WILKEY, Circuit Judge:
In these consolidated petitions, Panhandle Eastern Pipe Line Company (Panhandle) challenges orders issued by the Federal Energy Regulatory Commission (FERC). Two of these petitions1 challenge FERC orders requiring Panhandle to flow through new transportation revenues to its resale gas customers via its unrecovered purchased gas account (PGA), while prohibiting the flow-through of new transportation costs. The third petition 2 challenges the Commission’s selective waiver of its requirement of tracking authority allowing Panhandle to track decreased rates charged it by other pipelines, but not permitting it to pass on increased rates charged Panhandle. For the reasons to be discussed, we set aside the order in No. 78-1356, set aside in part and affirm in part the order in No. 78-1630, and affirm the order in No. 78-1960.
I. BACKGROUND
Commencing around 1971 shortages developed in the supplies of natural gas available to interstate pipelines, resulting in curtailment of deliveries to their customers. As a consequence of the reduction in pipeline gas supplies, natural gas users, including pipelines such as Panhandle, have had to seek more distant supplies of natural gas, which in turn requires special transportation arrangements in order to bring those supplies into their systems. A second consequence of the shortage and resulting curtailment has been that pipelines have substantial excess capacity which could be used, inter alia, to transport natural gas for other pipeline users. The instant petitions involve attempts by Panhandle and the Commission to grapple with problems arising from these changed conditions.
A. No. 78-1356
On 30 June 1977 Panhandle and its wholly owned subsidiary, Trunkline Gas Company, filed a joint application pursuant to section 7(c) of the Natural Gas Act3 for a certificate of public convenience and necessity to transport up to 1,800 Mcf of natural gas on a firm basis and 1,200 Mcf on a best efforts basis for eventual redelivery to Libby-Owens-Ford Company (LOF). The term of the transportation agreement was eight years. The rate proposed by Panhandle and Trunkline for the transportation service was $7,650 per month, subject to adjustment.
The Commission issued its order granting the requested certificates of public convenience and necessity for the transportation services on 16 December 1977. The certificates were granted for a two-year period only.4 The Commission approved Panhandle’s and Trunkline’s proposed transportation charges, after a minor adjustment.
In the same order, the Commission stated:
The rates in Docket No. RP 75-102 [Panhandle’s 1975 rate case] provide for the recovery of all justifiable costs for gas to be sold or transported but do not include the transportation of gas as proposed herein. Since Panhandle will recover its [1123]*1123costs through normal operations, any revenues from the instant transportation service shall be credited to its unrecovered purchased gas cost account.5
Thus in granting Panhandle’s certificate to transport gas for LOP, FERC ordered the pipeline to apply these transportation revenues to reduce the rates of gas resale customers by crediting the revenues to its PGA.6 This was designed to ensure that revenue gains of the transportation service would “inur[e] to the benefit of all of [Panhandle’s] resale customers.”7
On 13 January 1978 Panhandle requested a rehearing. It labeled the crediting requirement inappropriate because it was not limited to the excess of revenues over incurred costs. The company also argued that it was error to require crediting of transportation revenues to its purchased gas account because there is no relation between the two and “[t]he purchased gas account is carefully controlled under the Commission’s PGA regulations, and should not be mixed up with transportation revenues.” Further, there was no assurance the purchased gas adjustment tracking would be permitted throughout the eight-year period of the contract. Panhandle claimed the provision was discriminatory because it was not required of another pipeline, Transco, in the transportation arrangement. Finally the company urged that the requirement was arbitrary because it required automatic crediting of revenues without provision for automatic recovery of transportation costs.8
The Commission rejected Panhandle’s arguments in its order on rehearing issued 22 February 1978. FERC explained that the transportation service was made possible because of unused capacity in Panhandle’s system, and that the costs associated with that capacity were already borne by Panhandle’s resale customers. Thus, crediting the revenues through Account 191 was designed to benefit the resale gas customers who had paid for the costs associated with the excess pipeline capacity. There was no need to consider whether the PGA clause would continue the eight years of the contract because the certificate was limited to two years only. FERC found no discrimination vis-a-vis Transco, because Transco had previously agreed to credit transportation revenues to its unrecovered purchased gas account, and treatment of the revenues was an issue in certain Transco rate proceedings. The Commission did amend its 16 December 1977 order to allow Panhandle to recover its out-of-pocket costs incurred in performing the transportation services.9 Finally, the Commission pointed out that “[i]n the event Panhandle’s other transportation costs [were] preventing it from earning a reasonable return, it [was] free at any time to submit a general rate change under Section 4(e) of the Natural Gas Act.”10
On 20 April 1978 Panhandle filed its petition for review docketed as No. 78-1356.
B. No. 78-1960
On 25 October 1977 Trunkline applied for a certificate of public convenience and necessity to transport up to 10,000 Mcf of natural gas per day for Panhandle from offshore Louisiana. The gas was previously purchased by Panhandle from its affiliate Pan Eastern Exploration Company. The gas is transported by Trunkline to an exist[1124]*1124ing interconnection with Panhandle near Tuscola, Illinois. Two other pipelines, Tarpon Transmission Co. and Tennessee Gas Pipeline Co., were also involved in the transportation arrangement. Panhandle was to pay $81,800 per month for the transportation service plus a proportionate share of Trunkline’s payment to Tarpon for offshore transportation. Total cost to Panhandle for the new transportation service is claimed to be from $1.5 to $2 million per year.
