[Federal Register Volume 61, Number 85 (Wednesday, May 1, 1996)]
[Proposed Rules]
[Pages 19211-19220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10587]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 161, 250 and 284
[Docket No. RM96-1-000]
Standards For Business Practices Of Interstate Natural Gas
Pipelines
April 24, 1996.
AGENCY: Federal Energy Regulatory Commission, Energy.
ACTION: Notice of Proposed Rulemaking and Request for Office of
Management and Budget Emergency Processing of Submission of Collection
of Information.
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SUMMARY: The Federal Energy Regulatory Commission is issuing a notice
of proposed rulemaking to revise the Commission's regulations to
require interstate natural gas pipelines to follow standardized
procedures for critical business practices--nominations; allocations,
balancing, and measurement; invoicing; and capacity release--and
standardized mechanisms for electronic communication between the
pipelines and those with whom they do business. The proposed
regulations incorporate by reference the proposed standards submitted
by the Gas Industry Standards Board (GISB) in response to the
Commission's October 25, 1995 Advanced Notice of Proposed Rulemaking
(ANOPR). 60 FR 55504 (Nov. 1, 1995).
GISB and others in the natural gas industry have requested
expedited processing of this proposed rule. Accordingly, pursuant to 5
CFR 1320.13, the Commission is providing notice of its request to the
Office of Management and Budget (OMB) for emergency processing of this
proposed collection of information by May 24, 1996.
DATES: Comments on the proposed rule are due May 24, 1996. Comments
should be filed with the Office of the Secretary and should refer to
Docket No. RM96-1-000.
Because the Commission has requested OMB to process the proposed
collection of information on an emergency basis, comments on the
proposed collection of information should be filed with OMB, attention
Desk Officer FERC, as soon as possible.
ADDRESSES:
Federal Energy Regulatory Commission, 888 First Street, NE., Washington
DC, 20426
Office of Management and Budget, Room 3019 NEOB, Washington, D.C.
20503, or via the Internet at [email protected].
FOR FURTHER INFORMATION CONTACT:
Michael Goldenberg, Office of the General Counsel, Federal Energy
Regulatory Commission, 888 First Street, NE., Washington, DC
20426,(202) 208-2294
Marvin Rosenberg, Office of Economic Policy, Federal Energy Regulatory
Commission, 888 First Street, NE., Washington, DC 20426. (202) 208-1283
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 2A, 888 First
Street, N.E., Washington D.C. 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin
[[Page 19212]]
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 or 1-800-856-3920. To access CIPS, set your communications
software to use 19200, 14400, 12000, 9600, 7200, 4800, 2400, 1200, or
300 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 in Room 2A, 888 First Street,
N.E., Washington D.C. 20426.
The Commission's bulletin board system also can be accessed through
the FedWorld system directly by modem or through the Internet. To
access the FedWorld system by modem:
Dial (703) 321-3339 and logon to the FedWorld system.
After logging on, type: /go FERC
To access the FedWorld system, through the Internet:
Telnet to: fedworld.gov
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC
Or:
Point your Web Browser to: http://www.fedworld.gov
Scroll down the page to select FedWorld Telnet Site
Select the option: [1] FedWorld
Logon to the FedWorld system
Type: /go FERC
NOTICE OF PROPOSED RULEMAKING
April 24, 1996.
I. Introduction
The Federal Energy Regulatory Commission (Commission) is proposing
to amend its open access regulations to standardize business practices
and procedures governing transactions between interstate natural gas
pipelines, their customers, and others doing business on the pipelines.
The proposed standards govern four important business practices--
nominations; allocations, balancing, and measurement; invoicing; and
capacity release--as well as the mechanisms for electronic
communication between the pipelines and those doing business on the
pipelines. The proposed regulations incorporate by reference the
standards submitted by the Gas Industry Standards Board (GISB) in
response to the Commission's October 25, 1995 Advanced Notice of
Proposed Rulemaking (ANOPR).\1\ The Commission proposes to require
pipelines to comply with the regulations by January 1, 1997.
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\1\ Standards For Business Practices Of Interstate Natural Gas
Pipelines, 60 FR 55504 (Nov. 1, 1995), 73 FERC para. 61,104 (Oct.
25, 1995). Public Reporting Burden
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II. Public Reporting Burden
The proposed rule would require natural gas pipelines to adopt both
standards for business practices and procedures as well as mechanisms
for electronic communication between pipelines and those doing business
with the pipelines. The standards would regularize the means by which
the gas industry conducts business across the interstate pipeline grid.
The standards were developed by GISB, an industry consensus standards
organization, to improve the efficiency of the gas market. The
Commission is proposing to adopt these standards by reference.
The proposed rule would affect one existing Commission data
collection, FERC-545, Gas Pipeline Rates: Rate Change (Non-formal),
(OMB Control No. 1902-0154) (FERC-545), and establish a new data
collection/requirement, FERC-549C, Standards for Business Practices of
Interstate Natural Gas Pipelines, (OMB Control No. to be assigned)
(FERC-549C).
Under the existing data collection/requirements of FERC-545, there
would be a one-time estimated annual reporting burden of 6,400 hours
(80 hours per company) with the adoption of the standards/business
practices as proposed herein. The initial implementation of the
proposed standards/business practices would require approximately 80
interstate natural gas pipelines to make tariff filings to conform
their tariffs with the standards/business practices. (See FERC-545
burden detail in estimated burden table below.)
Under the new data collection/requirements of FERC-549C there would
be a one-time start-up annual burden/cost of 1,227,840 hours (15,348
per company). It is expected that any recurring annual burden/cost
would not be substantial given the operating efficiencies which would
result from the proposed standards/business practices, particularly the
improved methods of electronic communication.
