[Federal Register Volume 60, Number 211 (Wednesday, November 1, 1995)]
[Proposed Rules]
[Pages 55504-55506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27010]



=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission
18 CFR Part 284
[Docket No. RM96-1-000]


Standards For Business Practices Of Interstate Natural Gas 
Pipelines

Issued: October 25, 1995.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Advance Notice Of Proposed Rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Federal Energy Regulatory Commission is issuing a notice 
requesting comments containing detailed proposals for standardizing ten 
high priority business practices of interstate natural gas pipelines. 
In addition, comments are solicited on whether the Commission should 
standardize other business practices to better integrate the pipeline 
grid.

DATES: Comments are due by March 15, 1996. Comments should be filed 
with the Office of the Secretary and should refer to Docket No. RM96-1-
000.

ADDRESSES: Federal Energy Regulatory Commission, 888 First Street, 
N.E., Washington, DC 20426.

FOR FURTHER INFORMATION CONTACT:
Michael Goldenberg, Office of the General Counsel, Federal Energy 
Regulatory Commission, 825 North Capitol Street, NE, Washington, DC 
20426, (202) 208-2294.
Marvin Rosenberg, Office of Economic Policy, Federal Energy Regulatory 
Commission, 825 North Capitol Street, N.E., Washington, D.C. 20426, 
(202) 208-1283.
Brooks Carter, Federal Energy Regulatory Commission, 888 First Street, 
N.E., Washington, D.C. 20426, (202) 501-8145.

SUPPLEMENTARY INFORMATION: In addition to publishing the full text of 
this document in the Federal Register, the Commission also provides all 
interested persons an opportunity to inspect or copy the contents of 
this document during normal business hours at 888 First Street, N.E., 
Washington, D.C. 20426.
    The Commission Issuance Posting System (CIPS), an electronic 
bulletin board service, provides access to the texts of formal 
documents issued by the Commission. CIPS is available at no charge to 
the user and may be accessed using a personal computer with a modem by 
dialing (202) 208-1397. To access CIPS, set your communications 
software to use 19200, 14400, 12000, 9600, 7200, 4800, 2400, or 1200 
bps, full duplex, no parity, 8 data bits, and 1 stop bit. The full text 
of this document will be available on CIPS in ASCII and WordPerfect 5.1 
format. The complete text on diskette in WordPerfect format may also be 
purchased from the Commission's copy contractor, La Dorn Systems 
Corporation, also located at 888 First Street, N.E., Washington, D.C. 
20426.

Advance Notice of Proposed Rulemaking

    The Federal Energy Regulatory Commission (Commission) requests the 
submission of comments, by March 15, 1996, containing detailed 
proposals that will enable the Commission to adopt by regulation 
certain standards for business practices and procedures involving 
transactions between interstate natural gas pipelines and their 
customers.

Background

    In Order No. 563,1 the Commission began the process of 
standardizing electronic communication in the natural gas industry by 
developing standards for capacity release transactions. The capacity 
release standards were developed by industry working groups composed of 
representatives from all segments of the natural gas industry. During 
the process of developing the capacity release standards, a Working 
Group was established to begin the process of standardizing other 
business transactions. The Working Group identified ten high priority 
data elements for standardization. They are, in the order of priority 
assigned by the Working Group: nominations, confirmations, allocated 
gas flows, customer and contract imbalances, gas flow at metered 
points, transportation invoices, pre-determined allocation 
methodologies, gas payment remittance statements, gas sales invoices, 
and uploads of capacity release prearranged deals.

    \1\Standards For Electronic Bulletin Boards Required Under Part 
284 of the Commission's Regulations, Order No. 563, 59 FR 516 (Jan. 
5, 1994), III FERC Stats. & Regs. Preambles para. 30,988 (Dec. 23, 
1993), order on reh'g, Order No. 563-A, 59 FR 23624 (May 6, 1994), 
III FERC Stats. & Regs. Preambles para. 30,994 (May 2, 1994), reh'g 
denied, Order No. 563-B, 68 FERC para. 61,002 (1994).
---------------------------------------------------------------------------

