, or part thereof. Actual data shall be used as far as possible, and any estimated data shall be designated as such. The statements shall be subdivided by rate schedules, classes of service, customers, and delivery point when more than one is involved. In the event any sale shown separately is made through more than one delivery point, and conjunctive billing is pro

vided by the tariff, the above data may be combined for all delivery points. Such data shall include billing quantities that are used to compute the charges including contract demands, billing demands, metered demands and volumes, heat content, rates and other determinants, in sufficient detail to permit complete verification of the revenues.

(3) Major rate increase. Class A companies (as defined in subchapter F, Uniform System of Accounts for Natural Gas Companies, of this chapter) shall submit, in addition to the material required by subparagraph (1) of this paragraph, Statements A to M inclusive and O and P described in paragraph (f) of this section. Class B, C and D companies, defined as above, shall file only Statements L, M, N, O, and P. Statement P required to be submitted by all classes of companies, may be furnished not later than 15 days after the date of the filing. A natural gas company filing another major increase in rates or charges within a period of twelve months after the date of filing of Statements A through M and O and P or after the end of the test period used therein including the period of adjustments shown on Statements A through M may submit for such other increase Statements L, M, and N in lieu of Statements A through M if the proposed new rate increase is filed to compensate only for an increase in the cost of purchased gas and there has been no material change in the company's facilities, sales volumes, and cost of service other than cost of purchased gas since such prior rate increase was filed.

(4) Minor rate increase or rate decrease. Only Statements L through N need be filed in addition to the material required by subparagraph (1) of this paragraph. (Statements L through N are not required to make effective rate changes or tariff provisions ordered by the Commission.)

(c) Submission and rejection—(1) Submission of material by reference. If all or any portion of the information called for by this section has already been submitted to the Commission or is included among the data filed pursuant to this section, specific reference