[Federal Register Volume 71, Number 213 (Friday, November 3, 2006)]
[Proposed Rules]
[Pages 64655-64662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18336]


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

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 38 and 284

[Docket Nos. RM96-1-027 and RM05-5-001]


Standards for Business Practices for Interstate Natural Gas 
Pipelines; Standards for Business Practices for Public Utilities

October 25, 2006.
AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of Proposed Rulemaking.

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

SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes 
to amend its open access regulations governing standards for business 
practices and electronic communications with interstate natural gas 
pipelines and public utilities. The Commission is proposing to 
incorporate by reference certain standards promulgated by the Wholesale 
Gas Quadrant (WGQ) and the Wholesale Electric Quadrant (WEQ) of the 
North American Energy Standards Board (NAESB). These standards will 
establish communication protocols between interstate pipelines and 
power plant operators and transmission owners and operators. Through 
this rulemaking, the Commission is seeking to improve coordination 
between the gas and electric industries in order to limit 
miscommunications about scheduling of gas-fired generators.

DATES: Comments are due December 18, 2006.

ADDRESSES: Comments and reply comments may be filed electronically via 
the eFiling link on the Commission's Web site at http://www.ferc.gov. 
Documents created electronically using word processing software should 
be filed in the native application or print-to-PDF format and not in a 
scanned format. This will enhance document retrieval for both the 
Commission and the public. The Commission accepts most standard word 
processing formats and commenters may attach additional files with 
supporting information in certain other file formats. Attachments that 
exist only in paper form may be scanned. Commenters filing 
electronically should not make a paper filing. Service of rulemaking 
comments is not required. Commenters that are not able to file 
electronically must send an original and 14 copies of their comments 
to: Federal Energy Regulatory Commission, Office of the Secretary,

[[Page 64656]]

888 First Street, NE., Washington, DC, 20426.

FOR FURTHER INFORMATION CONTACT:
Marvin Rosenberg, Office of Energy Markets and Reliability, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426; 202-502-8292.
Kay Morice, Office of Energy Markets and Reliability, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426; 
202-502-6507.
Eric Winterbauer, Office of the General Counsel, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426; 
202-502-8329.

SUPPLEMENTARY INFORMATION: 

                            Table of Contents
                                                              Paragraph
                                                                 Numbers
I. Background..............................................            3
II. Discussion.............................................           11
    A. Incorporation of Standards by Reference.............           11
    B. Additional Issues Raised by NAESB...................           16
        1. Clarifications Regarding Gas Standards..........           17
            a. Use of Gas Indices for Pricing Capacity                17
             Release Transactions..........................
            b. Pipelines' Ability To Permit Shippers to               19
             Choose Alternate Delivery Points..............
            c. Changes to the Intraday Nomination Gas                 22
             Schedule......................................
        2. Clarifications Regarding Electric Standards.....           24
            a. Standards Relating to RTO/ISO Scheduling....           24
            b. Other Electric Standards Issues.............           28
III. Notice of Use of Voluntary Consensus Standards........           29
IV. Information Collection Statement.......................           30
V. Environmental Analysis..................................           37
VI. Regulatory Flexibility Act Certification...............           38
VII. Comment Procedures....................................           39
VIII. Document Availability................................           42
 

    1. The Federal Energy Regulatory Commission (Commission) proposes 
to amend parts 38 and 284 of its open access regulations governing 
standards for business practices and electronic communications with 
interstate natural gas pipelines and public utilities. The Commission 
is proposing to incorporate by reference certain standards promulgated 
by the Wholesale Gas Quadrant (WGQ) and the Wholesale Electric Quadrant 
(WEQ) of the North American Energy Standards Board (NAESB). These 
standards will establish communication protocols between interstate 
pipelines and power plant operators and transmission owners and 
operators. Through this rulemaking, the Commission is seeking to 
improve coordination between the gas and electric industries in order 
to limit miscommunications about scheduling of gas-fired generators. 
Improved communications should ensure reliability in both industries.
    2. NAESB also filed a report with the Commission including, among 
other things, a list of issues regarding coordination between the gas 
and electric industries that NAESB could not resolve. In particular, 
this report highlighted coordination problems between the gas industry 
and the scheduling practices of independent system operators (ISOs) and 
regional transmission organizations (RTOs). The Commission is concerned 
that, although organized markets often rely upon gas-fired generation 
to meet reliability requirements, the current scheduling processes of 
these market may not afford such generators the flexibility necessary 
to schedule their gas transactions effectively or to recover the full 
costs of such transactions, especially when gas prices are volatile. To 
address these issues, the Commission is establishing proceedings under 
section 206 of the Federal Power Act to examine whether ISOs and RTOs 
should be required to implement scheduling and compensation mechanisms 
to ensure that gas-fired generators can obtain gas when the gas-fired 
generation is necessary for reliability and that they are compensated 
appropriately when volatility in gas prices creates difficulty in 
recovering gas costs.

