(i.e., on a company-wide or total-system aggregated basis), does not permit shippers, the public,
or the Commission the ability to properly evaluate the justness and reasonableness of rates.
I. BACKGROUND
The Commissions NOPR proposes to amend Form 6, Page 700 to provide it, the public,
and shippers with the ability to calculate and evaluate the actual rate of return on equity for oil
pipelines. As the Commission correctly explains, the actual rate of return on equity reflects the
relationship between a pipelines revenues and its cost of service and the actual rate of return
on equity is particularly useful information when using Page 700 to evaluate whether a pipelines
rates are just and reasonable. NOPR, at P 5. In order to facilitate a calculation of an oil
pipelines actual rate of return on equity, the Commission is proposing that carriers supplement
the information reported on Page 700 as it respects rate base, rate of return, return on rate base,
and the composite tax rate percentage.
Rate Base. The NOPR proposes to enhance the transparency of the Rate Base
information reflected on Page 700, Line 5 through the addition of Lines 5a through 5c which,
consistent with Opinion No. 154-B,1 identify (1) Rate Base Original Cost (proposed Line 5a),
(2) Rate Base Unamortized Starting Rate base Write-Up (proposed Line 5b), and (3) Rate Base
Accumulated Net Deferred Earnings (proposed Line 5c). Id. at P 8. The NOPR explains that
the sum of proposed Lines 5a, 5b, and 5c comprises the pipelines Trended Original Cost Rate
Base which will be reflected in a new Line 5d titled Total Rate Base Trended Original Cost.2
Rate of Return. The NOPR proposes that pipelines be required to report the specific
cost of debt and cost of equity values that comprise the overall Weighted Cost of Capital that is
currently reported on Page 700, Line 6. Id. at P 9. In particular, the NOPR proposes that carriers
1
Williams Pipe Line Co., 31 FERC 61,377 (1985).
2
See Id.
2
report (1) Rate of Return Adjusted Capital Structure Ratio for Long Term Debt (proposed Line
6a), (2) Rate of Return Adjusted Capital Structure Ratio for Proprietary Capital (proposed Line
6b), (3) Rate of Return Cost of Long Term Debt Capital (proposed Line 6c), and (4) Rate of
Return.3
Return on Rate Base. The NOPR proposes that additional return on rate base detail be
reported on Page 700 so that the individual debt and equity components of the Overall Return on
Rate Base are identified, which is not provided in the ...
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