The proposed standards/data requirements contained in this Notice
of Proposed Rulemaking have been submitted to the Office of Management
and Budget for review under section 3507(d) of the Paperwork Reduction
Act of 1995, 44 U.S.C. 3507(d). For copies of the OMB submission,
contact Michael Miller at 202-208-1415. Comments are solicited on the
Commission's need to require the industry to adopt the standards/
business practices on an industry-wide basis; whether the proposed
requirements will have practical utility; the accuracy of the provided
burden estimates; ways to enhance the quality, utility, and clarity of
the proposed data requirements; and any suggested methods for
minimizing respondents' burden including the use of automated
techniques. Persons wishing to comment on the proposed information
requirements should direct their comments to the Desk Officer FERC,
Office of Management and Budget, Room 3019 NEOB, Washington, D.C.
20503, phone 202-395-3087 or via the Internet at [email protected].
GISB and others in the natural gas industry have requested
expedited processing of this proposed rule, and the Commission has
requested the Office of Management and Budget (OMB) to provide for
emergency processing of this proposed collection of information by May
24, 1996. Comments on the collection of information, therefore, should
be filed with the Office of Management and Budget as soon as possible
to provide OMB sufficient time for its review. A copy of any comments
filed with the Office of Management and Budget also should be sent to
the following address at the Commission: Federal Energy Regulatory
Commission, Information Services Division, Room 41-17, Washington, DC
20426, Attention: Michael Miller.
Estimated Annual Burden
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Total Total
Affected data collection/requirement Number of number of Hours per annual
respondents responses response hours
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FERC-549C (New Data Requirement):
Reporting/Data Requirement Burden....................... 80 80 15,348 1,227,840
[[Page 19213]]
FERC-545 (1902-0154):
Reporting/Data Requirement Burden....................... 80 80 80 6,400
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Total Annual Hours (All Data Collections/
Requirements)...................................... 80 80 15,428 1,234,240
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Data Collection/Requirement Costs: The Commission seeks comments on
the costs to comply with these proposed standards/business practices.
It has projected that the average annualized cost per respondent for
the first year would be as follows:
Annualized Capital/Start-up Costs
FERC-549C.................................................. $750,118
FERC-545................................................... 3,910
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Total.................................................... 754,028
Internal Review: The Commission has reviewed, in general, the
proposed standards/business practices and determined that they are
necessary to establish a more efficient and integrated pipeline grid.
Requiring such standards on an industry-wide basis would reduce the
variations in pipeline business practices and, thus, enable buyers to
more easily and efficiently buy and transport gas from all potential
sources of supply. The proposed standards/business practices conform to
the Commission's plan for efficient information collection,
communication, and management within the natural gas industry. The
Commission has assured itself, by means of its internal review, that
there is specific, objective support for the burden estimates
associated with the information requirements proposed in this Notice of
Proposed Rulemaking (NOPR).
III. Background
The process of standardizing business practices in the natural gas
industry began with a Commission initiative to convene a technical
conference to standardize electronic communication of capacity release
transactions.\2\ To develop the required standards, the participants at
the conference agreed to form working groups composed of
representatives from all segments of the industry. In addition to the
capacity release standards, the conference participants decided that
standardization of other business transactions, such as nominations and
flowing gas, was important and formed an additional Working Group to
begin to develop standards for these transactions. A consensus of the
Working Group recommended that the industry be permitted to develop and
implement such standards voluntarily. Thus, while the Commission
recognized the importance of this effort in helping to facilitate gas
movement across the pipeline grid, the Commission was not actively
involved in the process.\3\ The Commission pledged to reevaluate its
role in the development and implementation of such standards based on
the progress made by the industry.
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\2\ 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).
\3\ Order No. 563-A, III FERC Stats. & Regs. Preambles, at
31,050.
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During this same time frame, the industry sought to formalize the
Working Group process by forming a private standards organization to
continue and expand the Working Groups' efforts to develop electronic
standards. In 1995, the industry formed GISB as a consensus standards
organization open to all members of the gas industry.\4\ GISB's
procedures require balanced voting representation from all five
segments of the industry--pipelines, local distribution companies
(LDCs), producers, end-users, and services (including marketers and
third-party computer service providers). At the Executive Committee
level, a consensus of the five segments must approve each standard.\5\
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\4\ According to a March 27, 1996 letter from counsel for GISB,
to the Secretary of the Commission (filed in this docket), GISB has
not yet received approval by the American National Standards
Institute (ANSI) as an accredited standards organization due to a
misunderstanding between GISB and ANSI. GISB is now pursuing ANSI
accreditation, and, according to GISB, ANSI has agreed to expedite
its review of GISB's application. Accreditation involves, among
other items, ANSI's review of the process and procedures of the
standards-developers to ensure that the standards-development
process is open to all materially affected parties and that
standards are developed by a balanced consensus of the industry,
without domination by any single interest or interest category.
\5\ To pass the Executive Committee, a standard must be approved
by 17 out of the 25 members, with at least two affirmative votes
from each segment. These standards must then be approved by a vote
of 67% of GISB's general membership to become approved standards.
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In addition, the industry, under the auspices of the Interstate
Natural Gas Association of America (INGAA) and the Associated Gas
Distributors (AGD), began a Grid Integration Project to consider
standards for coordinating pipeline business practices to simplify the
process of shipping gas across multiple pipelines. After GISB expanded
its scope from electronic standards to encompass business practice
standards, the Grid Integration Project was folded into GISB.
On September 21, 1995, the Commission held a public conference in
Docket No. RM93-4-000 to evaluate the progress being made towards
standardization. Almost all the commenters at the conference
acknowledged that the industry had not achieved the anticipated
progress. Many participants maintained that merely standardizing
electronic communication did not go far enough to provide for efficient
integration of the pipeline grid. Even though GISB had promulgated
standards for electronic communication of nomination and confirmation
information, the participants contended these standards were not being
widely used because they failed to standardize the pipelines' disparate
underlying business practices. For example, pipelines often require
vastly different information to submit a valid nomination, so that,
even if nominations are submitted electronically, efficiency would be
impaired because the shippers' schedulers would have to know the
idiosyncratic nomination and confirmation information for each
pipeline.