I. Background

    3. NAESB is a non-profit, private standards development 
organization established in January 2002 to propose and adopt voluntary 
standards and model business practices designed to promote more 
competitive and efficient natural gas and electric service. Since 1995, 
NAESB and its predecessor, the Gas Industry Standards Board, have been 
accredited members of the American National Standards Institute (ANSI), 
complying with ANSI's requirements that its standards reflect a 
consensus of the affected industries.
    4. NAESB's standards include business practices that streamline the 
transactional processes of the natural gas and electric industries, as 
well as communication protocols and related standards designed to 
improve the efficiency of communication within each industry. NAESB 
supports all four quadrants of the gas and electric industries--
wholesale gas, wholesale electricity, retail gas, and retail 
electricity--and recognizes the ongoing convergence of the gas and 
electric businesses by ensuring that its standards receive the input of 
all industry quadrants when appropriate. All participants in the gas 
and electric industries are eligible to join NAESB, belong to one or 
more quadrant(s), and participate in standards development.
    5. NAESB's wholesale gas quadrant (WGQ) is composed of five 
industry segments: pipelines, producers, local distribution companies, 
end users, and services (including marketers and computer service 
companies). NAESB's wholesale electric quadrant similarly includes five 
industry segments: transmission, generation, marketer/brokers, 
distribution/load serving entities, and end users. NAESB's procedures 
ensure that all industry members can have input into the development of 
a standard, whether or not they are members of NAESB, and each standard 
NAESB adopts is supported by a consensus of the relevant industry 
segments.
    6. Since 1996, in Order No. 587 and subsequent orders, the 
Commission, through its notice-and-comment rulemaking process, adopted 
relevant gas standards by incorporating these standards by reference 
into its regulations.\1\ On April 25, 2006, the

[[Page 64657]]

Commission by a similar process incorporated by reference the first set 
of NAESB electric standards.\2\
---------------------------------------------------------------------------

    \1\ Standards For Business Practices Of Interstate Natural Gas 
Pipelines, Order No. 587, 61 FR 39053 (July 26, 1996), FERC Stats. & 
Regs. Regulations Preambles [July 1996-December 2000] ] 31,038 (July 
17, 1996).
    \2\ Standards for Business Practices and Communication Protocols 
for Public Utilities, 71 FR 26199 (May 4, 2006), FERC Stats. & Regs. 
Regulations Preambles ] 31,216 (Apr. 25, 2006).
---------------------------------------------------------------------------

    7. In January 2004, a cold snap highlighted the need for better 
coordination and communication between the gas and electric industries 
as coincident peaks occurred in both industries making the acquisition 
of gas and transportation by power plant operators more difficult. In 
response to this need, in early 2004, NAESB established a Gas-Electric 
Coordination Task Force to examine issues related to the 
interrelationship of the gas and electric industries and identify 
potential areas for improved coordination through standardization. 
Because of the importance of such coordination, the NAESB Board of 
Directors established a Gas-Electric Interdependency Committee in 
September 2004 to review coordination issues and identify potential 
areas for standards development.
    8. As a result of these efforts, on June 27, 2005, NAESB filed a 
status report with the Commission. The report included ten business 
practice standards jointly developed by the wholesale gas and electric 
quadrants, the first such collaboration between the two quadrants. The 
standards, in general, address communication processes between 
pipelines, power plant operators, and transmission operators.\3\
---------------------------------------------------------------------------

    \3\ On June 28, 2006, NAESB filed a report advising that the 
following permanent numbers have been assigned to these standards. 
The standards for the Wholesale Electric Quadrant are Gas/Electric 
Coordination Standards WEQ-011-0.1 through WEQ-011-0.3 and WEQ-011-
1.1 through WEQ-011-1.6. The standards for the Wholesale Gas 
Quadrant are: Additional Standards, Definitions 0.2.1 through 0.2.3 
and Standards 0.3.11 through 0.3.15.
---------------------------------------------------------------------------

