SFPP, L.P., 121611 FERC, IS08-390-004

Docket Nº:IS08-390-004, IS08-390-006
Party Name:SFPP, L.P.
Attorney:Charles F. Caldwell, Esq., Andrea Halverson Harper, Esq., Michelle T. Boudreaux, Esq., Amy Hoff, Esq., Albert S. Tabor, Jr., Esq., Randy P. Parker, Esq., Daniel Sanborn, Esq., and Dean Leafler, Esq., on behalf of SFPP, LP. Frederick G. Jauss IV, Esq., Beth Forsythe, Esq., and Timothy J. Koeppl, E...
Judge Panel:Before Commissioners: Jon Wellinghoff, Chairman; Philip D. Moeller, John R. Norris, and Cheryl A. LaFleur. Nathaniel J. Davis, Sr., Deputy Secretary.
Case Date:December 16, 2011
Court:Federal Energy Regulatory Commission
 
FREE EXCERPT

137 FERC ¶ 61220

SFPP, L.P.

Nos. IS08-390-004, IS08-390-006

United States of America, Federal Energy Regulatory Commission

December 16, 2011

Charles F. Caldwell, Esq., Andrea Halverson Harper, Esq., Michelle T. Boudreaux, Esq., Amy Hoff, Esq., Albert S. Tabor, Jr., Esq., Randy P. Parker, Esq., Daniel Sanborn, Esq., and Dean Leafler, Esq., on behalf of SFPP, LP.

Frederick G. Jauss IV, Esq., Beth Forsythe, Esq., and Timothy J. Koeppl, Esq., on behalf of ConocoPhillips.

George L. Weber, Esq., on behalf of Chevron Products Company.

Thomas J. Eastment, Esq., Gregory S. Wagner, Esq., Joshua B. Frank, Esq., Christina M. Vitale, Esq., Eunice B. Sutter, Esq., and Kevin J. Vaughan, Esq., for ExxonMobil Oil Corporation and BP West Coast Products, LLC.

Melvin Goldstein, Esq., Matthew Corcoran, Esq., and Barron W. Dowling, Esq., on behalf of Tesoro Marketing and Refining.

Steven A. Adducci, Esq., on behalf of Valero Marketing and Supply Company.

Richard E. Powers, Jr., Esq., and Christopher K. Diamond, Esq., for Continental Airlines, Inc., Northwest Airlines, Inc., Southwest Airlines, Inc., and U.S. Airways, Inc.

Derek L. Anderson, Esq., and Debora E. Lyon, Esq., on behalf of the FERC Trial Staff.

TABLE OF CONTENTS

Paragraph Numbers

I. Background .....................................................................................................................................................3

II. Test Year Definition and Throughput ...............................................................................................................9

A. Opinion No. 511 ............................................................................................................................................9

B. Rehearing .......................................................................................................................................................10

1. Rehearing Arguments ......................................................................................................................................10

2. Commission Determination ..............................................................................................................................18

C. Compliance Filing ..........................................................................................................................................26

1. SFPP’s Compliance Filing ..............................................................................................................................26

2. Shipper Protests .............................................................................................................................................27

3. Commission Determination .............................................................................................................................30

III. Volumetric Allocation of Costs .....................................................................................................................32

IV. Operating Expenses and Rate Design ...........................................................................................................35

A. Litigation Costs .............................................................................................................................................35

1. Opinion No. 511 ...........................................................................................................................................35

2. Rehearing ......................................................................................................................................................36

3. Compliance Filing .........................................................................................................................................43

B. Environmental Costs ....................................................................................................................................52

C. Fuel and Power Costs .................................................................................................................................58

V. Overhead Cost Allocation ...........................................................................................................................63

A. General .......................................................................................................................................................63

1. Summary of 2009 ID Determinations ............................................................................................................63

2. Opinion No. 511 ..........................................................................................................................................65

B. Rehearing Requests ......................................................................................................................................70

1. Appropriateness of SFPP’s Cost Allocation Methodology .............................................................................72

2. Relevance of Using Different Accounting Methods for Different Regulatory Bodies .........................................92

3. Quality of Direct Assignments ........................................................................................................................97

4. Exclusion of Certain KMEP Subsidiaries .......................................................................................................114

5. Appropriateness of Certain Cost and Revenue Components ..........................................................................158

6. KN Method .................................................................................................................................................169

C. Compliance Filing on Cost Allocation Issues .................................................................................................176

1. G&A Costs Directly Assigned to SFPP, Pacific Pipeline Group Sub-tier, or PPL Tier.....................................179

2. G&A Costs in KMI Cross-Charge ...............................................................................................................202

3. Indirect G&A Capital Project Costs .............................................................................................................218

VI. Capital Structure and the Cost of Capital .....................................................................................................230

A. PAA ...........................................................................................................................................................230

1. Opinion No. 511 .........................................................................................................................................230

2. Rehearing Requests .....................................................................................................................................232

3. Commission Determination ..........................................................................................................................235

4. Compliance Filing .......................................................................................................................................242

B. Debt Cost ..................................................................................................................................................245

1. Opinion No. 511 ........................................................................................................................................245

2. Rehearing Requests ....................................................................................................................................246

3. Compliance Filing .......................................................................................................................................248

C. Return on Equity ........................................................................................................................................250

1. Opinion No. 511 ........................................................................................................................................252

2. Rehearing Requests ...................................................................................................................................253

3. Commission Determination ........................................................................................................................256

D. Rate Base and Deferred Return ................................................................................................................260

1. Rehearing Requests ...................................................................................................................................261

2. Commission Determination ........................................................................................................................262

VII. Income Tax Allowance Issues ................................................................................................................266

A. Opinion No. 511 ......................................................................................................................................268

B. Summary of the Requests for Rehearing...

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