we expect to issue additional policy statements from time to time clarifying various aspects of these procedures and principles. The new area rate determinations resulting from such proceedings will represent final determinations of just rates for the areas involved as of the date of the decision and for prior periods.

The initial rates at which sales of natural gas in the Rocky Mountain area are to be certificated, without refund obligations for sales made under contracts dated after October 1, 1968, are set forth in table No. 1A and, subject to the additional requirements, restrictions, and authorizations provided in the orders issuing such certificates represent the area rate levels for the areas involved until such time as the Commission shall promulgate applicable just and reasonable rates in said area.

1 The rates reflect the result of approximate and average severance and production tax adjustments.

(b) As a result of our considerable experience with the effects of favored-nation and price redetermination provisions upon independent producer prices, we concluded that acceptance of settlement offers was desirable in the public interest, appropriate to carry out the provisions of the Natural Gas Act, and beneficial to ultimate consumers, pipeline purchasers and independent producers. In view of the foregoing, an adjustment to the price level for increased rates in Texas District Nos. 2, 3, 4, and 6, when coupled with the elimination of price redetermination provisions and favored-nation provisions in existing filed rate schedules appears to be appropriate.

(1) Accordingly, the Commission provides that: For rate schedules from which all price escalation clauses are being eliminated except for provisions for future changes in tax reimbursement, the area price level for increased rates for natural gas sales by independent producers in Texas District Nos. 2, 3, 4, and 6 is 15.08 cents per Mcf at 14.73 p.s.i.a. (15 cents per Mcf at 14.65 p.s.i.a.), including tax reimbursement.

(2) For rate schedules from which all price escalation clauses are being eliminated except for periodic escalation provisions as specified below and provisions for future changes in tax reimbursement, the area price level for increased rates for natural gas sales by independent producers in Texas District Nos. 2, 3, 4, and 6 is 14.68 cents per Mcf at 14.73 p.s.i.a. (14.6 cents per Mcf 14.65 p.s.i.a.), including tax reimbursement: Provided, however, That such revised rate schedules may contain escalation clauses providing future separate increases in rate not in excess of 1.01 cents per Mcf at 14.73 p.s.i.a. (1 cent per Mcf at 14.65 p.s.i.a.), the first such escalation not to be tendered for filing prior to the effective date of the 14.68 cents rate and subsequent escalations to be effective under the contract at not less than 5-year intervals thereafter.

(3) Subparagraphs (1) and (2) of this paragraph shall not be applicable to a settlement offer unless at least five years remain of the term of the contract comprising the rate schedule sought to be brought within the provisions thereof.

(4) Subparagraphs (1) and (2) of this paragraph shall not be applicable to a settlement offer which proposes to eliminate from a rate schedule (contract or agreement) only the right to present tax reimbursement.

(c) As a result of our continuing experience with the effects of favored-nation and price redetermination provisions upon independent producer prices, we conclude that extension of the applicable provisions of the Second Amendment to this Statement, set out in paragraph (b) in this section, to the areas set out below and to the extent there provided is desirable in the public interest, appropriate to carry out the provisions of the Natural Gas Act, and beneficial to ultimate consumers, pipeline purchasers and independent producers. To that end

(1) For rate schedules from which all price escalations clauses are being eliminated except for provisions for future changes in tax reimbursement, the area price level for increased rates for natural gas sales by independent producers from the various areas covered herein is set forth in column B of Table No. 2.

(2) For rate schedules from which all price escalations are being eliminated except for periodic escalation provisions as hereinafter specified and provisions for future changes in tax reimbursement,

the area price level for increased rates for natural gas sales by independent producers from the various areas covered herein is set forth in Column A of Table No. 2: Provided, however, That such revised rate schedules may contain escalation clauses providing future separate increases in rate not in excess of 1.01 cents per Mcf at 14.73 p.s.i.a. (1 cent per Mcf at 14.65 p.s.i.a.), the first such escalation not to be effective under the contract prior to November 1, 1968, and subsequent escalations to be effective under the contract at not less than 5-year intervals thereafter.

(3) Subparagraphs (1) and (2) of this paragraph shall not be applicable to a settlement offer unless at least five years remain of the term of the contract comprising the rate schedule sought to be brought within the provisions thereof.

(4) Subparagraphs (1) and (2) of this paragraph shall not be applicable to a settlement offer which proposes to eliminate from a rate schedule (contract or agreement) only the right to present tax reimbursement.

