[Federal Register Volume 79, Number 62 (Tuesday, April 1, 2014)]
[Proposed Rules]
[Pages 18223-18243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-06757]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM14-2-000]


Coordination of the Scheduling Processes of Interstate Natural 
Gas Pipelines and Public Utilities

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
proposing, as part of a series of orders, to revise its regulations at 
section 284.12 to better coordinate the scheduling of natural gas and 
electricity markets in light of increased reliance on natural gas for 
electric generation, as well as to provide additional flexibility to 
all shippers on interstate natural gas pipelines. The proposed 
revisions in this Notice of Proposed Rulemaking deal principally with 
revision of the operating day and scheduling practices used by 
interstate pipelines to schedule natural gas transportation service. 
These proposed revisions affect the business practices of the natural 
gas industry, which the industry has developed through the North 
American Energy Standards Board, and which the Commission has 
incorporated by reference into its regulations. The Commission, 
therefore, is providing the natural gas and electric industries with 
six months to reach consensus on standards, consistent with the 
Commission's guidance, including any revisions or modifications to the 
proposals provided herein.

DATES: Comments are due November 28, 2014.

ADDRESSES: Comments, identified by docket number, may be filed in the 
following ways:
     Electronic Filing through http://www.ferc.gov. Documents 
created electronically using word processing software should be filed 
in native applications or print-to-PDF format and not in a scanned 
format.
     Mail/Hand Delivery: Those unable to file electronically 
may mail or hand-deliver comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and 
additional information on the rulemaking process, see the Comment 
Procedures Section of this document.

FOR FURTHER INFORMATION CONTACT:
David Maranville (Legal Information), Federal Energy Regulatory 
Commission, Office of the General Counsel, 888 First Street NE., 
Washington, DC 20426, 202-502-6351

Anna Fernandez (Legal Information), Federal Energy Regulatory 
Commission, Office of the General Counsel, 888 First Street 
NE.,Washington, DC 20426, 202-502-6682

Caroline Daly Wozniak (Technical Information), Federal Energy 
Regulatory Commission, Office of Energy Policy and Innovation, 888 
First Street NE., Washington, DC 20426, 202-502-8931

SUPPLEMENTARY INFORMATION: Federal Energy Regulatory Commission

Table of Contents

 
                                                             Paragraph
                                                               Nos.
 
I. Background...........................................              12
    A. Current Natural Gas and Electric Scheduling                    13
     Systems............................................
        1. Nationwide Scheduling for Natural Gas                      13
         Interstate Pipeline Transportation.............
        2. Electric Scheduling..........................              19
        3. Commission Conferences.......................              22
II. Discussion..........................................              27
    A. Overview.........................................              27
    B. Gas Day..........................................              36
        1. Background and Issues........................              36
        2. Commission Proposal..........................              39
    C. Natural Gas Transportation Timely Nomination                   41
     Cycle..............................................
        1. Background and Issues........................              41
        2. Commission Proposal..........................              48
    D. Modified Intra-Day Nomination Timeline...........              55
        1. Background and Comments Received.............              55
        2. Commission Proposal..........................              63
    E. Clarification Regarding the ``No-Bump'' Rule for               71
     Pipelines with Enhanced Nomination Services........
    F. Multi-Party Transportation Contracts.............              76
III. Notice of Use of Voluntary Consensus Standards.....              82
IV. Information Collection Statement....................              83
V. Environmental Analysis...............................              87

[[Page 18224]]

 
VI. Regulatory Flexibility Certification................              88
VII. Comment Procedures.................................              90
VIII. Document Availability.............................              94
 

List of Tables, Figures, and Equations

Table 1: NAESB Gas Nomination Cycles.......................           16
Figure 1--Recent winter load--Eastern and Central Regions             40
 (non-holiday weekdays, Dec.-Feb.).........................
Figure 2--Recent winter load--Mountain and Pacific Regions            40
 (non-holiday weekdays, Dec.-Feb.).........................
Table 2: Electric Commitment Results Publication Timetable.           43
 