    Approximately one-and-a-half years ago, the Working Group 
recommended against the Commission promulgating standards in this area 
because it thought substantial progress could be made in developing and 
implementing standards on a voluntary basis. The Working Group, for 
example, anticipated significant implementation of the nomination and 
confirmation standards by September 1, 1995.
    The Commission accepted the consensus agreement of the Working 
Group and did not institute a process leading to the mandated 
implementation of business practice standards. The Commission, however, 
recognized the importance of such standards in facilitating gas 
movement across the pipeline grid.2 Depending on the progress made 
by the industry, the Commission committed itself to reevaluate whether 
it needed to become more involved in mandating the development and 
implementation of the standards.3

    \2\Order No. 563-A, III FERC Stats. & Regs. Preambles, at 
31,050.
    \3\Id.
---------------------------------------------------------------------------

    On September 21, 1995, the Commission held a conference in Docket 
No. RM93-4-000 to evaluate the progress being made towards 
standardization. Almost all the commenters at the conference conceded 
that the industry has not achieved the anticipated progress. For 
example, although the industry, through the Gas Industry Standards 
Board (GISB)4 has 

[[Page 55505]]
promulgated a set of standards governing the electronic communication 
of nomination and confirmation information, the standards are not being 
widely used.

    \4\GISB is a private standards development organization that has 
succeeded the industry Working Group as the primary vehicle for 
developing communication standards. On October 23, 1995, the GISB 
board voted to expand GISB's scope, subject to ratification by 
GISB's membership, to include ``business practices that streamline 
the transactional processes of the gas industry.'' As many of the 
participants at the September 21, 1995 conference discussed, this 
development was necessary for GISB to undertake the crafting of 
standards associated with the industry's business practices.
---------------------------------------------------------------------------

    Many participants at the September 21, 1995 conference maintained 
the standards do not go far enough to provide for efficient means of 
communication. The promulgated standards deal only with the electronic 
means of communicating the often idiosyncratic nomination and 
confirmation information for each pipeline. The standards do nothing to 
standardize the underlying information that is to be transmitted. As 
one participant pointed out, the 18 largest pipelines use 14 different 
nomenclatures to describe a pipeline receipt point and there is not 
even agreement on whether to accept nominations using Mcf or MMBtu to 
measure volumes. Without standardization of the nomination and 
confirmation information itself, many participants argued the industry 
would not achieve the business efficiencies which lie at the heart of 
any standardization effort.
    On October 18, 1995, the Interstate Natural Gas Association of 
America (INGAA) filed a letter with the Commission outlining a proposed 
process through which it, together with GISB and the rest of the 
industry, could reduce the variations in pipeline business practices to 
achieve an integrated pipeline grid. The INGAA proposal would 
standardize the data elements, nomenclature, and business procedures 
relating to the ten high priority data requirements identified by the 
Working Group. In addition, consideration would be given to other 
standards needed to coordinate pipeline business practices to promote 
gas flow across an integrated pipeline network, such as standardization 
of nomination deadlines, the start of the gas day, the nomination 
period, and capacity release procedures.5 INGAA proposes a 
schedule for development of standards that concludes with tariff 
filings that begin in October 1996.

    \5\These issues have been considered by the INGAA/American Gas 
Distributors (AGD) Grid Integration Project. See Grid Integration 
Project, Interim Reports of Task Forces (March 1995).
---------------------------------------------------------------------------