(d) (1) All permanent certificates of public convenience and necessity granting applications filed after April 15, 1965, will contain a condition, substantially in the language set out in subparagraph (2) of this paragraph, precluding any filing of an increased rate at a price in excess of those designated in Table No. 3 for the period prescribed therein, unless at the time of filing such certificate application, or within the time fixed in the notice of application for filing protests or petitions to intervene, the applicant indicates in writing that it is unwilling

Effective duration of antitriggering conditions is Jan. 1 1970, as provided for in Order No. 852, § 2.56(d) (3) and (4) o1 the Commission's general policy and interpretations, rules of practice, and procedure.

• For conversion factors see: 33 F.R. 14373, 4; 18 CFR 2.56:e).

any grant of certificate shall be so conditioned.

(2) Standard anti-triggering condition:

No increase in rate shall be filled prior to at any price which would exceed the ceiling prescribed for the given area by paragraph (d) of the Commission's Statement of General Policy 61-1, 83 amended.

(3) All permanent certificates of public convenience and necessity granting applications filed on or after July 1, 1967. will contain a condition, substantially in the language set out in subparagraph (4) of this paragraph, precluding any filing of an increased rate at a price in excess of those designated in the table referred to in subparagraph (1) of this paragraph, prior to January 1, 1970, unless at the time of filing such certificate application, or within the time fixed in the notice of application for filing protests or petitions to intervene, the applicant indicates in writing that it is unwilling to accept such a condition in which event the application will be set for formal hearing to determine, inter alia, whether any grant of certificate shall be so conditioned.

(4) Standard anti-triggering condition: "No increase in rate shall be filed prior to January 1, 1970, at any price which would exceed the ceiling prescribed for the given area by paragraph (d)(3) of the Commission's statement of general policy No. 61-1, as amended."

(e) For purposes of computing any area rate adjustments effectuated pursuant to this section, the following conversion factors with the results rounded to the nearest one-hundredth of a cent, shall be used in converting to the 14.73 p.s.i.a pressure base prescribed herein: From 14.65 p.s.i.a. to 14.73 p.s.l.a. From 15.025 p.s.l.a. to 14.73 p.s.i.a.

From 15.325 p.s.i.a. to 14.73 p.s.l.a.

1.00546

0.98037

0.96117

(f) Special policy for newly-discovered reservoirs on previously committed acreage. (1) In the Permian Basin and Southern Louisiana areas, the rate ceilings set forth in Table 1 of this section applicable to gas-well gas (or residue gas derived therefrom) shall be determined by the date of discovery of such reservoir, in lieu of the contract date, in the case of production on or after November 1, 1969, from a new reservoir on previously committed acreage. In all other areas, the initial rate ceilings set forth in Table 1 of this section shall determine the increased rate ceilings in the case of gas-well gas (or residue gas derived therefrom) produced on or after November 1, 1969, from a reservoir discovered on or after September 28, 1960, on previously committed acreage.

(2) Where a producer is entitled to an increase in the price of its gas based on the date of discovery of the reservoir from which gas-well gas sales (or residue

gas derived therefrom) are being made, it may file a proposed price increase pursuant to section 4 of the Natural Gas Act, indicating to what gas the higher price will be applicable. With each filing the producer will include (1) copies of all documents filed with or issued by local or State regulatory agencies relating to the discovery of the reservoir from which the gas is produced, and (ii) a statement by the buyer of the gas that the gas qualifies for the price sought, or why the buyer believes it does not. The producer shall also furnish any additional material in its possession or available to it which the Commission may request in writing. Documents or other data previously filed with this Commission, whether by the producer or another, may be incorporated by reference in any filing hereunder. Similar information shall be filed in any pending section 4 proceeding to which it is relevant. The Commission will follow the determination made by the appropriate State agency in determining the date of discovery of a reservoir. In the event the State agency changes its classification of a reservoir, the Commission shall follow such change as of the date of the new classification. Whenever the reclassification of a reservoir affects the applicable ceiling rate the producer and the buyer shall notify the Commission.

(3) Reservoirs Discovered on or After January 1, 1973. The rate for new reservoirs discovered on or after January 1, 1973, as a result of a well completion or recompletion commenced prior to January 1, 1973, shall be priced at the rate determined by § 2.56 (a) (5).

(g) If the Commission decides to suspend a rate change filing made by an independent producer under section 4(d) of the Natural Gas Act, and such rate change is filed at least 60 days prior to its proposed effective date, the suspension period will be 1 day from the proposed effective date, or 1 day from the date of initial delivery, whichever is later, unless the Commission waives the notice period required herein or imposes a longer suspension period.