    9. Additionally, the report highlights 13 issues involving gas and 
electric interdependency. These issues relate to fundamental 
differences between the two industries, including differences in lead 
time to prepare for load fluctuations, differences in the precision of 
instrumentation, and differences in the ``utility model'' used in the 
electric industry (in which generating capacity is planned for and 
built for anticipated future requirements) and the gas industry's 
``market-driven model'' (in which gas capacity is built only for those 
contracting for such capacity).
    10. On February 24, 2006, NAESB filed a final report with the 
Commission on the efforts of the Gas-Electric Interdependency 
Committee. Based on the 13 issues, the final report identified six 
potential areas where existing standards should be reexamined to 
determine whether new or updated business practices could improve 
communications between the gas and electric industries. In these six 
areas, the report makes requests to the Commission to clarify existing 
policies or identifies areas for standards development. Not all such 
standards development is supported by every segment of each industry, 
however. The requests for clarification include:
     Clarification of Commission orders regarding pipeline 
discounts and negotiated rates as relevant to the ability of shippers 
releasing capacity to price released capacity using gas price indices.
     Clarification of Commission orders regarding the ability 
of pipelines to shift gas with primary firm transportation within a 
pipeline path without having to re-offer as secondary firm 
transportation service.
    Potential areas for standards development include:
     Adding an additional gas intraday nomination cycle with 
bumping rights to provide more flexibility to shippers, including power 
generators, with firm transportation rights such that they can nominate 
for natural gas supporting their market clearing times.
     Modifying the requirements for organized electric markets 
so that the markets clear in sufficient time to nominate within the 
existing gas nomination timelines.
     Requiring gas-fired generators that bid into the day-ahead 
market to have the appropriate gas commercial arrangements to fulfill 
an accepted bid.
     Developing the appropriate supporting definitions for new 
business practices for the Wholesale Electric Quadrant, including but 
not limited to definitions for: Alternate fuel capability, usable 
alternate fuel capability, firm, transportation service, firm sales 
service, firm supply, and ``must run'' generator.

II. Discussion

A. Incorporation of Standards by Reference

    11. The Commission is proposing to incorporate by reference the 
NAESB WEQ and NAESB WGQ definitions and business practice standards 
providing for coordination and communication between natural gas 
pipelines and the various electric industry operators, including RTOs, 
ISOs and gas-fired power generators. Such coordination should help 
improve the reliability of both the gas and electric industries by 
ensuring that all parties have information relevant to their scheduling 
and dispatch.
    12. The standards, for example, would require gas-fired power plant 
operators and pipelines to establish procedures to communicate material 
changes in circumstances that may affect hourly flow rates. These 
standards would ensure that pipelines have relevant planning 
information that will assist in maintaining the operational integrity 
and reliability of pipeline service, as well as providing gas-fired 
power plant operators with information as to whether hourly flow 
deviations can be honored. They would further improve communication by 
requiring pipelines to provide electric transmission operators, 
including ISOs and RTOs, and power plant operators to sign up to 
receive from connecting pipelines operational flow orders and other 
critical notices. These standards will ensure that operators of the 
electric grid can stay abreast of developments on gas pipelines that 
can affect the reliability of electric service. The standards require 
that, upon request, a gas-fired power plant operator must provide to 
the appropriate electric balancing authority or electric reliability 
coordinator pertinent information regarding its service levels for gas 
transportation (firm or interruptible) and for gas supply (firm, fixed 
or variable quantity, or interruptible). This information should assist 
reliability coordinators in assessing the relative reliability of 
various gas-fired generators.\4\
---------------------------------------------------------------------------

    \4\ Adoption of these standards is in accordance with Sec.  
12(d) of the National Technology Transfer and Advancement Act of 
1995, in which Congress requires Federal agencies to use technical 
standards developed by voluntary consensus standards organizations, 
like the WGQ, as a means to carry out policy objectives or 
activities. Pub. L. No. 104 113, Sec.  12(d), 110 Stat. 775 (1996), 
15 U.S.C. 272 note (1997).
---------------------------------------------------------------------------

    13. To incorporate these standards by reference, the Commission is 
proposing to amend parts 38 and 284 of its regulations to include the 
appropriate standards.\5\ The Commission is also proposing to amend 
section 38.1 so that it applies to gas-fired power plant owners and 
operators and to public utilities that own, operate or control 
facilities used to effectuate wholesale power sales.
---------------------------------------------------------------------------

    \5\ The standards for the Wholesale Electric Quadrant are: Gas/
Electric Coordination Standards WEQ-011-0.1 through WEQ-011-0.3 and 
WEQ-011-1.1 through WEQ-011-1.6. The standards for the Wholesale Gas 
Quadrant are: Additional Standards, Definitions 0.2.1 through 0.2.3 
and Standards 0.3.11 through 0.3.15.
---------------------------------------------------------------------------