Process For Standardizing Critical Business Practices

    As a result of restructuring, the gas industry is becoming a 
national marketplace. In order to establish a more efficient and 
seamless pipeline grid, where buyers can easily and efficiently obtain 
and transport gas from all potential sources of supply, the development 
of standardized methods of conducting business along with standardized 
methods of communication is critical. Without common business practices 
and a common language for communication, the speed and efficiency with 
which shippers can transact business across multiple pipelines is now, 
and will continue to be, severely compromised. The industry must 
expeditiously complete standardization of crucial business practices to 
make the promise of a restructured and integrated pipeline grid a 
reality. Accordingly, the Commission intends to establish, by rule, 
standards governing pipelines' conduct of crucial business practices 
and the electronic means by which pipelines will exchange information 
with their customers and third-parties.
    The Commission will begin this process by focusing on the ten high 
priority data requirements identified by the industry itself. The items 
identified by the Working Group are nominations, confirmations, 
allocated gas flows, customer and contract imbalances, gas flow at 
metered points, transportation invoices, pre-determined allocation 
methodologies, gas payment remittance statements, gas sales invoices, 
and uploads of capacity release prearranged deals.
    By March 15, 1996, the Commission is soliciting comments containing 
detailed proposals for the standard set of information (data elements) 
that the Commission should require all pipelines to use in conducting 
these ten business transactions as well as for standard nomenclature 
and standards for any associated business practices and procedures. As 
an example, commenters should propose a simplified standard set of 
nomination information that will be sufficient for customers to submit 
a nomination on any pipeline as well as a standard set of information 
that would be included in the pipeline's confirmation of that request. 
In addition to business practice standards, comments also should 
address how the information is to be communicated. Comments should 
include communication protocols for each business practice addressing 
the scheduling and response times of information exchanges, performance 
standards for assessing whether the system is substantially meeting 
those goals, or other needed communication issues.
    The Commission expects the proposals to be sufficiently detailed 
that they could be included in a Notice of Proposed Rulemaking (NOPR). 
The comments submitted on March 15, 1996, also should propose an 
implementation schedule or plan, including development of the needed 
electronic communication standards and time for full and effective 
testing, so that the standards can be fully implemented by January 1, 
1997.
    In addition to the ten high priority data requirements, comments 
should address whether the Commission should adopt standards for 
pipeline business practices to help facilitate gas flow across the 
pipeline grid, such as the standards considered by the INGAA/AGD Grid 
Integration Project. For example, INGAA, in its letter, identified 
standards for nomination deadlines, gas day, the effective nomination 
period, and capacity release as ones appropriate for immediate 
consideration. Comments also should consider whether any revisions to 
current industry electronic communication protocols or practices are 
needed to facilitate the movement of gas across the pipeline grid, 
including alternatives to pipeline Electronic Bulletin Boards. Comments 
should include detailed proposals of standards that the Commission 
could adopt for implementation by January 1, 1997. The Commission 
recognizes that standardization is an ongoing and evolving process, and 
the Commission intends to be involved in further efforts to develop 
standards that will promote a national pipeline grid.6

    \6\For example, besides the ten high priority data elements, the 
Working Group identified 23 additional business issues that require 
standardization.
---------------------------------------------------------------------------

    The Commission urges representatives of the various segments of the 
industry to work together to achieve a consensus on these standards. 
The Commission's earlier efforts in this area benefitted greatly from 
the Working Groups' input. The Commission continues to believe that the 
industry should take the lead in developing and implementing standards 
that will be both practical and workable for the variety of business 
transactions which are presently taking place, as well as for those 
which may occur in the future. With the expansion of the scope of 
GISB's charter and the broad-based participation in GISB by all 
industry segments,7 the Commission expects that GISB may become a 
forum through which these industry efforts can be coordinated. If GISB 
is able to provide substantive and timely proposals for 

[[Page 55506]]
standards relating to the high priority data elements described above, 
as well as others such as those identified in the Grid Integration 
Project, the Commission will give those proposals considerable weight. 
However, even in the absence of a consensus proposal from GISB, the 
Commission intends to move ahead with this proceeding.

    \7\The Commission is aware that not all industry participants 
are members of GISB, but the Commission's understanding is that the 
GISB process permits nonmembers to participate in developing 
standards.
---------------------------------------------------------------------------

    As noted above, comments must be filed no later than March 15, 
1996, along with an implementation plan which ensures that 
implementation occurs by January 1, 1997. The Commission recognizes, 
however, that with respect to discrete elements of the ten high 
priority items, or other business practices, the industry may reach a 
consensus on specific standards before that date.8 To the extent 
the industry reaches consensus, the Commission encourages voluntary 
implementation of those consensus standards.

    \8\For example, in its October 18, 1995 letter, INGAA represents 
that it intends to submit to GISB a pipeline consensus draft 
addressing the minimum data elements and nomenclature for 
nominations and confirmations by December 1995.
---------------------------------------------------------------------------

    An original and 14 copies of comments in response to this notice 
must be filed with the Commission no later than March 15, 1996. 
Comments should be filed with the Office of the Secretary, Federal 
Energy Regulatory Commission, 888 First Street, N.E., Washington, DC 
20426 and should refer to Docket No. RM96-1-000.

    By the Commission.
Lois D. Cashell,
Secretary.
[FR Doc. 95-27010 Filed 10-31-95; 8:45 am]
BILLING CODE 6717-01-P