(Secs. 4, 5, 7, 52 Stat. 822, 823, 824; 15 U.S.C. 717c, 717d, 7171) [Statement of General Policy 61-1, 25 FR. 13969, Dec. 30, 1960, as amended by Order 273, Amdt. 7, 28 F.R. 12865, Dec. 4. 1963; Order 284, 29 FR. 11154, Aug. 1, 1964; Order 296, 30 F.R. 4671, Apr. 10, 1965; Order 352, Amdt. 11. 32 F.R. 9955, July 7, 1967; Order 367, 33 FR. 14373, Sept. 24, 1968; Order 374, 33 F.R. 17349, Nov. 23, 1968; Order 381, 34 F.R. 7904, May 20, 1969; 34 F.R. 9157,

June 11, 1969; 34 F.R. 12177, July 23, 1969; 34 FR. 15645, Oct. 9. 1969; Order 423, 36 FR. 3465, Feb. 25, 1971; Order 435, 36 F.R. 18375, Sept. 14, 1971; 38 FR 9810, 9811, Apr. 20, 1973; Order 699-H, 39 FR 43215, Dec. 11, 1974; 40 FR 2580, Jan. 14, 1975; Opinion 770-A, 41 FR 50233, Nov. 15, 1976]

CROSS REFERENCE: See § 154.109b of this title for definition of "Rocky Mountain area" with respect to an amendment affecting tables 2 and 3 in paragraph (c) and (d) respectively. (38 FR 9811, Apr. 20, 1973) § 2.56a

National rates for sales of natural gas from wells commenced on or after January 1, 1973, and certain other sales.

(a) Base national rates. Notwithstanding any other provisions of the General Rules of the Federal Power Commission, or the Regulations under the Natural Gas Act, sales of natural gas in interstate commerce which qualify under the provisions of this paragraph may be made at rates herein provided.

(1) Sales of natural gas in interstate commerce for resale may be made at a rate of $1.42 per Mcf (at 14.73 psia), exclusive of all State or Federal production, severance or similar taxes, and subject to the adjustments provided in this § 2.56a, and the escalation provided in paragraph (a) (2) of this section, provided:

(i) The sale is made from a well commenced on or after January 1, 1975.

(2) The price prescribed by paragraph (a)(1) of this section may be increased by an amount not to exceed 1 cent per Mcf per quarter commencing on October 1, 1976, and the first days of January, April, July, and October of every year, thereafter, for the term of the contract dedicating the subject gas for sale in interstate commerce pursuant to the terms of the sales contract until such time as the price prescribed in paragraph (a)(1) of this section shall be redetermined according to the provisions of paragraph (m) of this section.

(3) Sales of natural gas in interstate commerce for resale may be made at a rate of $0.93 per Mcf (at 14.73 psia), exclusive of all State or Federal production, severance or similar taxes, and subject to the adjustments provided in this section, and the escalation provided in paragraph (a) (4) of this section, provided:

(i) The sale is made from a well commenced on or after January 1, 1973, and prior to January 1, 1975.

(4) The price prescribed by this paragraph (a) (3) of this section may be increased by an amount not to exceed 1.0 cent per Mcf per annum commencing on January 1, 1977, and the first day of every year thereafter for the term of the contract dedicating the subject gas for sale in interstate commerce pursuant to the terms of the sales contract until such time as the price prescribed in paragraph (3) of this paragraph shall be redetermined according to the provisions of paragraph (m) of this section.

(5) Sales of natural gas in interstate commerce for resale may be made at a rate of 52 cents per Mcf (at 14.73 psia), exclusive of all State or Federal production, severance or similar taxes, and subject to the adjustments provided in this §2.56a, and the escalation provided in paragraph (a) (6) of this section, provided the sale is made pursuant to (i) a replacement contract where the sale was formerly made pursuant to a permanent certificate of unlimited duration under such prior contract which expired by its own term on or after January 1, 1973, or pursuant to a contract executed on or after January 1, 1973, where the prior contract expired by its own terms prior to January 1, 1973; or (ii) contracts for sale of natural gas in interstate commerce for gas from wells commenced prior to January 1, 1973, and not previously sold in interstate commerce prior to January 1, 1973, except pursuant to the provisions of §§ 2.68, 2.70, 157.22 or 157.29 (including sales made pursuant to those sections as modified by Federal Power Commission Order No. 491 et al.); or (iii) a completion operation into a different formerly nonproductive reservoir commenced on or after January 1, 1973, in a well commenced (spuddeά) prior to January 1, 1973.

(6) The price prescribed by paragraph (a) (5) of this section may be increased by an amount not to exceed 1.0 cent per Mcf per annum commencing on January 1, 1977, and the first day of every year thereafter for the term of the contract dedicating the subject gas for sale in interstate commerce pursuant to the terms of the sales contract until such time as the price prescribed in paragraph (a) (5) of this section shall be redetermined according to the provisions of paragraph (m) of this section.

(5) Tax adjustments. The applicable rates prescribed in paragraph (a) of this section shall be adjusted upward for all State or Federal production, severance,