    1. In this Notice of Proposed Rulemaking (Proposed Rule or NOPR), 
and in two contemporaneous orders, the Federal Energy Regulatory 
Commission (Commission) is proposing interrelated actions to address 
certain natural gas and electric industry coordination challenges that 
arise, in part, from increased reliance on natural gas for electricity 
generation. The Commission's proposed actions focus primarily on the 
scheduling practices of the natural gas transportation and electricity 
markets. The reforms proposed herein and the two contemporaneous orders 
build upon the comments made during Commission staff technical 
conferences and in comments filed in Docket No. AD12-12-000.
    2. In this Proposed Rule, the Commission proposes to amend its 
regulations at section 284.12 relating to the scheduling of 
transportation service on interstate natural gas pipelines to better 
coordinate the scheduling practices of the natural gas and electricity 
industries, as well as to provide additional scheduling flexibility to 
all shippers on interstate natural gas pipelines. In a separate order, 
the Commission is instituting a proceeding, under section 206 of the 
Federal Power Act (FPA),\1\ to coordinate the day-ahead scheduling of 
Independent System Operators (ISOs) and Regional Transmission 
Organizations (RTOs) with the revised interstate natural gas pipeline 
schedule.\2\ In addition, in a separate order, the Commission is also 
instituting a proceeding, under section 5 of the Natural Gas Act 
(NGA),\3\ to examine whether interstate natural gas pipelines are 
providing notice of offers to purchase released pipeline capacity in 
accordance with section 284.8(d) of the Commission's regulations.\4\
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    \1\ 16 U.S.C. 824e (2012).
    \2\ California Independent System Operator Corp., et al., Order 
Initiating Investigation into ISO/RTO Scheduling Practices and 
Establishing Paper Hearing Procedures, 146 FERC ] 61,202 (2014).
    \3\ 15 U.S.C. 717d.
    \4\ Posting of Offers to Purchase Capacity, 146 FERC ] 61,203 
(2014). See also 18 CFR 284.8(d)(2013).
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    3. The Commission's existing regulations \5\ regarding interstate 
natural gas pipelines' scheduling incorporate by reference the 
standards of the North American Energy Standards Board (NAESB) 
Wholesale Gas Quadrant (WGQ), a consensus standards organization 
representing all segments of the natural gas industry as well as the 
wholesale electric power industry.\6\ Since 1996 these standards have 
established nationwide timelines that the industry and the Commission 
have determined most efficiently schedule natural gas transactions 
across interconnecting pipelines. This standardized nomination timeline 
has resulted in a complementary standard timeframe in which parties 
acquire natural gas supplies.
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    \5\ See 18 CFR 284.12(a) and (b) (2013).
    \6\ NAESB is accredited by the American National Standards 
Institute (ANSI) as an accredited standards organization, which 
ensures that NAESB complies with ANSI's requirements that its 
procedures are open to materially affected parties and that the 
standards represent a reasonable consensus of the industry without 
domination by any single interest or interest category.
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    4. The Commission meanwhile has accepted regional variation in the 
development of scheduling practices in ISO and RTO markets, each of 
which has established its own timelines for submission of bids and 
posting of awards.
    5. While the nationwide natural gas nomination timeline has proven 
resilient over the last 17 years, recent developments in electricity 
markets signal that changes to the gas nomination schedule may be 
needed. Reliance on natural gas as a fuel for electric generation has 
steadily increased in recent years.\7\ This trend is expected to 
continue, resulting in greater interdependence between the natural gas 
and electric industries.\8\ Several events over the last few years, 
such as the Southwest Cold Weather Event,\9\ and the recent extreme and 
sustained cold weather events in the eastern U.S. in January 2014,\10\ 
show the crucial interrelationship between natural gas pipelines and 
electric transmission operators and underscore

[[Page 18225]]