Because the Commission had previously required Panhandle to credit new transportation revenues to its unrecovered purchased gas account, Panhandle petitioned to intervene in the proceeding and sought to have Trunkline’s certificate conditioned so as to permit Panhandle’s new transportation costs to be included as purchased gas costs recoverable through its PGA clause.11
On 17 April 1978 the Commission issued its order granting Trunkline’s certificate and denying Panhandle’s request.12 The Commission explained that the crediting of transportation revenues was applied to short term transportation arrangements to “assure that the pipelines’ customers share in the revenues received from such transportation service, since the rates that the customers pay are based on costs and revenues established in the pipelines’ most recent approved rate case.” The Commission then reasoned that recovery of transportation costs through the purchased gas adjustment provisions is not permitted unless the pipeline’s tariff includes a “tracking” provision. Panhandle’s tariff does not include such a provision. Because the Trunkline proceeding concerned a long term transportation service (ten years), the Commission determined that “if the cost to Panhandle for the transportation service performed by Trunkline precludes earning a reasonable return, Panhandle should consider submitting a general rate change filing under Section 4(e) of the Act.” The Commission further reasoned that since each Mcf of sales included fixed costs, to the extent Panhandle sold more gas than contemplated when the original rates were filed, the additional fixed costs recovered would offset the additional transportation costs.
Panhandle filed for rehearing on 16 May 1978.13 In its application Panhandle strenuously objected to the crediting requirement previously imposed upon it in the LOF proceedings. The company argued that disallowing flow-through of costs in the Trunk-line proceeding while requiring crediting of revenues in the LOF proceeding was inconsistent, and constituted a double penalty to Panhandle. It argued that the Commission’s reliance on Panhandle’s most recently approved rate case was misplaced, because it was “several years old and provide[d] no justification for the assumption that Panhandle’s customers are paying for the costs presently being incurred.” The company then requested a hearing to show that it was not recovering its costs of service and an adequate return. Panhandle argued that it was inconsistent for the Commission to require a “tracking” provision to pass on increased transportation costs, but not to pass on increased revenues. The company also objected to the requirement that it file a section 4 rate proceeding in order to recover its increased transportation costs, and cited two recent Commission cases where pipelines were allowed to track incremental costs without filing a section 4 rate increase. It also made reference to this court’s decision in Richmond Power & Light v. FERC,14 affirming a Commission order that did not require downstream electric utilities to absorb additional transmission costs. Finally, Panhandle maintained that the Commission erred in speculating that Panhandle’s increased costs could be recovered through its increased sales, since the cost to Panhandle for the gas and transpor[1125]*1125tation was greater than the highest rate it was allowed to charge.
The Commission denied the application for rehearing on 25 September 1978.15 Again, it pointed out that if Panhandle’s rates were inadequate to recover its costs, it should file for an increase under section 4. The Commission would not, however,
permit Panhandle to include in Account No. 191, Unrecovered purchased gas costs, the costs incurred by it as a result of Trunkline’s transportation of its gas. Such a course of action might have the effect of allowing Panhandle a rate increase when its rates, in the context of its overall cost of service vis a vis its overall revenues, might be fully adequate without such increase.16
While the Commission had “provided for tracking rate increases in the case of purchased gas costs in Order No. 452, . this did not extend to other cost elements, including transportation costs, such as are here sought by Panhandle.” Although it prohibited the passing on of transportation costs, the Commission did not feel it improper to require flow-through of revenues via the PGA account “to prevent a pipeline from being unjustly enriched at the expense of customers.” In any event, the Commission stated that Panhandle’s objections to the crediting provision should not be pursued collaterally “in this proceeding, where they are of peripheral interest only.”
The Commission distinguished the two cases that were cited by Panhandle as inconsistent with the Commission’s refusal to allow the company to track its increased transportation costs. Those two cases involved tracking of storage, costs, and were to be limited to their unique facts. The Commission then distinguished Richmond Power on two grounds: (1) it was a negotiated settlement, and (2) it “involved a coordinated response by many utilities to a special emergency situation at the behest of a stated Commission policy.” In response to Panhandle’s request for a hearing to show that it was not recovering its costs, the Commission stated that the company was “free in these circumstances to file a rate increase pursuant to Section 4 of the Natural Gas Act at any time.”
Panhandle filed a petition for review, No. 78-1960, on 28 September 1978, which was consolidated with Nos. 78-1356 and 78-1630 by order of the court on 3 October 1978. C. No. 78-1630
The orders under review in No. 78-1630 concern two rate adjustment filings by Panhandle. The first grew out of a Commission certificated joint transportation service 17 wherein gas purchased by Northern Natural Gas Co. (Northern) in offshore Louisiana was transported by Stingray Pipeline Co. (Stingray), Natural Gas Pipeline Co. of America (Natural), Trunkline, and Panhandle for eventual redelivery to Northern. Because of the location of delivery and redelivery points of the gas, there is no actual transportation by Panhandle and therefore no additional charge for its services. Pursuant to Panhandle’s FERC Rate Schedule T-18, Northern pays Panhandle a monthly charge representing the total transportation charges of Stingray, Natural, and Trunkline. Panhandle in turn pays to Trunkline the identical amount, pursuant to Trunkline’s FERC Rate Schedule T-20. Thus, as to transportation charges payable by Northern, Panhandle appears to be simply a conduit between Northern and Trunk-line.