On October 25, 1995, the Commission issued an advance notice of
proposed rulemaking requesting the submission of detailed proposals
from the industry, by March 15, 1996, that would enable the Commission
to adopt regulations for business practices and procedures involving
transactions between pipelines and their customers. In the ANOPR, the
Commission concluded that without common business practices
[[Page 19214]]
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 Commission sought detailed proposals in four areas: (1) The
standard set of information (data elements) that pipelines must use in
conducting ten high priority business transactions identified by the
industry--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; (2) standards covering nomenclature and any
business practices associated with the ten elements; (3) standard
methods of communicating the information, including communication
protocols for each business practice that address issues such as
scheduling and response times of information exchanges and performance
standards for assessing whether the system is substantially meeting
those goals; 6 and (4) standards needed to facilitate gas flow
across interconnecting pipelines, such as those considered by the Grid
Integration Project.
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\6\ The Commission also invited the submission of alternatives
to the current requirement that pipelines provide information
through an Electronic Bulletin Board (EBB). See 18 CFR 284.8(b)(4).
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The Commission established January 1, 1997 as the target deadline
for compliance with the standards, and urged the segments of the
industry to work together, as they had during the Working Group
process, to achieve consensus on the standards. The Commission
anticipated that GISB would become the forum for coordinating these
industry efforts, and stated it would give great weight to consensus
proposals emanating from the GISB process.
On March 15, 1996, GISB filed 140 standards covering five major
business areas--nominations and confirmations, flowing gas, invoicing,
capacity release, and the electronic mechanism for communication
between industry participants (the electronic delivery mechanism
(EDM)). Over 500 individuals participated in the effort to develop
these standards, with 45 days of meetings conducted over a period of 53
business days. The GISB Executive Committee, through its consensus
voting procedures, approved these standards. According to GISB, these
standards are intended to be minimum standards that parties are
encouraged to exceed by providing enhanced services or faster response
times. On March 15, GISB also filed a draft set of data elements
describing the specific information that would be used by industry
participants to conduct the 10 high priority business transactions.
Subsequently, on April 9, 1996, GISB's Executive Committee approved
the final version of the data sets. GISB filed the data sets with the
Commission on April 12, 1996, along with a revision to business
practice standard 1.2.2 to clarify the usage codes employed in the data
sets. GISB explains that the data sets are to be implemented using the
current PI-GRIDTM and DUNS numbers.7 GISB reports that, as
part of its process of trying to improve the standards, the Executive
Committee unanimously has adopted the recommendation of its Common
Codes Subcommittee to revise and enhance the common code structures to
produce greater efficiency.
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\7\ The PI-GRIDTM number is maintained by the Petroleum
Information Corporation pursuant to a contract with major gas
industry trade associations to provide and maintain a common code
database. The DUNS number refers to the company codes published by
Dun & Bradstreet Corporation. See Order No. 563-A, III FERC Stats. &
Regs. Preambles, at 31,043.
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GISB also states that it has begun the process of mapping the data
sets into ASC X12 language and preparing an implementation guide.8
GISB states that its task forces have committed to completing this
effort by May 31, 1996. GISB notes that if this effort reveals the need
for changes to the data sets, it will so inform the Commission.
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\8\ ASC X12 is a standardized format for electronic transmission
of documents. Standards for the use of such documents are
promulgated by the ANSI Accredited Standards Committee (ASC).
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GISB says it mailed out ballots to its membership on April 12,
1996, for ratification of the business practice standards and data
sets. An affirmative vote by 67% of those returning ballots is needed
for ratification, and members have 30 days to respond.
On March 15, 1996 (or shortly thereafter), 40 parties filed
comments on the GISB standards.9 On the whole, the commenters
found that GISB's standards would significantly improve the efficiency
of the gas market, but they raised questions with respect to specific
standards.
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\9\ The appendix lists those filing comments.
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IV. Discussion
A. Proposed Incorporation of the GISB Standards by Reference
The Commission commends the industry and GISB for the work they
have put into this process and the significant progress they have made
towards standardization. GISB's standards go beyond merely
standardizing the data sets for electronic communication of the ten
high priority data elements; the standards regularize the means by
which the entire industry will conduct business across the interstate
pipeline grid.
The following is just a small sample of what would be accomplished
by the adoption of these standards. All pipelines would permit pooling
on their systems, which will simplify nominations by permitting
producers and shippers to aggregate gas packages. All pipelines would
permit at least one intra-day nomination, which will allow shippers to
change the amount of gas they receive during a day to better fit
changing needs. All pipelines would adopt a standard set of information
covering the ten high priority data elements, so that shippers will be
able to communicate using the same information for the same
transactions no matter the pipelines with which they deal. And all
pipelines would support a standard Internet connection for
communications with their customers, eliminating the disparity in log-
in procedures and user interfaces faced by customers using the
individual pipeline electronic bulletin boards.
The GISB standards represent a formidable step towards improved
efficiency and competitiveness in the gas industry. Accordingly, the
Commission is proposing to require interstate pipelines to comply with
the GISB definitions, standards, and data sets by January 1,
1997.10 Pipelines also may need to make tariff filings to amend
current tariffs in sufficient time to comply with the new standards.
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\10\ The Commission is not proposing to adopt the principles
articulated by GISB, because these do not purport to impose
obligations on pipelines. The principles, however, will be used as
guidance as to the intent of the standards.
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To adopt the GISB standards, the Commission proposes to add section
284.10 to its regulations. Section 284.10(b) would incorporate the GISB
definitions, standards, and data sets by reference. GISB's previously
approved standards for capacity release transactions also would replace
the current requirement, in section 284.8(b)(5), that pipelines comply
with standardized data sets and communication protocols. In addition,
the EBB requirements of sections 284.8(b)(4) and 284.9(b)(4) would be
moved to section 284.10(a).