the need for improvements in the coordination of natural gas and 
electric markets. The differences between the nationwide natural gas 
scheduling timeline and the regional electric scheduling timelines can 
create complications for interstate pipelines and electric transmission 
operators in coordinating the scheduling of the two industries.
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    \7\ See, e.g., Energy Information Administration, Fuel 
Competition in Power Generation and Elasticities of Substitution 
(June 2012); ISO-NE., Addressing Gas Dependence at 3 (July 2012) 
(reliance on natural gas-fired electricity in the region increased 
from five percent in 1990 to 51 percent in 2011), http://www.iso-ne.com/committees/comm_wkgrps/strategic_planning_discussion/materials/natural-gas-white-paper-draft-july-2012.pdf.
    \8\ See, e.g., North American Electric Reliability Corporation, 
2013 Special Reliability Assessment: Accommodating an Increased 
Dependence on Natural Gas for Electric Power; Phase II: A 
Vulnerability and Scenario Assessment for the North American Bulk 
Power System at 1 (May 2013) (``Over the past decade, natural gas-
fired generation rose significantly from 17 percent to 25 percent of 
U.S. power generation and is now the largest fuel source for 
generation capacity. Gas use is expected to continue to increase in 
the future, both in absolute terms and as a share of total power 
generation and capacity.''); http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_PhaseII_FINAL.pdf; Energy 
Information Administration, Annual Energy Outlook 2013 Early Release 
Overview (2013) (showing electric generation from natural gas rising 
from 13 percent in 1993 to 30 percent in 2040); http://www.eia.gov/forecasts/aeo/er/early_elecgen.cfm; The New England State Committee 
on Electricity, Natural Gas Infrastructure and Electric Generation: 
A Review of Issues Facing New England (Dec. 14, 2012), http://www.nescoe.com/uploads/Phase_I_Report_12-17-2012_Final.pdf.
    \9\ See FERC/NERC, Report on Outages and Curtailments During the 
Southwest Cold Weather Event of February 1-5, 2011 (2011), available 
at http://www.ferc.gov/legal/staff-reports/08-16-11-report.pdf.
    \10\ The widespread and record low temperatures during January 
2014 resulted in coincident record peak demand for natural gas 
throughout the Midwest, Northeast, Mid-Atlantic, and Southeast 
regions leading to constrained pipeline capacity and high natural 
gas prices. In addition, in February 2014, arctic temperatures 
limited the availability of natural gas to supply New Mexico and 
Southern California leading CAISO to issue a system alert and a 
request for consumers to reduce power demand around the system. 
CAISO invoked increasingly stringent measures throughout the day to 
move generation off natural gas, reduce demand, and maintain 
sufficient supply to meet firm load. See FERC Staff Presentation 
``Recent Weather Impacts on the Bulk Power System'' January 16, 
2014, http://www.ferc.gov/CalendarFiles/20140116102908-A-4-Presentation.pdf.
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    6. In light of these concerns, the Commission, since early 2012, 
has engaged in a dialogue with natural gas pipelines, electric 
transmission operators, and other market participants and stakeholders 
in both industries regarding natural gas and electric industry 
coordination.\11\ In a report issued on November 15, 2012, Commission 
staff noted that, among other topics, industry participants highlighted 
the need for greater alignment of natural gas and electric scheduling 
practices.\12\ At the direction of the Commission, staff conducted a 
further technical conference in April 2013 to consider natural gas and 
electric scheduling practices, where participants again discussed, 
among other matters, whether and how natural gas and electric industry 
schedules could be harmonized in order to achieve the most efficient 
scheduling systems for both industries, whether additional nomination 
opportunities for natural gas transportation can be provided and, if 
so, under what conditions.\13\
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    \11\ See Coordination Between Natural Gas and Electricity 
Markets, Docket No. AD12-12-000 (Feb. 15, 2012), available at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=12893828.
    \12\ Staff Report on Gas-Electric Coordination Technical 
Conferences, Docket No. AD12-12-000 (Nov. 15, 2012) (November Staff 
Report), available at http://elibrary.ferc.gov/idmws/File_List.asp.
    \13\ Coordination between Natural Gas and Electricity Markets, 
Docket No. AD12-12-000 (Mar. 5, 2013) (Notice of Technical 
Conference), available at http://elibrary.ferc.gov/idmws/File_list.asp?document_id=14095482.
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    7. During the technical conference, some ISOs and RTOs expressed 
concern about the potential reliability effects on their systems if 
gas-fired generators encounter difficulty in acquiring natural gas or 
are subject to curtailment of natural gas supplies, particularly during 
periods of high demand on both the interstate pipeline and electric 
transmission systems. Interstate pipelines expressed similar concern 
about the effect on their ability to deliver natural gas when electric 
generators are dispatched and need to burn more natural gas than they 
have nominated. Generators and transmission operators raised concerns 
that managing fuel procurement risk can be a challenge because of the 
different operating days used by the natural gas and electric 
industries and because the timeframe for nominating natural gas 
pipeline transportation service is not synchronized with the timeframe 
during which generators receive confirmation of their bids in the day-
ahead electric markets. These differing timelines can cause significant 
price and/or supply risk for gas-fired generators because, to obtain 
the best gas price, the generators would need to nominate pipeline 
transportation service before they know if their electric bid has been 
confirmed.\14\ Generators, including generators in non-RTO markets, 
raised concerns about the flexibility of the gas scheduling system to 
accommodate their need to revise nominations in light of weather events 
or other operational needs. Several conference participants stressed 
that, due to the difficult policy questions involved, they would need 
Commission policy guidance before they would be able to move forward on 
coordination of their existing scheduling practices.
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    \14\ November Staff Report at 32.
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    8. Based on the current trend of increased use of natural gas as a 
fuel for electric generation, and in consideration of the discussions 
at the 2012-2013 technical conferences and filed comments, the 
Commission is proposing a set of related actions to address concerns 
regarding the impacts of divergent interstate natural gas pipeline and 
electric utility scheduling practices, as well as concerns regarding 
the flexible and efficient use of pipeline capacity by natural gas-
fired generators and other shippers.\15\ The Commission has identified 
three major areas in which revisions to the nationwide natural gas 
scheduling system seem appropriate. Therefore, in this Proposed Rule, 
the Commission is proposing to:
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    \15\ The Commission has recognized that even the most efficient 
standards need to be modified to accord with changing realities. 
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, at 
30,060 (1996). See American National Standards Institute, ANSI 
Essential Requirements: Due Process Requirements for American 
National Standards Sec.  4.7.1 (accessed 12/8/13) (requiring 
periodic updates of standards); Eviatar Zerubavel, The 
Standardization of Time: A Sociohistorical Perspective, 88 American 
Journal of Sociology 1, 5-7 (July 1982) (uniform standards of time 
are needed to coordinate industries).
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    a. Start the natural gas operating day (Gas Day) earlier in order 
to ensure that gas-fired generators are not running short on gas 
supplies during the morning electric ramp periods. The Commission is 
proposing to move the start of the Gas Day from 9:00 a.m. Central Clock 
Time (CCT) to 4:00 a.m. CCT.\16\
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    \16\ The NAESB WGQ standards refer to Central Clock Time which 
reflects day-light savings changes.
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    b. Start the first day-ahead gas nomination opportunity (Timely 
Nomination Cycle) for pipeline scheduling later than the current 11:30 
a.m. CCT. Due to the fact that the Timely Nomination Cycle is the most 
liquid of the gas nomination cycles, this change will allow electric 
utilities to finalize their scheduling before gas-fired generators must 
make gas purchase arrangements and submit nomination requests for 
natural gas transportation service to the pipelines. The Commission is 
proposing to move the Timely Nomination Cycle to 1:00 p.m. CCT.\17\
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    \17\ The Commission is not proposing any changes to the Evening 
Cycle.
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    c. Modify the current intraday nomination timeline to provide four 
intraday nomination cycles, instead of the existing two, to provide 
greater flexibility to all pipeline shippers. The Commission is 
proposing to revise the existing standard intraday nomination cycles, 
including adding an early morning nomination cycle with a mid-day 
effective flow time and a new late-afternoon nomination cycle during 
which firm nominations would have precedence over or be permitted to 
bump already scheduled interruptible service. However, bumping would 
not be permitted during the proposed final intraday nomination cycle. 
In summary, the Commission is proposing to provide four standard 
intraday nomination cycles to occur at 8:00 a.m. CCT (bump), 10:30 a.m. 
CCT (bump), 4:00 p.m. CCT (bump) and 7:00 p.m. CCT (no-bump).\18\
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    \18\ See the Appendix for a Table summarizing the Commission's 
proposed scheduling timeline.
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    9. The Commission also clarifies in this Proposed Rule its policy 
concerning the ability of a pipeline to permit firm shippers to bump an 
interruptible shipper's nomination during any enhanced nomination 
opportunity proposed by the pipeline (beyond the standard nomination 
opportunities). We also propose to require all interstate pipelines to 
offer multi-party service agreements, similar to those already offered 
by some interstate pipelines. Such multi-party service agreements can 
provide multiple shippers the flexibility to share interstate pipeline 
capacity to serve complementary needs in an efficient manner.
    10. Although we present specific proposed reforms to existing 
natural gas industry scheduling practices in this Proposed Rule, we 
continue to recognize that the natural gas and