On 6 February 1978 Panhandle filed a proposed rate change for Northern.18 In its cover letter, Panhandle referenced only a decrease in Trunkline’s transportation rates, but the attached worksheet made clear that the proposed change reflected a significant increase in the charge to Northern based on a higher rate to be paid Stingray.
[1126]*1126The second filing,19 submitted 9 February 1978, involved a Commission approved transportation service by Trunkline and Panhandle for Central Illinois Public Service Co. (CIPSCO).20 Panhandle’s cover letter referenced Trunkline’s general rate decrease, and the tariff sheets reflected only that rate decrease.
On 10 March 1978 the Commission by letter order accepted the proposed rate decrease as to CIPSCO, but rejected the increase as to Northern.21 The Commission explained that Panhandle did not have tracking authority to reflect the rate changes, but the CIPSCO adjustment would be accepted anyway, since the proposed rate was equal to or lower than currently effective rates. The increased rate for Northern was rejected for lack of tracking authority.
Panhandle applied for a rehearing on 10 April 1978.22 It contended that the rates and charges contained in the revised tariff sheets were obligatory under Panhandle’s Rate Schedule T-18, were approved by pri- or Commission order, and therefore not subject to partial approval and partial rejection without any evidentiary basis, hearings, procedural safeguards, or finding supporting such action. The pipeline argued that it was improvident and erroneous to deny Panhandle’s proposed increase when the Commission had approved Trunkline’s application for the identical amount. Panhandle submitted that it was error for the Commission to waive its requirement of tracking authority to permit filing of rate reductions, and at the same time refuse to waive them as to rate increases. Panhandle pointed out that it would suffer a significant out-of-pocket loss unless it were permitted to pass through the increased charges.
The Commission denied the application for rehearing on 9 May 1978.23 It explained that Panhandle had no authority under its transportation certificate to track changes in its rates, and that the acceptance of Trunkline’s related rate decrease did not automatically entitle Panhandle to an increase. Trunkline’s rate change, in accordance with regulations, was supported by cost-of-service evidence, while Panhandle’s was not. That the increased transportation charge to Panhandle had been approved by the Commission did not entitle the company to pass on the increases in the absence of an approved tracker or a eost-of-service showing. The Commission held that it had discretion to accept the voluntarily filed rate decrease to benefit consumers, and to reject simultaneously a rate increase. It stated that waiver of its requirements is appropriate for good cause shown, but that Panhandle had not made such a showing in this case.
Panhandle filed its petition for review as to these orders on 6 July 1978.
II. THE MERITS
It is hard to resist agreeing with Panhandle that the orders under review appear in various ways to put the squeeze on the pipeline, although to be sure the existence and degree of any pinch depends on which of several states of the world actually exists. In general, the Commission appears to take a quite liberal view of its own authority to require the flow-through of revenues, while imposing rather vigorous procedural standards on Panhandle in its effort to recover its additional costs. Whether the various procedures were valid or fair is a rather close question. Nevertheless, we think that the revenue crediting requirement in No. 78-1356 must be set aside as unauthorized by section 7, violative of Commission regulations, not premised on solidly based findings in the record, and unreasonable. [1127]*1127Since Panhandle’s objections to the Commission’s order in No. 78-1960 relate largely to its inconsistency with the revenue crediting policy, the arguments are in great measure defused by our disposition of No. 78-1356. To the extent Panhandle is claiming to be entitled to recover increased transportation costs via Account 191, even in the absence of revenue crediting, we" affirm the Commission’s refusal. As to No. 78-1630, we think that when a pipeline is merely an accounting conduit for charges made by other pipelines, a proper case for waiver is presented. We therefore set aside that portion of the order disallowing Panhandle the right to track its increased cost, while affirming that portion approving the filing of decreased rates.
Panhandle contends in No. 78-1356 that the requirement that it credit its transportation revenues to Account 191, especially when it is prohibited from charging its transportation costs similarly, (1) violates section 5 of the Act, (2) runs roughshod over the Commission’s regulations concerning the PGA clause, and (3) is in various ways unfair, discriminatory, and contrary to most precedent. The Commission counters that it is authorized under section 7 to impose such conditions on certificates, that the condition was necessary to prevent over-collection by Panhandle of fixed costs, and that the order violated neither Commission regulations nor precedent.
Although the objective of the Commission in fashioning the revenue crediting requirement may be laudable, the order must be set aside because we conclude that the Commission’s section 7 conditioning power does not authorize the adjustment of rates charged customers not receiving the services to be certificated. We also find that the order violates the Commission’s accounting regulations, does not rest on soundly based findings in the record and is unreasonable. Since we reverse on these grounds we do not find it necessary to reach Panhandle’s contention that the order was discriminatory or contravened precedent.