Incorporation of the GISB standards by reference is consistent with
the public policy of having federal agencies rely upon voluntary
private standards
[[Page 19215]]
whenever feasible.11 Even though the Commission is proposing to
incorporate the standards by reference, the Commission retains the
ability, if it deems necessary, to modify pipelines' obligations by
specifying in the regulations any deletions of, or revisions or
additions to the GISB standards.
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\11\ See National Technology Transfer and Advancement Act of
1995, Pub L. 104-113, Sec. 12(d), 110 Stat. 775 (1996), and OMB
Circular A-119, ``Federal Participation in the Development and Use
of Voluntary Standards'' (Oct. 20, 1993) (an earlier version is
available at 47 FR 49496 (Nov. 1, 1992)).
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In its March 15, 1996 filing, GISB asserts that major efforts are
required by all segments of the industry to meet the Commission's
proposed January 1, 1997 compliance date. GISB, therefore, requested
the Commission to issue its NOPR and final rule as quickly as
procedural rules permit, with a target date of May 31, 1996, for
issuance of the final rule.
Since GISB did not submit the data sets until April 12, 1996, and
final approval of the business practice standards and the data sets by
the GISB members will not take place until mid-May 1996, the Commission
cannot meet the suggested May 31, 1996 date and still afford a
meaningful opportunity for comment.12 The Commission, however,
recognizes the importance of this undertaking and is committed to
moving this proceeding as quickly as possible. The Commission, for
example, is issuing this NOPR at the earliest opportunity after having
received GISB's final data sets.
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\12\ Although GISB fully expects membership approval of the
standards, the Commission's 30 day comment period in this proceeding
affords an opportunity for comment in the event that the membership
vote results in any changes or revisions to the standards.
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GISB states that the standards were based on the Commission's
January 1, 1997 target compliance date, with the exception of the
Internet protocols, for which GISB proposes a compliance date of April
1, 1997. Other commenters, however, expressed concern about the effect
on shippers and consumers if pipeline compliance is set for January 1,
1997, and failures occur during the midst of the winter heating season.
The Commission considers prompt implementation of these standards
to be a high priority for the industry and does not want to unduly
delay the beneficial effects of implementing these standards. Affected
parties are fully aware of the standards and can begin to plan for
implementation now. The Commission, therefore, proposes to adhere to
the January 1, 1997 compliance date. The Commission recognizes,
however, the concerns expressed by some parties regarding mid-winter
implementation. Parties objecting to this proposed date for compliance
should provide a fully developed staggered implementation plan or other
approach that will ensure rapid implementation of the most important
standards. INGAA, for instance, submitted a proposed phased
implementation plan that puts off implementation of some of the
important nomination and other standards until June of 1997. The
Commission believes this is too long.
Adoption of the GISB standards does not mean that the work of
standardization is done. As GISB and the industry recognize,
standardization is an ongoing, continuous process and not all the
needed standards could be developed within the timeframe established by
the Commission in the ANOPR. The Commission, therefore, is also setting
September 30, 1996 as a date for GISB and the industry to submit
detailed proposals for standards in the additional areas identified by
GISB and the commenters, such as expansion of Internet protocols to
include all electronic information provided by the pipelines (perhaps
to replace pipeline cost-of-service EBBs13), title transfer
tracking, allocations and rankings of gas packages, treatment of
compressor fuel, operational balancing agreements, routing models,
imbalance resolution, operational flow orders, multi-tiered allocations
and confirmations, and additional pooling standards.
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\13\ 18 CFR 161.3(h), 250.16(c)(2)284.8(b)(4), 284.106(c)(4),
284.223(b) (requiring pipelines to post capacity information,
affiliate discount reports, the affiliate capacity allocation log,
and an index of customers on EBBs).
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B. Electronic Delivery Mechanism
GISB has not yet completed the technical process of mapping the
data sets to the ASC X12 formats and preparing the associated
implementation guide, but has committed to do so by May 31, 1996. The
Commission expects that these documents will go through the GISB
consensus process for obtaining industry input and approval. Once
completed, the Commission proposes to incorporate these documents in
its regulations.
In addition, GISB's standard for providing for Internet
communication is tentative and depends on the outcome of further
examination of security and other issues. The Commission requests
comment from GISB and others specifying the delivery mechanism and
related standards and protocols that would be used on January 1, 1997,
if the Internet approach is not adopted. Comments also should address
whether additional standards are needed for Internet communication,
such as the use of file transfer protocol (FTP), and the timetable for
developing those standards.
C. Comments
The comments on the GISB standards that were received
contemporaneously with GISB's filing fall into essentially four
categories: Suggestions to delete or revise standards; requests for
clarification as to the scope of standards; requests for waivers; and
requests for additional standards that GISB either did not adopt or did
not consider. Given the information the Commission has at this point in
the process, the objections raised do not appear to justify any change
or revision to the industry's consensus proposals in this NOPR. A
benefit of having these comments is that they may help focus the
industry's comments on this proposed rule.
1. Requests for Revisions
Since a consensus of all segments of the natural gas industry has
found that the standards are necessary and achieve a reasonable balance
between the needs of all segments and areas of the country, the
Commission is hesitant to revise them. The industry, not the
Commission, is in the best position to evaluate and balance the
industry's concerns, and the Commission sees no evidence that an
appropriate balance has not been struck. For example, some LDCs and
shippers on the West Coast contend their efficiency would be improved
by moving the start of the nomination process from 11:30 a.m. to 12:30
p.m. Iroquois, on the other hand, contends that 10:30 a.m. would be
preferable for East Coast shippers. Similarly, several Midwest LDCs
contend their pipelines' previous 12:00 noon gas day makes their
nomination and scheduling process easier than GISB's 9:00 a.m. gas day,
but apparently the rest of the industry prefers the 9:00 a.m. gas day.
