Section 3.48.464. Simplified pipeline tariff rates.

	(a)  Rates contained in an initial simplified pipeline tariff must be less than or equal to rates computed using  
		(1) a cost-of-service component that consists of  
			(A) total actual annual operating costs up to and including $10,000,000 and less than or equal to the sum of   
				(i) 10 percent of the initial rate base of $1,000,000 or less;  
				(ii) 7.5 percent of the initial rate base over $1,000,000 up to and including $5,000,000; and  
				(iii) five percent of the initial rate base over $5,000,000;  
			(B) an annual depreciation expense calculated using straight-line depreciation and a 25-year economic life;  
			(C) a return on rate base equal to the rate of return specified in (3) of this subsection multiplied by the rate base specified in (2) of this subsection; and  
			(D) annual ad valorem taxes based on the mill rate adopted under  
				(i) AS 43.56.010 for crude oil and gas pipelines; or  
				(ii) AS 29.45.010 for product pipelines;  
		(2) a rate base component composed of beginning plant costs less prior accumulated depreciation, if any, and working capital of 2.5 percent of beginning plant costs; and  
		(3) a rate-of-return component with an overall weighted pretax cost of capital of 14.1 percent.  
	(b)  Total annual operating costs under (a)(1)(A) of this section must be exclusive of depreciation and ad valorem taxes.  
	(c)  The rate design for rates contained in a simplified pipeline tariff must be either a single system-wide rate or mileage-proportional rates and  
		(1) if the carrier is providing common carriage service, the rate design must include a volumetric rate based on throughput; or  
		(2) if the carrier is providing firm and interruptible service, the rate design must include a reservation fee or similar charge for reservation of capacity complying with AS 42.06.350(c)(1).  
	(d)   The collection of money for dismantlement, removal, and restoration is waived for the period the designated pipeline facility operates under rates contained in a simplified pipeline tariff. The pipeline carrier may not, through future revised rates, recover any portion of the dismantlement, removal, and restoration money waived under this subsection.  
	(e)  The initial estimated throughput used to calculate rates for a new pipeline facility with less than 15 months' operating experience must be the estimated average annual throughput during the first three years of operation. The initial estimated throughput used to calculate rates for a pipeline facility with 15 or more months' operating experience must be the actual annual throughput during the most recent four calendar quarters.  
	(f)  A pipeline carrier collecting rates filed under 3 AAC 48.200 - 3 AAC 48.410 that proposes to revise its rates by implementing simplified pipeline tariff rates shall comply with the requirements of (a), (b), and (c) of this section and the following requirements:  
		(1) plant balances, accumulated depreciation, additions, and retirements shall be based upon  
			(A) actual beginning plant balances, accumulated depreciation, additions, and retirements authorized by the commission to be included in rates; or  
			(B) in the absence of a specific authorization by the commission, amounts used to determine rates in the pipeline carrier's previous rate filings;  
		(2) undepreciated plant balances must be depreciated using the straight-line method based on a 25-year economic life reduced by the number of years the designated pipeline facility was in public service before the filing of a simplified pipeline tariff.  
	(g)   A pipeline carrier with simplified pipeline tariff rates in effect may file revised rates below the currently effective rates without providing information required by 3 AAC 48.466. This subsection does not relieve the pipeline carrier of the obligation to file revised rates in compliance with (h) of this section.  
	(h)  A pipeline carrier with simplified pipeline tariff rates shall file revised rates no later than first quarter of the third calendar year following the effective date of the most recent rates filed under (a) of this section.  
	(i)  Revisions to simplified pipeline tariff rates may be submitted in accordance with 3 AAC 48.275 or this section. Revised rates filed under this section must be calculated in accordance with (a), (b), and (c) of this section and the following requirements:  
		(1) operating costs for revised rates must be based on initial operating costs, indexed upward or downward as follows:  
			(A) the index is the Producer Price Index for Finished Goods (PPI-FG) using a 1982 base year, as published by the United States Department of Labor, Bureau of Labor Statistics (BLS) in the PPI Detailed Report, or equivalent data retrieved from http://www.bls.gov as Series ID WPUSOP3000;  
			(B) the operating costs for revised rates are the initial operating  costs, divided by the PPI-FG reported for the month in which the initial operating costs were filed, multiplied by the PPI-FG  
				(i) for the month nearest to the date of the current filing; and  
				(ii) that is not identified as preliminary or subject to revision or correction;  
			(C) each filing that includes an indexing calculation must  
				(i) clearly identify the value and month of the PPI-FG used in each step of the calculation; and  
				(ii) include a copy of each BLS report that was used to obtain the data, or a printout of the equivalent data retrieved from the BLS website;  
		(2) property balances for revised rates must include adjustments, for actual additions and actual retirements including accumulated depreciation balances, to plant balances, as reflected in the most recent previous filing under this section;  
		(3) estimated throughput for revised rates must be based upon actual throughput for the most recent four calendar quarters.  

Authorities

42.06.140;42.06.350;42.06.360;42.06.370;42.06.380;42.06.390;42.06.410

Notes

Reference

3 AAC 48.452
3 AAC 48.454
3 AAC 48.458
3 AAC 48.460
3 AAC 48.466
3 AAC 48.468
3 AAC 48.476

Authority

AS 42.06.140 AS 42.06.350 AS 42.06.360 AS 42.06.370 AS 42.06.380 AS 42.06.390 AS 42.06.410

History

Eff. 1/9/2009, Register 189