1. Section 7 Authority
(a) Ratemaking Under the Natural Gas Act
The purpose of the Natural Gas Act was to “underwrite just and reasonable rates to the consumers of natural gas.”24 It was framed “to afford consumers a complete, permanent and effective bond of protection from excessive rates and charges,”25 and at the same time, to ensure that rates set be “consistent with the maintenance of adequate service in the public interest.”26
Three interrelated sections constitute the “comprehensive and effective regulatory scheme” 27 Congress created with regard to ratemaking. Section 7 provides that to undertake the “transportation or sale of natural gas,” an entity must first obtain “a certificate of public convenience and necessity issued by the Commission.” 28 In issuing such certificates, the Commission has “the power to attach . . . such reasonable terms and conditions as the public convenience and necessity may require.” 29 Once rates are authorized under section 7, a natural gas company may file for an in[1128]*1128crease under section 4.30 The company must file its rates thirty days before they go into effect.31 The Commission may then suspend the new rate schedule for five months.32 Thereafter the increased rates may be collected but the Commission may require a bond to ensure refunds of “increased rates or charges by its decision found not justified.”33 The burden of proof in section 4 proceedings is on the natural gas company.34
On the other hand, if rates are unjust or unreasonable, the Commission may adjust them pursuant to section 5.35 This section provides that “[wjhenever the Commission, after a hearing . . . shall find that any rate ... is unjust, unreasonable, unduly discriminatory, or preferential, the Commission shall determine the just and reasonable rate . . . and shall fix the same by order.”36 Section 5 rate adjustments may be prospective only,37 and the Commission may not order rate increases unless the company has filed a new rate schedule.38
In the instant case, the Commission has attempted to effectuate the policies of the Natural Gas Act by mandating a flow-through of revenues to resale customers as a condition on a section 7 transportation certificate. The Commission has implicitly determined that permitting Panhandle to retain these transportation revenues would allow it to be “unjustly enriched at the expense of consumers.”39 Since theoretically Panhandle is already recovering from rates set in a prior rate settlement the fixed costs of the unused capacity that permits it to provide transportation services, “additional revenues covering the same fixed costs” are overcollections.40
Panhandle claims that if in fact the Commission believes its rates are too high, it must follow the customary procedures under section 5 of the Act which permits it to act only “after hearing” and only after a finding that Panhandle’s overall rates are unjust.41 The Commission argues that since the revenue crediting condition was imposed pursuant to the Commission’s section 7 power, section 5 requirements of hearings and findings do not apply.42
The underlying premise of the Commission’s argument is that it had authority under section 7 to condition the certificate to require revenue crediting, so long as the condition was “supported by soundly based findings in the record” and was reasonable.43 We do not interpret section 7 so expansively.
(b) The Scope of the Section 7 Conditioning Power
The actual language of section 7(e) is broad indeed. It states that in granting certificates: “The Commission shall have the power to attach to the issuance of the certificate and to the exercise of the rights granted thereunder such reasonable terms and conditions as the public convenience and necessity may require.” In the absence of sections 4 and 5 of the Act, this broad mandate conceivably could authorize adjustment of rates not involved in the actual certificate proceeding. But section 7’s broad conditioning power must be read in [1129]*1129conjunction with sections 4 and 5. In that context, for three reasons we believe that the conditioning power does not extend to adjusting previously approved rates for services not before the Commission in the relevant certificate proceeding.
(i) Emasculation of the Role of Section 5
First, the more expansive reading would effectively emasculate the role of section 5 in the ratemaking scheme. Any time the Commission had good reason to believe that a pipeline’s rates were unjust or unreasonable, it could simply condition the granting of new certificates on the adjustment of those rates, the condition to terminate only when the pipeline filed a new rate proceeding under section 4. There would be no need for the Commission to use section 5 so long as pipelines continued requesting new certificates — instead, the Commission could simply condition certificates on rate reductions and shift the burden to the pipelines, to show affirmatively that its previous rates continued to be just and reasonable. Section 5 would be reduced to a stopgap device, necessary for reducing unjust or unreasonable rates only when no new certificate filings were being made. We do not think that section 7 was meant to reduce so sharply the role of section 5, and therefore decline to adopt FERC’s expansive interpretation of the conditioning power.44
(ii) Erosion of Protections Against Regulatory Lag and Rate Instability
Although the Act’s principal purpose is to protect consumers against excessive rates, a corollary purpose is to allow natural gas companies their cost of service and a reasonable rate of return.45 Recognizing that it is in the public interest that companies receive adequate revenues to maintain high quality service, Congress designed sections 4 and 5 to protect companies against regulatory lag46 and provide a degree of certainty in their rate schedules. Under section 4, once a company has filed a new rate schedule and the five-month statutory suspension period has elapsed, the rates go into effect — subject to a refund obligation. Thus, should administrative proceedings take longer than five months companies are protected against additional loss of revenues. Once rates are approved by certificate or in section 4 proceedings, the Commission may change them only after a section 5 hearing and specific findings that they are unjust or unreasonable.47 Section 5 rate reduction orders may be prospective only. This ensures rate stability; companies may count on receiving previously approved revenues without the threat of an indefinite refund requirement at a later date.