The GISB standards, therefore, appear to effect a reasonable compromise
between the positions of the various industry segments. 14
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\14\ The GISB standards do not appear to preclude the Midwest
LDCs from reaching agreements with their pipelines to provide
greater nomination flexibility if that is required in their region.
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Some commenters are concerned that GISB's deadlines do not provide
sufficient flexibility. NGC/Conoco/Vastar/Coastal contend uniform
nomination deadlines should not be adopted; they prefer varied
nomination schedules, because, they argue, varied schedules would
permit parties bumped on one pipeline to renominate on other pipelines.
[[Page 19216]]
The GISB standards, however, do not appear to unduly restrict
flexibility. The standards would require each pipeline to permit one
intra-day nomination four hours prior to gas flow. The standards also
establish a seven-day-a-week, 24-hour-a-day nomination process and
specify that nominations submitted after the nomination deadline should
still be processed by the pipeline. Thus, as long as pipelines have
available capacity, shippers should be permitted to nominate gas on
those pipelines even if the nomination deadline has passed or they have
not previously submitted a nomination for that day. The Commission
solicits comments as to whether this interpretation is correct or
whether an additional standard may be needed requiring pipelines to
permit nominations any time they have unscheduled capacity.
Of course, during the comment period, GISB and the industry have an
additional opportunity to review the standards that have been
challenged and submit revisions. The Commission also will be able to
review these matters again in light of comments on both sides of the
issues.
In addition, the Commission requests clarification of GISB's
statement that all of its standards should be considered minimums and
that parties are encouraged to exceed these standards. The Commission
is not sure whether GISB intends that pipelines and their customers can
mutually agree to change all of the GISB standards or whether some
standards should be considered inviolate, because any change would have
adverse repercussions for non-contracting parties.
2. Requests for Clarification
The requests for clarification generally involve questions about
how the standards are to be implemented. For instance, some shippers
contend that GISB's standard for one intra-day nomination should apply
to all receipt and delivery points and all services, while others
contend that pipelines should be permitted to offer services without
this flexibility for a lower price. CNG Transmission similarly contends
that the requirement for pipelines to provide pooling should apply only
to direct feed deliveries, not to supplies received from upstream
pipelines.
The Commission expects pipelines to make a good faith effort to
implement these standards as broadly as possible to provide their
customers with the services they need to operate in an integrated gas
market. Providing more specific answers to implementation questions may
not be possible on a generic basis, since operational conditions and
customers' requirements may differ depending on the pipelines. The
Commission expects pipelines to consult, and reach agreement, with
their shippers on the mechanics of implementation. This process should
resolve most of these disputes. But, if problems still exist, the
Commission can address them when pipelines file revised tariffs to
incorporate the standards or through the complaint process.
3. Requests for Waivers
Several pipelines have requested waivers of certain standards that
they find impractical on their systems. In particular, they argue that
they may not be able to provide, with their current equipment, certain
measurement data as quickly as the standards specify. They maintain
that installing updated equipment would be unnecessarily expensive.
As a general matter, the Commission is hesitant to grant exceptions
to industry-wide standards, because such exceptions run counter to the
reason for establishing standards in the first place: that the industry
requires uniform procedures to achieve the greatest efficiency in
transporting gas across an integrated pipeline grid. The Commission,
however, will consider requests for waivers based on the facts of the
individual situation. Agreement to a waiver by a pipeline's customers
would be an important factor in considering any waiver request.
4. Requests for Additional Standards
GISB recognizes that additional work is needed to consider
standards in the additional areas listed earlier, 15 but has not
yet established deadlines for consideration of such standards. A number
of the commenters argue that standards in these areas are extremely
important, but they do not suggest that development of standards in
these areas is a prerequisite to implementation of the current GISB
standards.
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\15\ See text accompanying note 13, supra.
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The Commission recognizes that, in the time provided, the industry
could not reach agreement on all the issues necessary to enhance the
efficiency of the gas marketplace. Although adoption of standards in
these additional areas need not take place coincident with the
standards GISB has filed, prompt attention to these issues appears
important to the continued development of an efficient gas marketplace.
For a fully competitive gas market to exist, participants need to be
able to buy and sell gas freely. The ability do so, however, can be
restricted if these transactions are not accurately reflected in the
scheduling, confirmation, and accounting procedures used by the
industry. Similarly, shippers should be able to contract for gas at a
lower price if they are willing to assume a greater risk of
curtailment. Thus, shippers and producers must be able to assign
different priorities to gas packages to reflect those choices.
The industry is better able than the Commission to craft solutions
that will most effectively resolve the issues at the lowest overall
cost. Now that the press of developing the bulk of the standards has
receded, the Commission expects the industry to focus its attention on
these additional areas. The Commission recognizes that some of these
issues are complex and have vexed the industry for some time. But that
is all the more reason for all segments of the industry and GISB to
continue to work cooperatively and creatively to develop solutions that
fairly balance the concerns of all the participants. For example, when
faced with the task of creating a database for common transaction
points, the industry decided upon a nationwide solution by using the
Petroleum Information Corporation to create and administer the common
code data base. Similar creativity should be employed here.
Because of the importance shippers place on resolving these issues,
the Commission is soliciting detailed proposals for standards in these
areas from GISB and the industry, by September 30, 1996. The Commission
would prefer that the industry reach consensus agreement through GISB
on proposed standards (or a consensus that a standard is not needed).
However, if with this additional time, the industry is unable to reach
consensus, the Commission is willing to resolve these issues. In the
event consensus is not reached, the Commission will expect the
September 30, 1996 reports to be sufficiently comprehensive that they
fully describe the problems faced by the industry and explain whether a
uniform response is needed or not, discuss the potential solutions to
the problems that have been considered, and provide analysis of the
benefits and disadvantages of the proposed solutions.