    14. The Commission is not proposing that pipelines and public 
utilities make

[[Page 64658]]

tariff filings to include these standards in their tariffs in this 
rulemaking. These standards would be included in later standard 
versions when NAESB updates its wholesale gas and electric standards 
and, if the Commission decides to incorporate these later standard 
versions into its regulations, pipelines and public utilities will then 
be required to include these standards in their tariffs.
    15. Four of the standards require pipelines, RTOs/ISOs and/or gas-
fired power plant operators to establish procedures to communicate 
information with each other.\6\ For instance, standard WEQ-011-1.2 
requires pipelines and gas-fired power plant operators to establish 
procedures to communicate hourly gas-flow information. With respect to 
these standards, we propose to require each pipeline and relevant 
public utility to demonstrate compliance by filing a statement as to 
whether it has established the required procedures with each relevant 
entity on its system or taken appropriate action, as required by the 
standards. While the Commission expects that the parties would be able 
to negotiate acceptable provisions, if an intractable dispute should 
arise, the parties can submit the dispute to the Commission for 
resolution. This is similar to what the Commission has required in 
previous rulemaking proceedings.\7\
---------------------------------------------------------------------------

    \6\ These standards are WEQ-011-1.2 and WGQ Standard 0.3.12; 
WEQ-011-1.4; WEQ-011-1.5; and WEQ-011-1.6 and WGQ Standard 0.3.15.
    \7\ See Standards for Business Practices of Interstate Natural 
Gas Pipelines, 85 FERC ] 61,371 (1998). In a similar situation (a 
requirement that pipelines enter into operation balancing agreements 
(OBAs) with interconnecting pipelines), rather than requiring 
pipelines to file their OBAs, the Commission required the pipelines 
to file a statement with the Commission certifying that they have 
complied with the requirement to enter into OBAs.
---------------------------------------------------------------------------

B. Additional Issues Raised by NAESB

    16. NAESB identified six issues for which it requests clarification 
of existing Commission policy or puts forward potential areas for 
standards development that some industry participants believe might 
assist in resolving coordination problems between the gas and electric 
industries. These revisions and enhancements, however, did not command 
a consensus of the industries sufficient to pass as NAESB standards. We 
discuss below the two requests for clarification. We then discuss the 
issues for which NAESB requested guidance needs for NAESB to deliberate 
on potential new standards.
1. Clarifications Regarding Gas Standards
a. Use of Gas Indices for Pricing Capacity Release Transactions
    17. NAESB has requested clarification of Commission policy with 
respect to capacity release transactions using gas price indices. Some 
in NAESB expressed concern that the current NAESB standards on capacity 
release are more restrictive on pricing beneath the maximum tariff rate 
than current Commission policy requires. They suggest that revision of 
these standards would be more consistent with Commission policy and 
would create an economic incentive for releasing shippers to provide 
more short-term capacity to the gas-fired generation market. This is 
because, with the prospect of a higher release value, releasing 
shippers can explore replacement capacity alternatives that otherwise 
would not be cost-effective. In this regard, NAESB requests 
clarification of the Commission's February 27, 2004 Order in Panhandle 
\8\ regarding the ability of releasing shippers to employ gas prices 
indices in pricing capacity release transactions.
---------------------------------------------------------------------------

    \8\ Panhandle Eastern Pipe Line Co., 106 FERC ] 61,194 at P 6 
(2004).
---------------------------------------------------------------------------

    18. The Commission clarifies that, as it stated in Panhandle, 
releasing shippers should be free to offer the same type of pricing 
arrangements that the pipeline offers and, therefore, releasing 
shippers are free to use gas price indices in pricing released capacity 
so long as the rate paid by the replacement shipper does not exceed the 
maximum rate in the pipeline's tariff. As the Commission stated in 
Northern, ``rate formulas that produce varying rates during the term of 
an agreement are permissible as discounted rates, so long as the rate 
remains within the range established by the maximum and minimum rates 
set forth in the pipeline's tariff.'' \9\
---------------------------------------------------------------------------