[[Page 18226]]

electricity industries are best positioned to work out the details of 
how changes in scheduling practices can most efficiently be made and 
implemented, consistent with the policies discussed here. Therefore, we 
are providing the natural gas and electric industries, through NAESB, 
with a period of 180 days after publication of the Proposed Rule in the 
Federal Register to reach consensus on any revisions to the 
Commission's proposals and either file consensus standards with the 
Commission or notify the Commission of its inability to reach consensus 
on any revisions to the Commission's proposals. The Commission 
appreciates the recent work of the Natural Gas Council (NGC), the 
Desert Southwest Pipeline Stakeholders (DSPS), and others to formulate 
proposals for Commission consideration. These efforts represent a 
significant step forward in helping to address the scheduling issues 
confronting the natural gas and electric industries, and we encourage 
these parties to continue their work and participate in the NAESB 
process to formulate a consensus proposal, consistent with the policies 
discussed herein. In addition, while the proposals in this Proposed 
Rule focus on natural gas industry regulations, we expect the electric 
industry (particularly the ISOs and RTOs) to participate in these 
efforts to help ensure that the resulting consensus reasonably 
accommodates the interests of both industries.
    11. In the event that NAESB is able to reach a consensus on 
revisions to the Commission's proposals, comments on those consensus 
standards, as well as comments on the Commission's proposals, are to be 
filed 240 days after publication of the Proposed Rule in the Federal 
Register. Because NAESB is an ANSI accredited consensus standards 
organization, the Commission could incorporate by reference in a final 
rule consensus standards filed by NAESB.\19\ In the event that NAESB in 
unable to reach a consensus on any revisions to the Commission's 
proposals, comments on the Commission's proposals also are to be filed 
240 days after publication of the Proposed Rule in the Federal 
Register. If the Commission adopts regulations that have not been 
approved by NAESB, it will expect NAESB to integrate the Commission's 
regulations into its standards within 90 days of the effective date of 
the final rule and to notify the Commission when the standards have 
been approved.
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    \19\ Pub L. 104-113, 12(d), 110 Stat. 775 (1996), 15 U.S.C. 272 
note (1997); OMB Circular A-119 (agency ``must use voluntary 
consensus standards, both domestic and international, in its 
regulatory'' as well as procurement activities).
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I. Background

    12. In order to put these related Commission actions in context, we 
first provide a description of the current interstate natural gas and 
electric utility scheduling systems and the issues raised during the 
Commission conferences and in filed comments in Docket No. AD12-12-000.