Interpreting the conditioning power to allow adjustment of previously approved [1130]*1130rates eliminates both protections in one fell swoop. Rate stability is destroyed because at any time a certificate is filed, immediate reductions may be ordered as to previously approved rates. Protections against revenue loss caused by administrative delay are seriously diluted. In addition to the thirty-day filing period and five-month rate suspension period prescribed by the Act, a pipeline would be deprived of the revenues from previously approved rates during the time necessary to prepare new section 4 filings.48 Because the Commission’s expansive view of the conditioning power would largely extinguish these protections of sections 4 and 5, we refuse to adopt it.
(iii) Circumvention of Section 5 Requirements of Hearings and Findings
Finally, we reject the broad interpretation of section 7 because it allows circumvention of section 5 requirements of a hearing and specific findings as to justness and reasonableness of existing rates. The law seems clear that once rates are approved in certificates or rate proceedings, they may only be adjusted by the Commission after a finding that they are unjust, unreasonable, or not the lowest reasonable rate.49 It would be ironic after rates have been approved as theoretically just and reasonable under section 4 to allow the Commission to reduce them by revenue crediting or other means without a specific finding that the rates are no longer just and reasonable.50 We therefore decline to adopt the wider construction of section 7 that would do away with the section 5 requirement of hearings and findings before reducing rates.51
For these reasons we hold that FERC may not as a condition on a section 7 certificate require a pipeline to adjust rates previously approved by the Commission for customers not receiving the services to be certificated.52
[1131]*1131(c) Case Law
The Commission cites a great many cases to show the “considerable breadth” of its conditioning authority under section 7(e). The decisions are distinguishable from the' case at hand, and we do not find them controlling.
FERC initially cites the Supreme Court’s seminal opinion in Atlantic Refining Co. v. Public Service Commission (CATCO).53 There, the Court declared that the Commission should give “a most careful scrutiny and responsible reaction to initial price proposals of producers under § 7.”54 The Court noted that the interminable delay involved in section 5 proceedings, “the fact that the Commission was not given the power to suspend initial rates under § 7,” and the absence under section 5 of a refund protection make “it the more important . that ‘this crucial sale should not be permanently certificated unless the rate level has been shown to be in the public interest.’ ”55 Without appropriate rate conditions in the certificate, “a windfall for the natural gas company with a consequent squall for the consumers” could result. The Court found that “[t]his the Congress did not intend.” 56
The Court continued,
There is, of course, available in such a situation, a method by which the applicant and the Commission can arrive at a rate that is in keeping with the public convenience and necessity. The Congress, in § 7(e), has authorized the Commission to condition certificates in such manner as the public convenience and necessity may require. Where the proposed price is not in keeping with the public interest because it is out of line or because its approval might result in a triggering of general price rises or an increase in the applicant’s existing rates by reason of “favored nation” clauses or otherwise, the Commission in the exercise of its discretion might attach such conditions as it believes necessary.57
The Court noted that in allowing the Commission to attach rate conditions on certificates, “§ 7 is given only that scope necessary for ‘a single statutory scheme under which all rates are established initially by the natural gas companies . subject to being modified by the Commission.’ ” 58 Further, “[sjection 7 procedures in such situations thus act to hold the line awaiting adjudication of a just and reasonable rate.”59
The other decisions cited us generally expand or refine this section 7(e) conditioning power regarding rates and contractual pro[1132]*1132visions for the services to be certificated.60 As to rate conditions, the decisions accord with the principle that section 7 may be used “to hold the line awaiting adjudication of a just and reasonable rate.”61
Here, the Commission has not acted just to hold the line on certificated rates, but to adjust other, previously approved rates as well.62 FERC has not cited, and our own research does not disclose, any judicial authority holding that the Commission may tinker with rates previously found just and reasonable in conditioning a certificate dealing with other sales or services. For the reasons already mentioned, we decline to so extend the Commission’s conditioning powers.
In addition, we note that the considerations mandating the use of section 7 to set initial rates for certificated sales or services do not require its use to adjust previously approved rates for other services. As the Supreme Court noted in CATCO, when initial rates are set the only protection consumers have against excessive rates, other than the Commission’s section 7 scrutiny of proposed rates, is the possibility of a subsequent section 5 proceeding to lower rates.63 The delay, lack of suspension power, and lack of power to order retroactive relief in section 5 proceedings make it important for the Commission to “hold the line [by certificate condition] awaiting adjudication of just and reasonable ratefs].”64 Here, just and reasonable rates have already been adjudicated, at least by settlement approved by the Commission. The resale customers have had the protection of a section 4 proceeding with its refund and suspension provisions, and as well have continuing protection of section 5, inadequate though it may be of itself. The rates have already been approved as theoretically just and reasona[1133]*1133ble, and therefore the spectre of “a windfall for the natural gas company with a consequent squall for the consumers” is not so ominous in the absence of certificate conditioning, as it is where initial rates are proposed. Since the public interest here seems to be adequately protected by sections 4 and 5, we do not feel that the cited cases require us to extend the scope of section 7 to allow adjustment of previously approved rates for services not involved in the pertinent certificate proceeding.