    \9\ Northern Natural Gas Co., 105 FERC ] 61,299 at P 17 (2003).
---------------------------------------------------------------------------

b. Pipelines' Ability To Permit Shippers To Choose Alternate Delivery 
Points
    19. NAESB requests clarification regarding the ability of pipelines 
to permit shippers to shift gas deliveries from a primary to a 
secondary delivery point when a pipeline constraint occurs upstream of 
both points. Such changes would make it easier for shippers to redirect 
gas supplies to generators during periods when capacity is scarce. 
NAESB provides, as an example, that a customer has 100 dekatherms 
scheduled to flow from a primary receipt point through the posted point 
of restriction to a primary delivery point. Under the same contract, 
the customer then requests a nomination change to move 50 of the 100 
dekatherms to a secondary delivery point that is outside its 
transportation path but still through the posted point of restriction.
    20. In Order No. 637-B, the Commission provided that pipelines must 
implement within-the-path scheduling under which a shipper seeking to 
use a secondary delivery point within its scheduling path has priority 
over another shipper seeking to use the same delivery point but that 
point is outside of its transportation path.\10\ The Commission posited 
an example in which Shipper 1 (with a primary delivery point at A) and 
Shipper 2 (with a primary delivery point downstream at C) pay the same 
rate in the zone, and both shippers are seeking to change delivery 
points to point B. The Commission found that Shipper 2 should receive a 
higher priority over mainline capacity to point B than Shipper 1, 
because point B is within Shipper 2's path.
---------------------------------------------------------------------------

    \10\ Regulation of Short-Term Natural Gas Transportation 
Services, 92 FERC ] 61,062 at 61,168-70 (2000).

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

[[Page 64659]]

[GRAPHIC] [TIFF OMITTED] TP03NO06.000

    21. The scenario posed by NAESB is a slight variation of the 
within-the-path scheduling as described in Order No. 637-B. Although 
the shipper has scheduled capacity through a posted point of 
constraint, the secondary delivery point it seeks to use is outside of 
its transportation path. In most cases, it would be reasonable to 
permit the reassignment as posited by NAESB, since the shipper seeking 
to redesignate delivery points already has a transportation contract 
with primary points through the posted constraint point and has 
scheduled gas through that point so that reallocating gas to a 
different delivery point would not pose an operational problem. The 
only possible caveat would be if the shipper (Shipper 1) seeks to 
redesignate a secondary delivery point (outside its path) that is also 
being requested by another shipper, and the delivery point is within 
the path of the Shipper 2. If both secondary nominations to that point 
cannot be accepted, as in the case of the example above, Shipper 2, 
with a contract path through the secondary point, would have priority.
c. Changes to the Intra-Day Nomination Gas Schedule
    22. NAESB suggests a review of the possibility of adding an 
additional intra-day nomination cycle with bumping rights to provide 
more flexibility to shippers, including power generators, with firm 
transportation rights such that they can nominate for natural gas 
supporting their market clearing times.
    23. Any standards that would allow better coordination between 
scheduling of gas and electric markets would be of benefit to both 
industries, and we encourage NAESB to continue its efforts to develop 
such standards. With respect to intra-day nominations, the Commission's 
regulations provide that firm transportation capacity must be accorded 
scheduling priority over interruptible transportation capacity.\11\ At 
the same time, however, the Commission has recognized the interest of 
interruptible shippers in achieving business certainty by making the 
last intra-day nomination opportunity one in which firm nominations do 
not bump interruptible nominations:
---------------------------------------------------------------------------

    \11\ 18 CFR 284.12(b)(1)(i)(A)(2006).

    Making the third intra-day nomination non-bumping creates a fair 
balance between firm shippers, who will have had two opportunities 
to reschedule their gas, and interruptible shippers and will provide 
some necessary stability in the nomination system, so that shippers 
can be confident by mid-afternoon that they will receive their 
scheduled flows.\12\
---------------------------------------------------------------------------

    \12\ Standards for Business Practices of Interstate Natural Gas 
Pipelines, Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), FERC Stats. 
& Regs. Regulations Preambles ] 31,062 at 30,672 (Apr. 16, 1998).

    However, within the confines of these policies, NAESB may consider 
whether changes to existing intra-day schedules can better provide for 
coordination between gas and electric scheduling. For instance, the 
current NAESB standards require intra-day nominations to be submitted 
by 10 a.m. (bumping) and 5 p.m. (non-bumping). There is no reason why 
another bumping intra-day nomination opportunity could not be 
introduced between these two or that the timing of these intra-day 
nomination opportunities could not be adjusted to better coordinate 
with electric scheduling.
2. Clarifications Regarding Electric Standards
a. Standards Relating to RTO/ISO Scheduling
    24. NAESB has considered, but has been unable to agree upon, 
modifications to the routine scheduling of ISO and RTO markets (not in 
an emergency) so that the markets clear in sufficient time to nominate 
within the existing gas nomination timelines. It also considered 
whether standards should be developed to require generators that offer 
into the day-ahead market to have the appropriate gas commercial 
arrangements to fulfill the needed obligations. As NAESB states, the 
disconnect between gas and electric schedules leaves some generators 
two options: Either (a) purchase and nominate gas transportation on a 
timely basis and risk not having their bid subsequently clear the power 
market or, (b) wait to see if their bid clears the power market and 
risk relying upon the intra-day gas transportation nominations.
    25. The Commission agrees that these are serious issues, 
particularly during periods of coincident peak use in the electric and 
gas industries. RTOs and ISOs frequently consider gas-fired generation 
to be necessary to maintain reliability. Yet, especially during periods 
when both electricity and gas are in short supply, gas-fired generators 
may have difficulty buying gas and transportation, because the RTOs' 
and ISOs' scheduling process does not match the gas process. Moreover, 
if the gas-fired generator does submit bids into the RTO/ISO market 
based on current gas prices, those prices may change significantly 
during periods with volatile gas prices by the time the RTO or ISO 
calls upon the generator to run.\13\
---------------------------------------------------------------------------