A. Current Natural Gas and Electric Scheduling Systems

1. Nationwide Scheduling for Natural Gas Interstate Pipeline 
Transportation
    13. The nationwide natural gas standards originated in 1995, when 
all segments of the natural gas industry agreed to form the Gas 
Industry Standards Board (GISB) (the precursor to NAESB) as its vehicle 
to formalize the creation of industry-wide communication standards.\20\ 
Later in 1995, after conducting an industry technical conference, the 
Commission issued an Advanced Notice of Proposed Rulemaking (ANOPR), 
requesting the submission of proposals by GISB to standardize business 
practices across the interstate natural gas pipeline grid.\21\ One of 
the Commission's principal concerns was the standardization of 
nomination and confirmation schedules.
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    \20\ Under its charter and by-laws, GISB was open to all members 
of the gas industry and utilized open and balanced consensus voting 
procedures to ensure that a standard was acceptable to all industry 
segments.
    \21\ Standards for Business Practices of Interstate Natural Gas 
Pipelines, Advanced Notice of Proposed Rulemaking, 73 FERC ] 61,104 
(1995).
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    14. After the issuance of the ANOPR, the industry mobilized under 
the GISB procedures, with over 500 individuals participating in 45 days 
of meetings over a period of 53 business days to produce consensus on a 
comprehensive set of business practice standards covering nominations 
and confirmations, flowing gas, invoicing, capacity release, and 
electronic communication.\22\ The industry concluded that a nationwide 
timeline for scheduling and nominating natural gas transportation was 
needed given the interconnected nature of pipelines. As GISB stated, 
``the standard nomination timeline allows a shipper whose transaction 
spans more than one pipeline the certainty that the transaction will 
really `work' as contemplated.'' \23\ In Order No. 587, the Commission 
incorporated these nationwide standards into its regulations, 
recognizing the need for nationwide, as opposed to regional scheduling, 
for interstate natural gas pipeline service.\24\ Since 1996, the 
nationwide framework of scheduling timelines has remained in place, 
with numerous improvements and modifications, such as the addition in 
1997 of standardized intraday nomination opportunities.\25\
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    \22\ Standards for Business Practices of Interstate Natural Gas 
Pipelines, Notice of Proposed Rulemaking, 61 FR 19211 (May 1, 1996), 
FERC Stats. & Regs. Proposed-Regulations 1988-1998 ] 32,517, at 
33,209 (1996).
    \23\ Order No. 587, FERC Stats. & Regs. ] 31,038, at 30,067.
    \24\ ``An integrated pipeline grid means that an East Coast LDC 
can nominate gas from a producer located in any time-zone on the 
North American continent. If an upstream-downstream system or a 
regional system were used, the LDC would not get confirmation of the 
first leg of the journey until well after it gets confirmation of 
the final downstream leg (which is probably well after the close of 
its business day).'' Id. at 30,068.
    \25\ See Standards for Business Practices of Interstate Natural 
Gas Pipelines; Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), FERC 
Stats. & Regs. Regulations Preambles July 1996-December 2000 ] 
31,062 (1998); Order No. 587, FERC Stats. & Regs. ] 31,038, at 
30,060 (recognizing that standards development requires continuous 
adaption to changed circumstances: ``standards development is not 
like a sculptor forever casting his creation in bronze, but like a 
jazz musician who takes a theme and constantly revises, enhances, 
and reworks it'').
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    15. The natural gas scheduling system is based on several 
underlying principles. First, the Gas Day is standard nationwide, 
beginning at 9:00 a.m. CCT and ending at 9:00 a.m. CCT the following 
day. All nominations for transportation service are for a daily 
quantity to be transported over that 24-hour period. The rate at which 
a shipper may use its contracted quantity, also known as a flow rate, 
on a given pipeline is determined by the individual pipeline's tariff 
and the flexibility of that pipeline to permit non-ratable flows. 
Except for special services, pipeline services are generally based on 
the assumption of uniform hourly flows over the Gas Day. While Table 1 
below lists the effective times for nominations, changes to these 
nominations are limited by the remainder of a shipper's daily quantity 
and the remaining hours of the Gas Day.\26\ Second, interstate natural 
gas pipelines schedule their systems based on the priority of the

[[Page 18227]]

transportation contract held by the shipper. Nominations of firm 
transportation from a primary receipt point to a primary delivery point 
(primary firm nominations) have the highest priority,\27\ followed by 
secondary-firm, within-the-path \28\ nominations, secondary-firm, 
outside of the path nominations, and finally nominations from shippers 
holding interruptible transportation capacity.
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    \26\ For example, if a shipper with a contract for 2,400 Dth/
day, schedules 1,200 Dth at the Timely Nomination Cycle, and submits 
an intraday nomination at the Intra-Day 1 cycle, that shipper can 
increase its scheduled capacity, assuming capacity availability, by 
no more than 1,600 Dth, bringing its total scheduled quantity to 
2,000 Dth/day. This occurs because the shipper has already operated 
for eight hours based on a daily nomination of 1,200 Dth (50 Dth/
hour). (8 hrs * 50 = 400 Dth). This leaves the shipper only 16 hours 
to increase its flow rate to 100 Dth/hr, bringing its total daily 
quantity to 2,000 Dth (400 Dth for the first 8 hours + 1,600 for the 
remaining 16 hours).
    \27\ A firm shipper's primary receipt and delivery points are 
listed in its service agreement and define the guaranteed firm 
transportation service the pipeline has contracted to provide that 
shipper. The Commission also requires pipelines to permit shippers 
to use all other points in the rate zones for which they pay on a 
secondary-firm basis.
    \28\ Secondary-firm nominations are firm nominations that 
include at least one secondary point. Within-the-path nominations 
are nominations where the secondary nomination point is contained 
wholly within the primary points listed in the shipper's contract.
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    16. The current NAESB WGQ standards establish four standard 
nomination periods (i.e., periods during which a shipper can request 
transportation service under its contract) for a Gas Day. As summarized 
in the figure below, the first two nomination opportunities occur the 
day before gas flows, and the second two opportunities occur during the 
day of gas flow.