(d) Conclusion as to Section 7 Authority
Because we believe a contrary interpretation would emasculate the role of section 5, dilute the protections provided in sections 4 and 5 against regulatory lag and rate instability, and eliminate section 5 protections of hearings and specific findings as to justness and reasonableness of rates pri- or to a rate reduction order, and in the absence of binding contrary precedent, we hold that the Commission does not have authority under section 7 to compel flow-through of revenues to customers of services not under consideration in that proceeding for certification.65
In so doing, we do not mean to intimate that FERC may not take a company’s overall rate structure into consideration in issuing certificate orders. It may evaluate that and myriad other factors as they bear on the public convenience and necessity. The Commission may not, however, order adjustments in previously approved rates for services not before it in the certificate proceeding.
We recognize that there may be instances where certification of essentially cost-free transportation services will push a company’s rate of return over the just and reasonable level. Nevertheless, we'do not believe the solution to the problem is to ignore the policies and protections of sections 4 and 5 and forbid companies to keep revenues pending a section 4 filing. We think a more acceptable and equitable solution would be the adoption by the Commission in appropriate proceedings66 of some sort of “tracker” system for transportation revenues and costs similar to the PGA clause.67 A tracker system would avoid the infirmities of the Commission’s order here — it would not eliminate the role of section 5, it would avoid revenue loss caused by administrative lag and provide rate stability, and it would not run afoul of the section 5 policies of hearings and findings. Further, such a tracker would allow resale customers to receive the benefits and bear the burdens of transportation services provided by and for other companies. We cannot force the Commission to adopt such a system, but today’s holding certainly should not be viewed as precluding use of transportation tracking clauses as approved in appropriate proceedings.68
[1134]*11342. Violation of Commission Regulations.
The purchased gas adjustment clause provisions69 were adopted by the Commission to “permit pipeline companies to protect themselves against supplier rate increases.” 70 The clause allows pipelines to adjust their rates semiannually to reflect changes in unrecovered purchased gas costs. In the meantime, purchased gas costs above or below the current adjustment are placed in a deferred account (Account 191), to be recovered over the next six-month period as a surcharge to the rates, or in the case of lower costs, a reduction in the rates.71 This relieves pipelines of the burden of continuous rate filings, enabling them to recover expeditiously “the cost of purchased gas [which] constitutes the largest single component of their cost of service.” 72
/The unrecovered purchased gas cost account is Account 191 of the Uniform System of Accounts for Natural Gas Companies. It provides:
191 Unrecovered purchased gas costs.
A. This account shall include purchased gas costs related to Commission approved purchased gas adjustment clauses when such costs are not included in the utility’s rate schedules on file with the Commission.73
The pertinent regulation defines “purchased gas cost” as
the cost of wellhead purchases, field line purchases, plant outlet purchases, transmission line purchases, and pipeline production from leases acquired on and after October 7, 1969. Nonconcurrent exchange transactions may be reflected as a cost of purchased gas.74
Panhandle points out that these regulations nowhere permit inclusion of transportation costs or revenues. It argues that the subject revenues should instead be credited to Account 489, titled “Revenues from transportation of gas for others.”75 Panhandle also argues that the challenged order violates longstanding Commission precedent and lists a number of cases where the Commission has refused to allow inclusion of transportation costs in a PGA [1135]*1135clause.76 FERC distinguishes these decisions on the basis that they involved pass-through of costs, not revenues.77 To demonstrate that the order under review is in accord with Commission precedent, it cites a number of recent orders, none judicially reviewed, in which it has ordered crediting of transportation revenues.78
Thus the Commission’s position seems to be that the PGA regulations allow pass-through of transportation revenues, but not of costs. We do not read the carefully constructed purchased gas regulations so loosely. Account 191 applies to costs, not revenues, and to purchased gas items, not transportation items. Moreover, Account 489 by its terms appears to be the proper locus for transportation revenues.
The Commission agrees that Account 489 “is the usual situs for revenues,” but it claims that use of that account “would be inappropriate here” because Account 489 “defers revenues until a rate change proceeding under Section 4, and has no provision for flowing excess revenues back to Panhandle’s jurisdictional customers.”79 Also conceding that nothing in the PGA regulations speaks to transportation costs and revenues, the Commission argues that “nothing specifically precludes using these mechanisms to respond to the Commission’s regulatory purposes.”80 It then cites authority that its powers must be construed broadly in the public interest.81 It points out that in the absence of the condition, Panhandle would continue to “overcollect the excess transportation revenues.” 82
We agree that “ ‘the Commission’s broad responsibilities . . . demand a generous construction of its statutory authority,’ ”83 but we do not believe the Commission should have authority to play fast and loose with its own regulations. It has become axiomatic that an agency is bound by its own regulations.84 The fact that a regulation as written does not provide FERC a quick way to reach a desired result does not authorize it to ignore the regulation or label it “inappropriate.”85
Thus, the order under review must be set aside because in requiring crediting of transportation revenues to the purchased [1136]*1136gas account, the Commission violated its own regulations.86
3. The Condition Is Not Supported by Soundly Based Findings and Is Unreasonable
Even assuming the revenue crediting provision did not violate Commission regulations and was within the ambit of the section 7(e) conditioning power, we find that the condition was not supported by soundly based findings in the record and was not reasonable.87
(a) Basis for Revenue Crediting
The Commission’s theory for attaching the certificate condition is that (1) Panhandle’s extant configuration of rates was designed to recover its full cost of service; (2) consequently, any uncontemplated revenues, such as those obtained through the transportation services in question, would permit double recovery of certain of Panhandle’s items of cost and would pro tanto raise Panhandle’s rate of return, and consequently rates charged, above the just and reasonable level.88 If the state of the world were as the Commission assumes it to be, the challenged condition in fact may have been reasonable. But, as Panhandle is at pains to emphasize throughout its brief, there is no reason to assume that existing revenues are adequate. The Commission’s argument depends on the justness and reasonableness of the rates prescribed in Panhandle’s 1975 ratemaking case.89 Although the rates may have been just and reasonable in 1975 it is plain that they need not be so at present. If Panhandle’s revenues do not presently recover the full cost of service, then the Commission’s argument is substantively incorrect and works rather harshly.