D. Capacity Release
The Commission has been examining the operation of its capacity
release mechanism in a number of proceedings.16 As part of this
process,
[[Page 19217]]
Commission staff, in the fall of 1994, conducted informal discussions
with all segments of the gas industry about the way in which the system
operates, discussions which helped form the basis for changes in the
program.17
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\16\ Release of Firm Capacity on Interstate Natural Gas
Pipelines, Order No. 577, 60 FR 16979 (Apr. 4, 1995), III FERC
Stats. & Regs. Preambles para. 31,017 (Mar. 29, 1995). See also
Petition Of United Distribution Companies and Associated Gas
Distributors For A Rulemaking To Promote Growth And Development Of
The Secondary Market, Docket No. RM94-10-000, filed December 9,
1993.
\17\ See Order No. 577, III FERC Stats. & Regs. Preambles at
31,313.
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Although GISB did not propose changes to the major policy aspects
of the Commission regulations (such as the cap on the price for
released capacity and the requirement for bidding on pipeline
EBBs18), GISB did address important issues regarding the operation
of the capacity release program. Of particular interest, GISB proposes
a standard timeframe within which pipelines would process capacity
release transactions and has created standardized data sets permitting
uploads of capacity release transactions. Under GISB's timeline,
replacement shippers would be able to nominate under a short-term
release (less than five months) within one day of notifying the
pipeline of the release.19 This same schedule applies whether the
release is subject to bidding or is exempt from the bidding
process.20
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\18\ 18 CFR 284.243.
\19\ Specifically, pipelines would need to be notified by 1 p.m.
for shippers to nominate the next day.
\20\ Capacity release deals are exempt from bidding if they are
for a period of 31 days or less or are at the maximum rate. 18 CFR
284.243(h).
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To assist in the Commission's consideration of the capacity release
mechanism, the Commission is requesting comment on how adoption of
GISB's proposals would affect concerns previously expressed about the
capacity release program. Comments should not focus on whether the
Commission should revise its basic capacity release policies, such as
the price cap or bidding, but should center on the effect of adopting
the GISB standards on previously identified problems with the capacity
release system. Comments should address how effectively GISB's
proposals deal with concerns about the speed and other mechanics of the
pipeline bidding process, the difficulty in coordinating releases
across multiple pipelines, and the lack of comparability between the
capacity release procedures and the process of obtaining pipeline
interruptible or short-term firm capacity.
Few comments address GISB's capacity release provisions.
TransCapacity requests clarification of standard 5.3.11 which states
that ``replacement shipper initiates confirmation of prearranged deals
electronically.'' TransCapacity contends that the standard, as worded,
does not require pipelines to accept replacement shipper confirmations
through file uploads; it would permit pipelines to specify EBB
confirmations or some other electronic means.
TransCapacity appears to raise a valid concern. The reason for
developing standardized data sets for uploads of pre-arranged deals was
to increase the efficiency of the capacity release mechanism by
permitting parties to avoid the use of pipeline EBBs to transmit
release transactions to the pipelines. On some pipelines, apparently,
submission of the pre-arranged deal is not sufficient to conclude the
transaction; the pipeline requires the replacement shipper to confirm
that transaction. Comments should consider whether the efficiency
sought to be achieved through uploads of pre-arranged deals would be
compromised if pipelines are not required to permit uploads of
confirmations by the replacement shipper or its agent.
INGAA suggests that the Commission consider removing the
requirement that bidding take place through the pipeline and, instead,
establish a mechanism under which bidding could take place through
third-party computer service providers. Comments should address whether
this proposal would introduce greater efficiency in the capacity
release system. One of the principal arguments for permitting bidding
on third-party boards was that third-parties have an incentive to
process transactions much faster than the pipelines, which sometimes
had bidding and posting periods lasting several days. GISB's standards
would require pipelines to process bids in one day, and comments should
address whether this change reduces the need for third-party bidding.
In addition, comments should consider the possible effect on releasers
and replacement shippers if, instead of having the assurance that all
biddable deals for a pipeline are posted on that pipeline's system,
they also have to monitor postings on third-party boards.
V. Environmental Analysis
The Commission is required to prepare an Environmental Assessment
or an Environmental Impact Statement for any action that may have a
significant adverse effect on the human environment.\21\ The Commission
has categorically excluded certain actions from these requirements as
not having a significant effect on the human environment.\22\ The
action taken here falls within categorical exclusions in the
Commission's regulations for rules that are clarifying, corrective, or
procedural, for information gathering, analysis, and dissemination, and
for sales, exchange, and transportation of natural gas that requires no
construction of facilities.\23\ Therefore, an environmental assessment
is unnecessary and has not been prepared in this rulemaking.
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\21\ Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs. Preambles 1986-1990 para. 30,783 (1987).
\22\ 18 CFR 380.4.
\23\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27).
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VI. Regulatory Flexibility Act Certification
The Regulatory Flexibility Act of 1980 (RFA) \24\ generally
requires a description and analysis of final rules that will have
significant economic impact on a substantial number of small entities.
The proposed regulations would impose requirements only on interstate
pipelines, which are not small businesses, and, these requirements are,
in fact, designed to reduce the difficulty of dealing with pipelines by
all customers, including small businesses. Accordingly, pursuant to
section 605(b) of the RFA, the Commission hereby certifies that the
regulations proposed herein will not have a significant adverse impact
on a substantial number of small entities.
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\24\ 5 U.S.C. 601-612.
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VII. Information Collection Requirement
The Commission considers the prompt implementation of these
standards to be a high priority for the industry, and GISB and others
in the natural gas industry have requested that the Commission process
this proposed rule as quickly as possible. The Commission believes that
the normal clearance procedures for review and approval by the Office
of Management and Budget (OMB) could delay the proposed date for
pipelines to comply with the rule. Therefore, the Commission is
submitting this proposed information collection/requirement for
emergency processing under Section 5 CFR 1320.13 of OMB's regulations.
The Commission requests OMB to approve the proposed data collection
requirements no later than 5 p.m., May 24, 1996. Comments to OMB
regarding the subject NOPR should be sent as soon as possible in order
that OMB have sufficient time for its review.