                                      Table 1--NAESB Gas Nomination Cycles
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                                  Nomination deadline    Notification of    Nomination effective
        Nomination cycle                 (CCT)            schedule (CCT)            (CCT)          Bumping of IT
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Timely..........................  11:30 a.m..........  4:30 p.m...........  9:00 a.m. Next Day..  N/A.
Evening.........................  6:00 p.m...........  10:00 p.m..........  9:00 a.m. Next Day..  Yes.
Intra-Day 1.....................  10:00 a.m..........  2:00 p.m...........  5:00 p.m. Current     Yes.
                                                                             Day.
Intra-Day 2.....................  5:00 p.m...........  9:00 p.m...........  9:00 p.m. Current     No.
                                                                             Day.
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    Before a pipeline schedules a shipper's requested quantity under 
these standards, the pipeline confirms the shipper's nomination with 
upstream and downstream parties to make sure the shipper has contracted 
for sufficient gas with an upstream supplier to fulfill its nomination, 
and to ensure the downstream entity, such as a Local Distribution 
Company (LDC), has sufficient capacity to accept that gas.
    17. The Timely Nomination Cycle is the most liquid time to acquire 
both natural gas supply and transportation capacity. During that cycle, 
all of the pipeline's nomination priorities are in effect: primary-firm 
nominations have priority over secondary-firm nominations, and 
secondary-firm nominations have priority over interruptible 
transportation.\29\ In subsequent nomination cycles, firm service 
scheduled in an earlier cycle cannot be displaced or bumped by another 
firm nomination for that Gas Day.\30\ In addition, firm intraday 
nominations have priority over, and thus can displace or bump scheduled 
and flowing interruptible transportation.\31\ This policy recognizes 
that ``firm shippers are paying reservation charges for priority rights 
and those rights should include the right to have a nomination become 
effective as early as possible on the Gas Day following the 
nomination.'' \32\ However, the final intraday nomination (Intra-Day 2) 
cycle is a ``no-bump'' cycle, meaning that interruptible transportation 
previously arranged for cannot be displaced or bumped by a firm Intra-
Day 2 nomination. In approving this arrangement (referred to as the 
``No-Bump Rule''), the Commission found that it would create a fair 
balance between firm and interruptible shippers and provide necessary 
stability in the nomination system.
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    \29\ See P 14 supra.
    \30\ Transwestern Pipeline Company, 99 FERC ] 61,356, at P 12 
(2002) (``the Commission's long standing policy on firm service is 
that once scheduled, whether at primary or alternate points, the 
service may not be bumped by a nomination by another firm 
shipper'').
    \31\ 18 CFR 284.12(b)(1)(i) (2013); Order No. 587-G, FERC Stats. 
& Regs. ] 31,062 at 30,672.
    \32\ Id. at 30,671.
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    18. Individual pipelines may offer additional scheduling 
opportunities beyond the standard nomination cycles. However, shippers 
transporting gas over multiple pipeline systems may have limited 
ability to utilize these additional scheduling opportunities if the 
upstream or downstream pipelines cannot confirm those scheduling 
changes. Currently, several pipelines offer additional nomination 
cycles.\33\
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    \33\ See, e.g., Texas Gas Transmission LLC, 137 FERC ] 61,093 
(2011), order on compliance, 138 FERC ] 61,176 (2013) (Texas Gas); 
Gulf South Pipeline Company LP, 141 FERC ] 61,262 (2012).
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2. Electric Scheduling
    19. Scheduling practices in the electric industry vary by region. 
In terms of processes that are run by the ISOs and RTOs, the practice 
of scheduling resources generally includes the commitment and dispatch 
of sufficient, deliverable generation to supply load in a least cost 
manner, all based on generator availability and the transmission 
facilities that will be in service that day. These processes for 
scheduling resources also account for imports and exports, the 
provision of ancillary services, and contingencies that may limit the 
availability of certain generation or transmission assets during the 
operating day.
    20. To perform the unit commitment and dispatch processes used to 
develop daily resource schedules, ISOs and RTOs collect supply offers 
from generators and expected demand from load serving entities. The 
ISOs and RTOs then run market algorithms that, accounting for 
transmission constraints and other operational limitations, determine 
the least cost set of resources that can be used to serve load. 
Additionally, each ISO and RTO also performs a reliability unit 
commitment process to procure resources, in addition to those resources 
committed to serve the load bid into the day-ahead market, as necessary 
to meet the ISO's or RTO's own forecast of the next day's load and, in 
some cases, other system needs. These reliability processes vary in 
each ISO and RTO--both in name and in details of implementation.
    21. In terms of when resource scheduling processes take place, for 
most electric utilities the 24-hour operating day begins at 12:00 a.m. 
local time. In ISO and RTO regions, the system operators run the day-
ahead unit commitment and dispatch in the day leading up to the 
operating day. Once these processes are run, they become effective at 
the beginning of the operating day. Each ISO and RTO establishes its 
own timing for executing the day-ahead and reliability scheduling 
processes, including the times of day when bids and offers are due to 
the system operator, when the market and reliability processes are run, 
and when the results of the scheduling processes are made available to 
generators. The individual ISO and RTO day-ahead