It is not without significance that the Commission at no point made an express finding that Panhandle’s rates continued to recover its full cost of service. The Commission merely assumed that they did. This seems to us a rather precarious assumption to make in view of the rising costs90 in almost all aspects of society between the time the rate case was filed and the instant order entered. The validity of the assumption is also undermined by increases in need for and costs of transportation services, as evidenced in No. 78-1960. Further, as the Commission observed, the general rate level [1137]*1137for Panhandle is presently the subject of another proceeding.91
We do not think that the Commission’s dubious assumption as to the continuing adequacy of the 1975 rates qualifies as a “soundly based finding[] in the record” upon which section 7(e) conditions must be founded. In the absence of such support, the order must be set aside.92
(b) Disallowing Offset of Revenues by New Transportation Costs Was Unreasonable
Assuming arguendo that the Commission’s order was authorized by section 7, did not violate its regulations, and was otherwise supported by soundly based findings in the record, we think the order was unreasonable because it did not allow offset of revenues by increased transportation costs. In its application for reconsideration and rehearing to FERC in the LOF proceeding, Panhandle urged that requiring crediting of revenues and prohibiting flow-through of increased transportation costs constituted a double penalty. The -company expressed a willingness to develop with the Commission staff “an appropriate provision dealing with the flow-through of transportation costs paid by Panhandle to others as well as transportation revenues received by Panhandle from others.”93 The Commission's response was that Panhandle was free at any time to submit a section 4 general rate change in the event its other transportation costs were preventing it from earning a reasonable return.94
Panhandle argues that the Commission’s “facile response . . . fall[s] woefully shy of the ‘reasoned consideration’ standard that is required by law.”95 FERC maintains its disposition was correct because the revenue crediting requirement was “directly connected” to the Commission’s section 7 conditioning power, but the request to flow through costs for “unspecified transportation services” was “more suited to a general rate case where a general tracking provision might be allowed.”96
[1138]*1138We find the Commission’s justifications inadequate. The fact that Panhandle could seek a tracking provision in a rate case does not make inappropriate the allowance of an offset of transportation costs against transportation revenues before crediting the balance for resale customers. Furthermore, we think such a netting procedure would be essential where both transportation costs and revenues were unanticipated — even assuming the pipeline was in other respects recovering its costs. The unforeseen income may increase a pipeline’s revenues above the just and reasonable level, but the unforeseen costs, at the same time, would directly reduce the size of this “over-collection.” If any amount needed to be credited under the Commission’s theory, we think it would be the unanticipated revenues from transportation for others less the unanticipated costs of transportation by other pipelines.
Therefore, we think the Commission’s order was unreasonable to the extent it did not allow netting out of new transportation costs prior to the entry of the credit in Account 191.97
4. Conclusion — No. 78-1356
Because the order under review in No. 1356 constituted an improper exercise of the Commission’s section 7 conditioning power, violated the Commission’s accounting regulations, was not supported by soundly based findings in the record, and was unreasonable in the absence of an offset, we set it aside, and remand the case for further proceedings not inconsistent with this opinion.
The order under review in No. 78-1960 involved the Commission’s disposition of a Panhandle filing “prepared in an effort to find an acceptable solution to the serious problems” flowing from FERC’s revenue crediting policy.98 Panhandle’s proposal was to include additional transportation costs and charges in Account 191 in the same way it was compelled to credit its transportation revenues. The Commission rejected the suggestion. Because we today invalidate the revenue crediting policy, in large measure the questions raised in this petition resolve themselves. To the extent issues in this petition are not mooted by our disposition of No. 78-1356, we affirm the Commission’s order.
Panhandle argues that the Commission’s refusal to allow the pipeline “to recover, as an offset to Account No. 191,” new transportation costs was based upon “bald, wholly unsupported assumptions as to the adequacy of Panhandle’s overall rate level,” and therefore violated section 5.99 If Panhandle is referring to the Commission’s refusal to net out transportation costs from revenues before crediting, there may be some validity to the argument.100 That question is mooted, however, since we void the revenue crediting procedure in No. 78-1356. If, on the other hand, Panhandle is arguing that prohibiting flow-through of transportation costs is violative of section 5 even in the absence of revenue crediting, we cannot agree. Refusal to allow flow-[1139]*1139through of increased costs does not constitute a rate change, and therefore the policies of section 5 simply do not apply.
Panhandle also contends that the Commission has confused the provisions of sections 4 and 5, by “thrust[ing] upon Panhandle an unlawful requirement that it forfeit its new transportation revenues automatically, and in addition be obliged to commence Section 4 general rate case proceedings to restore the funds needed to meet its. expenses for transportation for others.” 101 Again, in view of today’s holding, this issue is moot.
