efficacy of our procedures, management, and decisional process, I recommend that you or your designee meet with me and my key staff on a systematic monthly basis to review:

once ·

(1)

(2)

the progress made to implement our procedures
consistent with the recommendations of your
report;

programs to improve the regulatory process as
developed on our own initiative or on the
basis of suggestions by your auditing staff; and

(3) jointly evaluate and determine additional
measures and policies which may be practicably
undertaken to improve our regulatory and
decisional process.

Your staff has discussed our policies with me only over two years ago. I believe that a more effective and valuable return on both human and physical resources will be realized by monthly interchanges at the policy, as well as auditor level, relating to matters more properly addressed on a continuous basis.

In your letter of September 13, 1974, you state:

"We are making a number of recommendations intended
to improve:

--FPC's monitoring of interstate gas sales by imposing reporting requirements on regulated entities,

establishing an adequate data and a recordkeeping system, and requiring timely and complete reporting of gas sales data.

--The processing of applications under the optional
certificate procedure to insure that gas consumers
are not charged rates which are higher than justified.

--FPC's procedures to insure that upper level officials
do not own financial securities which could result
in a conflict of interest."

Before addressing these recommendations, it is essential to review briefly the proportions of the natural gas crisis to which our policies were addressed.

On June 11, 1974, at hearings before the Subcommittee on Communications and Power of the House Committee on Interstate and Foreign Commerce, I outlined the current status of the pervasive and deepening natural gas shortage which we have attempted to resolve on a priority basis since I became Chairman in August of 1969. I stated in my summary statement as follows:

The current gas shortage has been most
clearly manifested in curtailments of service
by pipeline companies and distributors to
their customers. It is anticipated that
curtailments will be 55% greater in the period
April 1974 through March 1975 than in the
comparable 1973-1974 period. From April 1,
1974 through March 31, 1975, curtailments of
firm requirements are anticipated to be
1,845,770 MMcf, or 9.6% of the total require-
ments of the reporting companies for firm gas,
compared to a curtailment of 1,191,132 MMc f
in the like period of 1973-1974 which was
equivalent to a curtailment of 6.3 percent of
firm requirements. The referred demand as the
result of curtailments through March 31, 1975
of next year in terms of barrels of oil equiva-
lent should be about 330 million barrels.

The impact of these curtailments will depend upon the degree of curtailment by the pipelines and the availability of alternate fuels. United Gas Pipe Line Company anticipates curtailments of almost 41% and Trunkline Gas Company, as well as Arkansas Louisiana Gas Company, expect to curtail about one-third of their requirements for gas. The regions which will experience major gas curtailments during this period include Appalachia, the Great Lakes, New England, the Northern Plains, and the Southeastern portion of the United States, including the Gulf Coast Area, with chronic gas curtailments in other parts of the United States.

Table 1 outlines the firm curtailments of each of the curtailing companies from 1970-1973, Table 2 shows curtailments for the first quarter of 1974. Cumulative net curtailments of firm service from 1970 through March 31, 1974, totaled 2.4 Tcf.