[[Page 18228]]

schedules are discussed in greater detail below.
    In non-ISO and RTO systems, the Commission's pro forma OATT 
specifies that firm interchange schedules need to be submitted by 10:00 
a.m. day-ahead or a reasonable time that is generally accepted in the 
region and is consistently adhered to by the Transmission Provider.\34\
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    \34\ Pro forma OATT Sec.  13.8. Schedules for Non-Firm Point-To-
Point Transmission Service must be submitted to the Transmission 
Provider no later than 2:00 p.m. of the day prior to commencement of 
such service. Pro forma OATT Sec.  14.6.
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3. Commission Conferences
    22. As noted above, the Commission has engaged in an extensive 
dialogue with industry on gas-electric coordination issues. These 
efforts were first formalized on February 15, 2012, when the Commission 
issued a notice in Docket No. AD12-12-000 requesting comments on 
various aspects of gas-electric interdependence and coordination in 
response to questions posed by members of the Commission.\35\ In order 
to better understand the interface between the electric and natural gas 
pipeline industries and identify areas for improved coordination, the 
questions covered a variety of topics including market structures and 
rules, scheduling, communications, infrastructure and reliability. In 
response to the notice, the Commission received comments from 79 
entities that raised concerns, including the need for alignment of 
natural gas and electric scheduling.
---------------------------------------------------------------------------

    \35\ Coordination Between Natural Gas and Electricity Markets, 
Docket No. AD12-12-000 (Feb. 15, 2012) (Notice Assigning Docket No. 
and Requesting Comments), available at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=12893828. See also Commissioner 
Philip D. Moeller, Request for Comments of Commissioner Moeller on 
Coordination between the Natural Gas and Electricity Markets (Feb. 
3, 2012), available at http://www.ferc.gov/about/com-mem/moeller/moellergaselectricletter.pdf; Commissioner Cheryl A. LaFleur, 
Statement regarding Standards for Business Practices for Interstate 
Natural Gas Pipelines (Feb. 16, 2012, available at http://www.ferc.gov/media/statements-speeches/lafleur/2012/02-16-12-lafleur-G-1.asp.
---------------------------------------------------------------------------

    23. During August 2012, the Commission convened five regional 
conferences for the purpose of exploring these issues and obtaining 
further information from the electric and natural gas industries 
regarding coordination between the industries. Representatives from a 
cross-section of both industries attended the regional conferences, 
with total attendance exceeding 1,200 registrants. As noted above, the 
November Staff Report following these conferences stated that, among 
other topics, participants highlighted the need for alignment of 
natural gas and electric scheduling. Generators participating in the 
ISO and RTO markets stated that managing fuel procurement risk can be a 
challenge because the natural gas and electric operating days are not 
aligned. Many participants voiced concerns related to whether 
establishing a standard energy day for both industries is warranted, 
whether and how utilities can most effectively match their scheduling 
times with the nationwide natural gas scheduling timeline, whether 
additional nomination opportunities for natural gas can be provided 
and, if so, under what conditions. Participants also pointed out that 
changes to natural gas scheduling practices can have national 
implications given the operational structure of the pipeline system and 
that whether changes to the scheduling practices of the natural gas or 
electric industries are necessary to better align these two markets has 
been a matter of debate among the industries for a number of years.
    24. On November 15, 2012, the Commission issued an order directing 
further technical conferences and reports.\36\ In this order, the 
Commission recognized that questions raised at the conferences, related 
to scheduling and other issues, were of sufficient importance that they 
warranted a separate technical conference to focus on the details 
relating to scheduling.\37\ Therefore, the Commission directed, among 
other things, that Commission staff convene a technical conference to 
identify areas in which additional Commission guidance or potential 
regulatory changes could be considered.\38\
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    \36\ Coordination Between Natural Gas and Electricity Markets, 
141 FERC ] 61,125 (2012) (November 15 Order).
    \37\ Id. P 6.
    \38\ Id. P 8.
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    25. Pursuant to the November 15 Order, the Commission held a 
technical conference on April 25, 2013 (April 2013 technical 
conference) regarding natural gas and electric scheduling practices, 
and issues related to whether and how natural gas and electric industry 
schedules could be harmonized in order to achieve the most efficient 
scheduling systems for both industries.\39\ More than 300 persons, 
representing a cross-section of industry, participated in the April 
2013 technical conference, and discussed four major topic areas: 
natural gas and electric operating day, natural gas nomination cycles, 
the No-Bump Rule, and electric scheduling and market rules.\40\
---------------------------------------------------------------------------