    \13\ If the gas-fired generator seeks to hedge its gas prices, 
and is not dispatched, it may be unable to recover its gas costs.
---------------------------------------------------------------------------

    26. Because of the serious repercussions on the electric market of 
these problems, the Commission is concurrently opening section 206 
proceedings to examine the RTO and ISO scheduling processes during 
emergency conditions. These proceedings are intended to ensure that the 
RTOs and ISOs have procedures in place during emergencies to permit 
better synchronization of their markets with the gas market and to 
ensure that generators making appropriate bids into the RTO and ISO 
markets are able to recover their prudently incurred costs.

[[Page 64660]]

    27. The NAESB report raised the issue of whether to develop 
standards regarding the appropriate commercial relationships that 
generators must have in bidding into day ahead markets, so that they 
have the appropriate gas commercial arrangements to fulfill the needed 
obligations. Some of the objections to such an effort, NAESB notes, are 
that it would interfere with company's risk management strategies, and 
that reliability issues should be addressed by NERC. We agree that 
business practice standards requiring, for instance, that gas-fired 
generators have firm gas supply or gas transportation contracts would 
go beyond the scope of business practices. Instead of mandating 
commercial relationships, the section 206 proceedings will focus on 
ensuring that generators in organized markets can synchronize their gas 
and electric scheduling and can receive appropriate compensation for 
prudently incurred costs if gas prices deviate significantly from those 
that could have been expected at the time they submitted their bid.
b. Other Electric Standards Issues
    28. NAESB also suggests that supporting definitions for new 
business practices could be developed for the electric industry, 
including but not limited to definitions for: alternate fuel 
capability, usable alternate fuel capability, firm transportation 
service, firm sales service, firm supply, and ``must run'' generator. 
The report is not clear as to what affect such definitions would have 
on the operation of the electric grid, or what business practices would 
be affected. Consequently, we will not at this time provide guidance on 
whether such definitions should be developed.

III. Notice of Use of Voluntary Consensus Standards

    29. In section 12(d) of the National Technology Transfer and 
Advancement Act of 1995, Congress affirmatively requires Federal 
agencies to use technical standards developed by voluntary consensus 
standards organizations, like NAESB, as the means to carry out policy 
objectives or activities unless use of such standards would be 
inconsistent with applicable law or otherwise impractical.\14\ NAESB 
approved the standards under its consensus procedures. Office of 
Management and Budget Circular A-119 (Sec.  11) (February 10, 1998) 
provides that Federal agencies should publish a request for comment in 
a NOPR when the agency is seeking to issue or revise a regulation 
proposing to adopt a voluntary consensus standard or a government-
unique standard. In this NOPR, the Commission is proposing to 
incorporate by reference voluntary consensus standards developed by the 
WGQ and WEQ.
---------------------------------------------------------------------------

    \14\ Pub. L. No. 104-113, Sec.  12(d), 110 Stat. 775 (1996), 15 
U.S.C. 272 note (1997).
---------------------------------------------------------------------------

IV. Information Collection Statement

    30. The following collections of information contained in this 
proposed rule have been submitted to the Office of Management and 
Budget (OMB) for review under section 3507(d) of the Paperwork 
Reduction Act of 1995, 44 U.S.C. 3507(d). The Commission solicits 
comments on the Commission's need for this information, whether the 
information will have practical utility, the accuracy of the provided 
burden estimates, ways to enhance the quality, utility, and clarity of 
the information to be collected, and any suggested methods for 
minimizing respondents' burden, including the use of automated 
information techniques. The following burden estimates include the 
costs to implement the WEQ's and WGQ's definitions and business 
practice standards providing for coordination and which will establish 
communication protocols between interstate natural gas pipelines and 
power plant operators and transmission owners and the various electric 
industry operators. The burden estimates are primarily related to 
start-up to implement these standards and regulations and will not 
result in ongoing costs.