The pipeline submits that it is error for the Commission to interpret the PGA regulations to include transportation revenues but not costs. It argues, “The Commission cannot have it both ways. Either its regulations permit including transportation items in the purchased gas accounts or they do not. Panhandle submits that they do not . . .” 102 We agree with Panhandle. But since the PGA regulation's do not permit inclusion of transportation items, the Commission’s refusal to allow transportation costs to flow through Account 191 must be upheld.
Panhandle’s final argument is that it is arbitrary and contrary to precedent to disallow pass-through of increased transportation costs. It argues that since the Commission’s assumption regarding Panhandle’s PGA clause is that the pipeline “cannot absorb additional gas purchase expenses, and must recover such costs through the PGA clause, it is not permissible for the Commission to assume at the same time that the related transportation costs can be absorbed — at least without some examination of the cost of service and Panhandle’s revenue requirements.”103 If Panhandle is arguing that refusal to allow transportation cost recovery is arbitrary in the context of the revenue crediting requirement, the argument is moot. If it is suggesting that it is absolutely entitled to pass on transportation costs in the absence of an affirmative finding by the Commission that the pipeline can absorb the increased costs, we disagree. It probably would be wise for the Commission to adopt a mechanism in appropriate proceedings allowing transportation costs similar treatment to that of purchased gas costs, but we do not think it arbitrary for the Commission to refuse to expand the definition of purchased gas costs to benefit Panhandle in a section 7 certificate proceeding for Trunkline. We think the decision to construe narrowly the PGA regulation falls within that zone of reasonableness immunizing it from reversal.
Panhandle points out that in Tennessee Gas Pipeline Co.104 and Texas Eastern Transmission Corp.105 the Commission allowed tracking of transportation charges. These cases involved special storage arrangements, and the Commission was careful in each one to deny precedential value to the cases. The holdings have not been followed in subsequent cases, and FERC submits that Tennessee Gas and Texas Eastern “are anomalies in a sea of consistent Commission rulings rejecting rate filings of this nature.”106 It is not denied that the Commission has a policy against permitting tracking of transportation charges outside of settlement agreements. That the Commission granted two sui generis exceptions when special storage arrangements were involved certainly does not compel it to allow tracking when more general transportation situations arise.107
[1140]*1140Therefore, we conclude that the order in No. 78-1960 must be affirmed to the extent that the issues therein are not mooted by our disposition of No. 78-1356.
C. No. 78-1680
The orders reviewed in No. 78-1630 are related to those in Nos. 78-1356 and 1960 in that they involve rates charged and costs incurred by Panhandle for natural gas transportation services. The pipeline argues that it was arbitrary for the Commission to waive its requirements of a full cost-of-service showing to allow a rate decrease, but refuse to do so as to a related cost increase.108 The Commission responds that its primary duty is to protect the interest of consumers, and therefore waiving requirements to allow rate decreases, but not increases, was within the breadth of its discretion. FERC concedes that Panhandle “has now set forth in its brief . some data which may be sufficient to call for a reexamination of the denial of waiver” but argues that the company “has not submitted that data to the Commission as required by the Natural Gas Act.” The Commission suggests that “[i]f Panhandle believes that it has sufficient cause to be granted a waiver, then it should request the Commission to grant such a waiver in the first instance.” 109
We think Panhandle’s application for rehearing made it sufficiently clear that it was seeking a waiver of pertinent regulations. Furthermore, we believe the Commission had the relevant data before it to rule on the request.
Although we agree with the Commission that accepting rate decreases generally does not compel it to accept related rate increases, we think that on the facts of the disputed order, it was an abuse of discretion not to allow Panhandle to pass on its costs. Due to the location of delivery points, it appears that Panhandle makes no charge to Northern for its services. In seeking the rate increase, Panhandle was merely attempting to pass on dollar for dollar rate increases approved by the Commission for upstream pipelines. The Commission has authority to waive requirements of tracking authority in a proper case. We think that where a pipeline is merely an accounting conduit for charges made by other pipelines, good cause exists to grant a waiver.
For these reasons, we set aside that portion of the Commission’s order denying Panhandle’s rate increase in FERC Docket No. RP78-39, and remand the case for further proceedings consistent with this opinion. Since it appears that Panhandle does not object to the Commission’s acceptance of the pipeline’s rate decrease in FERC Docket No. RP78-40 — except to the extent that it demonstrates discriminatory treatment — that portion of the order is affirmed.110
III. CONCLUSION
In sum, we find that the Commission’s rather novel revenue crediting procedure must be disapproved in this context because it is not authorized by section 7(e), it is violative of the Commission’s accounting regulations, it is not supported by soundly [1141]*1141based findings in the record and it is unreasonable. We therefore vacate the order in No. 78-1356 and remand the case for further proceedings consistent with this opinion. Because we invalidate the revenue crediting approach in No. 78-1356, we find the issues in No. 78-1960 largely mooted; to the extent they are not, we affirm the Commission’s disposition. Finally, we vacate that portion of the order in No. 78-1630 prohibiting Panhandle to pass on its increased costs, affirm that portion approving Panhandle’s filing of decreased rates, and remand the case for further proceedings consistent with this opinion.