Title: FERC-545, Gas Pipeline Rates: Rate Change (Non-formal).
[[Page 19218]]
Action: Proposed Data Collection/Requirements.
OMB Control No.: 1902-0154.
Docket No.: RM96-1-000.
Respondents: Interstate Natural Gas Pipelines (Not applicable to
small businesses).
Frequency of Responses: One-time tariff filings (First year).
Title: FERC-549C, Standards for Business Practices of Interstate
Natural Gas Pipelines.
Action: Proposed Data Collection/Requirements.
OMB Control No.: To be assigned by OMB.
Respondents: Interstate Natural Gas Pipelines (Not applicable to
small businesses).
Frequency of Responses: One-time capital/start-up new business
procedures (First year).
Necessity of Information: The Notice of Proposed Rulemaking
solicits public comments to respond to the standards proposed to be
established to govern four major business practices--nominations;
allocations, balancing, and measurement; invoicing; and capacity
release--as well as the mechanism for electronic communication between
the pipelines and those doing business with the pipelines. The proposed
data requirements incorporate by reference the standards submitted by
GISB. Without the Commission's adoption of these standards to establish
common business practices and a common language for communication
across the pipeline grid, the speed and efficiency with which shippers
can transact business across multiple pipelines would be severely
compromised. Under the proposed rule, all pipelines would adopt a
standard set of information covering the ten high priority data
elements, so that shippers would be able to communicate using the same
information for the same transactions regardless of the pipelines with
which they are dealing. In addition, all pipelines would support a
standard Internet connection for communications with their customers,
eliminating the disparity in log-on procedures and user interfaces
faced by customers using the individual pipeline electronic bulletin
boards.
The Office of Management and Budget's (OMB) regulations require OMB
to approve certain information collection requirements imposed by
agency rule.\25\ The information collection requirements in the
proposed rule would be reported directly to the industry users. The
implementation of these proposed data requirements will help the
Commission carry out its responsibilities under the Natural Gas Act and
coincide with the current regulatory environment which the Commission
instituted with Order No. 636 and the restructuring of the natural gas
industry. The Commission's Office of Pipeline Regulation uses the data
in rate proceedings to review rate and tariff changes by natural gas
companies for the transportation of gas and for general industry
oversight.
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\25\ 5 CFR 1320.11.
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The Commission is submitting notification of this proposed rule to
OMB for emergency processing. Interested persons may obtain information
on the reporting requirements by contacting the Federal Energy
Regulatory Commission, 888 First Street N.E., Washington, DC 20426
[Attention: Michael Miller, Information Services Division, (202) 208-
1415] or the Office of Management and Budget [Attention: Desk Officer
for the Federal Energy Regulatory Commission (202) 395-3087].
VIII. Comment Procedures
The Commission invites interested persons to submit written
comments on the matters proposed in this notice, including any related
matters or alternative proposals that commenters may wish to discuss.
The Commission also invites commenters to address the comments already
filed in this proceeding and discuss why they may support the standards
filed by GISB. An original and 14 copies of comments to this notice
must be filed with the Commission no later than May 24, 1996. Comments
should be submitted to the Office of the Secretary, Federal Energy
Regulatory Commission, 888 First Street, NE, Washington, DC 20426, and
should refer to Docket No. RM96-1-000. Additionally, comments should be
submitted on computer diskette in WordPerfect 5.1 format or in ASCII
format, with the name of the filer and Docket No. RM96-1-000 on the
outside of the diskette.
All written comments will be placed in the Commission's public
files and will be available for inspection in the Commission's Public
Reference Room at 888 First Street, NE, Washington, DC 20426, during
regular business hours.
List of Subjects
18 CFR Part 161
Natural gas, Reporting and recordkeeping requirements.
18 CFR Part 250
Natural gas, Reporting and recordkeeping requirements.
18 CFR Part 284
Continental shelf, Natural gas, Reporting and recordkeeping
requirements; Incorporation by reference.
By direction of the Commission.
Lois D. Cashell,
Secretary.
In consideration of the foregoing, the Commission proposes to amend
Parts 161, 250, and 284, Chapter I, Title 18, Code of Federal
Regulations, as set forth below.
PART 161--STANDARDS OF CONDUCT FOR INTERSTATE PIPELINES WITH
MARKETING AFFILIATES
1. The authority citation for Part 161 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
Sec. 161.3 [Amended]
2. In Sec. 161.3, paragraph (h)(2) is amended by removing the
phrase ``Sec. 284.8(b)(4)'' and adding, in its place, the phrase
``Sec. 284.10(a)''.
PART 250--FORMS
1. The authority citation for Part 250 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352.
Sec. 250.16 [Amended]
2. In Sec. 250.16, paragraph (c)(2) is amended by removing the
phrase ``Sec. 284.8(b)(4)'' and adding, in its place, the phrase
``Sec. 284.10(a)''. ,
PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES
1. The authority citation for Part 284 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C 7101-7532; 43
U.S.C 1331-1356.
2. In Sec. 284.8, paragraphs (b)(4) and (b)(5) are removed,
paragraph (b)(6) is redesignated (b)(4), and paragraph (b)(3) is
revised to read as follows:
Sec. 284.8 Firm transportation service.
* * * * *
(b) * * *
(3) An interstate pipeline that offers transportation service on a
firm basis under subpart B or G of this part must provide all shippers
with equal and timely access to information relevant to the
availability of such service, including, but not limited to, the
[[Page 19219]]
availability of capacity at receipt points, on the mainline, at
delivery points, and in storage fields, and whether the capacity is
available directly from the pipeline or through capacity release. The
information must be provided on an Electronic Bulletin Board with the
features prescribed in Sec. 284.10(a) and as required by
Sec. 284.10(b).