----------------------------------------------------------------------------------------------------------------
                                                                     Number of
                 Data collection                     Number of     responses per     Hours per     Total number
                                                    respondents     respondent       response        of hours
----------------------------------------------------------------------------------------------------------------
FERC-549C.......................................              93               1              20           1,860
FERC-717........................................             220               1              33           7,260
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
    Totals......................................  ..............  ..............  ..............           9,120
----------------------------------------------------------------------------------------------------------------

    Total Annual Hours for Collection (Reporting and Recordkeeping, (if 
appropriate)) = 9,120.
    Information Collection Costs: The Commission seeks comments on the 
costs to comply with these requirements. It has projected the average 
annualized cost for all respondents to be the following: \15\
---------------------------------------------------------------------------

    \15\ The total annualized cost for the two information 
collections is $1,368,000. This number is reached by multiplying the 
total hours to prepare a response (hours) by an hourly wage estimate 
of $150 (a composite estimate that includes legal, technical and 
support staff rates). $1,368,000 = $150 x 9,120.

------------------------------------------------------------------------
                                                FERC-549C      FERC-717
------------------------------------------------------------------------
Annualized Capital/Startup Costs...........        $279,000   $1,089,000
Annualized Costs (Operations & Maintenance)             N/A          N/A
ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½
    Total Annualized Costs.................         279,000    1,089,000
------------------------------------------------------------------------

    31. OMB regulations \16\ require OMB to approve certain information 
collection requirements imposed by agency rule. The Commission is 
submitting notification of this proposed rule to OMB. These information 
collections are mandatory requirements.
---------------------------------------------------------------------------

    \16\ 5 CFR 1320.11.
---------------------------------------------------------------------------

    Title: Standards for Business Practices of Interstate Natural Gas 
Pipelines (FERC-549C).
    Standards for Business Practices and Communication Protocols for 
Public Utilities (FERC-717) (formerly Open Access Same Time Information 
System).
    Action: Proposed collections.
    OMB Control No.: 1902-0174 and 1902-0173.
    Respondents: Business or other for profit, (Public Utilities and 
Natural Gas Pipelines (Not applicable to small business)).

[[Page 64661]]

    Frequency of Responses: One-time implementation (business 
procedures, capital/start-up).
    32. Necessity of Information: This proposed rule, if implemented, 
would upgrade the Commission's current business practice and 
communication standards to include standardized communication protocols 
between interstate pipelines and power plant operators and transmission 
owners and operators. The implementation of these standards and 
regulations is necessary to improve coordination between the gas and 
electric industries, to limit miscommunications about scheduling of 
gas-fired generators and to improve the reliability in both industries.
    33. The implementation of these data requirements will help the 
Commission carry out its responsibilities under the Federal Power Act 
and Natural Gas Act of promoting the efficiency and reliability of the 
electric and gas industries' operations. The Commission's Office of 
Energy Markets and Reliability will use the data for general industry 
oversight.
    34. Internal Review: The Commission has reviewed the requirements 
pertaining to business practices and electronic communication of public 
utilities and natural gas pipelines and made a preliminary 
determination that the proposed revisions are necessary to establish 
more efficient coordination between the gas and electric industries. 
Requiring such information ensures both a common means of communication 
and common business practices to limit miscommunication for 
participants engaged in the sale of electric energy at wholesale and 
the transportation of natural gas. These requirements conform to the 
Commission's plan for efficient information collection, communication, 
and management within the electric power and natural gas pipeline 
industries. 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.
    35. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, Attn: Michael Miller, Office of the Executive Director, 888 
First Street, NE., Washington, DC 20426 Tel: (202) 502-8415/Fax: (202) 
273-0873, E-mail: [email protected].
    36. Comments concerning the collection of information(s) and the 
associated burden estimate(s), should be sent to the contact listed 
above and to the Office of Management and Budget, Office of Information 
and Regulatory Affairs, Washington, DC 20503 [Attention: Desk Officer 
for the Federal Energy Regulatory Commission, phone: (202) 395-7856, 
fax: (202) 395-7285].

V. Environmental Analysis

    37. 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.\17\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\18\ The actions proposed here fall 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 and electric power that requires no 
construction of facilities.\19\ Therefore, an environmental assessment 
is unnecessary and has not been prepared in this NOPR.
---------------------------------------------------------------------------

    \17\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. 
Preambles 1986-1990 ] 30,783 (1987).
    \18\ 18 CFR 380.4(2005).
    \19\ See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 
380.4(a)(27)(2005).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Act Certification

    38. The Regulatory Flexibility Act of 1980 (RFA) \20\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The regulations proposed here impose requirements only on interstate 
pipelines and public utilities, the majority of which are not small 
businesses, and would not have a significant economic impact. These 
requirements are, in fact, designed to benefit 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.
---------------------------------------------------------------------------

    \20\ 5 U.S.C. 601-612(2006).
---------------------------------------------------------------------------

VII. Comment Procedures

    39. The Commission invites interested persons to submit comments on 
the matters and issues proposed in this notice to be adopted, including 
any related matters or alternative proposals that commenters may wish 
to discuss. Comments are due December 18, 2006. Comments must refer to 
Docket Nos. RM05-28-000, RM96-1-027, and RM05-5-001 and must include 
the commenter's name, the organization they represent, if applicable, 
and their address in their comments. Comments may be filed either in 
electronic or paper format.
    40. Comments may be filed electronically via the eFiling link on 
the Commission's Web site at http://www.ferc.gov. The Commission 
accepts most standard word processing formats and commenters may attach 
additional files with supporting information in certain other file 
formats. Commenters filing electronically do not need to make a paper 
filing. Commenters that are not able to file comments electronically 
must send an original and 14 copies of their comments to: Federal 
Energy Regulatory Commission, Office of the Secretary, 888 First 
Street, NE., Washington, DC 20426.
    41. All comments will be placed in the Commission's public files 
and may be viewed, printed, or downloaded remotely as described in the 
Document Availability section below. Commenters on this proposal are 
not required to serve copies of their comments on other commenters.

VIII. Document Availability

    42. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's 
Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. 
eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426.
    43. From FERC's Home Page on the Internet, this information is 
available in eLibrary. The full text of this document is available in 
eLibrary both in PDF and Microsoft Word format for viewing, printing, 
and/or downloading. To access this document in eLibrary, type the 
docket number excluding the last three digits of this document in the 
docket number field.
    44. User assistance is available for eLibrary and the FERC's Web 
site during our normal business hours. For assistance contact FERC 
Online Support at [email protected] or toll-free at (866) 208-
3676, or for TTY, contact (202) 502-8659.

List of Subjects

18 CFR Part 38

    Conflict of interests, Electric power plants, Electric utilities, 
Incorporation by reference, Reporting and recordkeeping requirements.

[[Page 64662]]

18 CFR Part 284

    Incorporation by reference, Natural gas, Reporting and 
recordkeeping requirements.

    By direction of the Commission.
Magalie R. Salas,
Secretary.

    In consideration of the foregoing, the Commission proposes to amend 
parts 38 and 284, Chapter I, Title 18, Code of Federal Regulations, as 
follows:

PART 38--BUSINESS PRACTICE STANDARDS AND COMMUNICATION PROTOCOLS 
FOR PUBLIC UTILITIES

    1. The authority citation for part 38 continues to read as follows:

    Authority: 16 U.S.C. 791-825r, 2601-2645; 31 U.S.C. 9701; 42 
U.S.C. 7101-7352.

    2. Section 38.1 is revised to read as follows:


Sec.  38.1  Applicability.

    This part applies to any public utility that owns, operates, or 
controls facilities used for the transmission of electric energy in 
interstate commerce or for the sale of electric energy at wholesale in 
interstate commerce and to any non-public utility that seeks voluntary 
compliance with jurisdictional transmission tariff reciprocity 
conditions.
    3. Section 38.2 is amended by adding new paragraph (a)(8) to read 
as follows:


Sec.  38.2  Incorporation by reference of North American Energy 
Standards Board Wholesale Electric Quadrant standards.

    (a) * * *
    (8) Gas/Electric Coordination Standards including the WEQ standards 
contained in Final Action R04021 (August 15, 2005).
* * * * *

PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE 
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES

    4. The authority citation for part 284 continues to read as 
follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352; 
43 U.S.C. 1331-1356.

    5. In Sec.  284.12, paragraph (a)(1)(i) is revised to read as 
follows:


Sec.  284.12  Standards for pipeline business operations and 
communications.

    (a) * * *
    (1) * * *
    (i) Additional Standards (General Standards and Creditworthiness 
Standards) (Version 1.7, December 31, 2003) and the WGQ standards 
contained in Final Action R04021 (August 15, 2005).
* * * * *
 [FR Doc. E6-18336 Filed 11-2-06; 8:45 am]
BILLING CODE 6717-01-P