* * * * *
3. In Sec. 284.9, paragraph (b)(4) is removed, paragraph (b)(5) is
redesignated (b)(4), and paragraph (b)(3) is revised to read as
follows:
Sec. 284.9 Interruptible transportation service
* * * * *
(b) * * *
(3) An interstate pipeline that offers transportation service on an
interruptible basis under subpart B or G of this part must provide all
shippers with equal and timely access to information relevant to the
availability of such service. The information must be provided on an
Electronic Bulletin Board with the features prescribed in
Sec. 284.10(a) and as required by Sec. 284.10(b).
* * * * *
4. Section 284.10 is added to read as follows:
Sec. 284.10 Standards for Pipeline Business Operations and
Communications.
(a) Electronic Bulletin Boards. An interstate pipeline that is
required by this chapter or by its tariff to display information on an
Electronic Bulletin Board must provide for the following features on
its board:
(1) Downloading by users,
(2) Daily back-up of information displayed on the board, which must
be available for user review for at least three years,
(3) Purging of information on completed transactions from current
files,
(4) Display of most recent entries ahead of information posted
earlier, and
(5) On-line help, a search function that permits users to locate
all information concerning a specific transaction, and a menu that
permits users to separately access the notices of available capacity,
the marketing affiliate discount information, the marketing affiliate
capacity allocation log, and the standards of conduct information.
(b) Incorporation by Reference of Business Practice and Electronic
Communication Standards. (1)(i) An interstate pipeline that transports
gas under subpart B or G of this part must comply with the following
business practice and electronic communication standards promulgated by
the Gas Industry Standards Board, which are incorporated herein by
reference in accordance with 5 U.S.C. 552(a) and 1 CFR Part 51:
(A) Nominations Definitions 1.2.1 through 1.2.4 (Version 1),
Standards 1.3.1 through 1.3.23 (Version 1), and Data Sets 1.4.1 through
1.4.5 (Version 1);
(B) Flowing Gas Standards 2.3.1 through 2.3.28 (Version 1) and Data
Sets 2.4.1 through 2.4.4 (Version 1);
(C) Invoicing Definition 3.2.1 (Version 1), Standards 3.3.1 through
3.3.21 (Version 1), and Data Sets 3.4.1 through 3.4.3 (Version 1);
(D) Electronic Delivery Mechanisms Standards 4.3.1 through 4.3.4
(Version 1), except that pipelines must comply with Standards 4.3.1 and
4.3.2 by January 1, 1997;
(E) Capacity Release Definition 5.2.1 (Version 1), Standards 5.3.1
through 5.3.29 (Version 1), and Data Sets 5.4.1 through 5.4.20 (Version
1);
(F) Electronic Data Interchange Implementation Guide, Capacity
Release (Version 1.0).
(ii) Copies of these standards may be obtained from the Gas
Industry Standards Board, 1100 Louisiana, Suite 4925, Houston, TX
77002. Copies may be inspected and copied at the Federal Energy
Regulatory Commission, Public Reference and Files Maintenance Branch,
888 First Street, N.E., Washington, DC 20426.
(2) Interstate pipelines must comply with these standards and
protocols by January 1, 1997.
Note--The following appendix will not appear in the Code of
Federal Regulations
Appendix.--RM96-1-000--Comments Filed
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Commenters Abbreviations
------------------------------------------------------------------------
American Forest & Paper AF&PA.
Association.
Associated Gas Distributors... AGD.
Brooklyn Union Gas Company.... Brooklyn Union.
Central Illinois Light Company CILCO.
CNG Transmission Corporation.. CNG Transmission.
CNG Energy Services CNG ESC.
Corporation.
Coastal Gas Marketing Company. Coastal.
Colorado Interstate Gas CIG/ANR.
Company and ANR Pipeline
Company.
Consolidated Natural Gas CNG.
System.
East Ohio Gas Co., Hope Gas, CNG LDCs.
Inc., The Peoples Natural Gas
Co., Virginia Natural Gas,
Inc., & West Ohio Natural Gas
Co..
Energy Managers Association... EMA.
EnerSoft Corp. and NYMEX EnerSoft/NYMEX
Technology Corp..
Equitrans, L.P................ Equitrans.
GasEDI........................ GasEDI.
Gas Industry Standards Board.. GISB.
GISB Services Segment GISB Services Segment.
Executive Committee Members.
Independent Petroleum IPAA.
Association of America.
Interstate Natural Gas INGAA.
Association of America.
Iroquois Gas Transmission Iroquois.
System, L.P..
Koch Gateway Pipeline Company. Koch Gateway.
Midland Cogeneration Venture MCV.
Limited Partnership.
Minnegasco.................... Minnegasco.
Natural Gas Clearinghouse, NGC/Conoco/Vastar.
Conoco, Inc. and Vastar Gas
Marketing, Inc..
Natural Gas Council........... Natural Gas Council.
Natural Gas Pipeline Company Natural.
of America.
Natural Gas Supply Association NGSA.
NorAm Energy Services, Inc.... NES.
Northern Distributor Group.... NDG.
[[Page 19220]]
Northern Indiana Public Northern Indiana Distributors.
Service Company, Northern
Indiana Fuel and Light
Company, and Kokomo Gas and
Fuel Company.
Northwest Industrial Gas Users NWIGU.
Pacific Gas and Electric PG&E.
Company.
Pacific Gas Transmission PGT.
Company.
PanEnergy Companies........... PanEnergy.
SABRE Decision Technologies... SDT.
Southern California Edison Edison.
Company.
The Peoples Gas Light and Coke Peoples.
Company, North Shore Gas
Company, and Northern
Illinois Gas Company.
TransCapacity Limited TransCapacity.
Partnership.
United Distribution Companies. UDC.
Williams Interstate Natural WINGS.
Gas System.
Williston Basin Interstate Williston.
Pipeline Company.
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[FR Doc. 96-10587 Filed 4-30-96; 8:45 am]
BILLING CODE 6717-01-P