    \39\ Coordination Between Natural Gas and Electricity Markets, 
Docket No. AD12-12-000 (Mar. 5, 2013) (Notice Of Technical 
Conference), available at http://elibrary.ferc.gov/idmws/File_list.asp?document_id=14095482.
    \40\ Supplemental Notice of Technical Conference, Docket No. 
AD12-12-000, at 4-7 (Apr. 3, 2013) (Supplemental Notice of Technical 
Conference), available at http://elibrary.ferc.gov:0/idmws/doc_info.asp?document_id=14104023.
---------------------------------------------------------------------------

    26. The participants in these conferences identified a number of 
specific areas in which the differences between the nationwide natural 
gas schedule and the regional electric schedules can affect the ability 
to provide reliable service and may create inefficiencies in scheduling 
that result in less cost effective use of resources. The major issues 
identified by the participants were: (1) The discontinuity between the 
operating days of electric utilities (including ISOs and RTOs) and the 
standardized operating day of interstate natural gas pipelines; (2) the 
lack of coordination between the day-ahead process for nominating 
interstate natural gas pipeline transportation services and the day-
ahead process for scheduling electric generators, particularly those of 
the ISOs and RTOs; and (3) the lack of intraday nomination 
opportunities on interstate natural gas pipelines, which may limit the 
ability of gas-fired electric generators, as well as other shippers, to 
revise their nominations during the operating day.

II. Discussion

A. Overview

    27. The growing reliance on natural gas as a fuel for electric 
generation, combined with differences in business practices between the 
two industries, has the potential to create challenges for interstate 
natural gas pipelines, electric transmission operators and electric 
generators in assuring reliable and efficient operations. This problem 
is particularly acute for some ISOs and RTOs and those gas-fired 
generators operating in their markets. At the same time, in areas of 
the country where bilateral markets are prevalent and storage is 
minimal, customers are looking for added flexibility. The Commission is 
proposing in this NOPR, and the related orders, to take actions that 
provide for better coordination in scheduling between the industries, 
while respecting the differences between the industries in their 
operational and business needs. These proposed reforms will help to 
ensure just and reasonable rates and terms and conditions of service 
for both wholesale electric generation and transmission and natural gas 
transportation.
    28. Scheduling practices on the interstate natural gas pipeline 
system

[[Page 18229]]

and electric transmission systems are similar in some respects. For 
both systems, planning and scheduling take place one day ahead of the 
operating day based on weather forecasts and other factors affecting 
demand. In addition, scheduling on both systems needs to be adjusted 
during the operating day as energy supply and demand factors change. 
However, physical and operational differences exist between the 
systems. Due in part to limited electric storage, electric transmission 
operators continuously and near instantaneously need to balance supply 
and demand to ensure the system remains in equilibrium. Natural gas, on 
the other hand, moves at a much slower rate than electricity.\41\ 
Pipelines maintain balance between supply and demand through the use of 
linepack and operational storage, and allow for variations in customer 
deliveries from equal hourly flow rates on an as available or best-
efforts basis.\42\ As a result, an interstate pipeline must plan in 
advance so that it has sufficient linepack and/or storage to satisfy 
variations in expected hourly demand on the system. Such advance 
planning is particularly important for serving gas-fired generators, 
because electric generators can draw significant volumes of natural gas 
off a pipeline, sometimes as much as industrial users or a small city. 
Accordingly, increased use of natural gas by the electric industry can 
have a significant impact on the delivery capabilities of interstate 
natural gas pipelines.\43\ Consequently, improvements in the 
coordination of the electric and natural gas nomination and scheduling 
practices could provide greater opportunities for gas-fired generators 
to obtain needed natural gas supplies and for pipelines to plan for 
their expected demands. Providing these opportunities will be 
beneficial for both industries in helping to ensure reliable and 
efficient operations.
---------------------------------------------------------------------------

    \41\ See American Gas Association, ``How Does the Natural Gas 
Delivery System Work?'' at http://www.aga.org/KC/ABOUTNATURALGAS/CONSUMERINFO/Pages/NGDeliverySystem.aspx (last visited Dec. 17, 
2013) (``Natural gas moves through the transmission system at up to 
30 miles per hour, so it takes several days for gas from Texas to 
arrive at a utility receipt point in the Northeast''). While most 
pipelines schedule service based on an assumption of same day 
deliverability of natural gas from receipt to delivery point, this 
ability is provided through the pipeline's ability to plan for 
nominated service by increasing line pack to support expected loads.
    \42\ During much of the year, most interstate natural gas 
pipelines can accommodate significant variations in hourly flow 
rates. However, during high demand periods when pipeline 
capabilities are being fully utilized to provide firm transportation 
services, a constrained pipeline may announce a critical notice 
period, where shippers are expected to stay in balance. Some 
pipelines also offer enhanced services that permit shippers to 
subscribe to services providing more variable hourly flow rates.
    \43\ See North American Electric Reliability Corp., Special 
Reliability Assessment: A Primer of the Natural Gas and Electric 
Power Interdependency in the United States, at 85-86 (Dec. 2011) 
(``the electric utility loads are as large, or larger, than many of 
the LDC loads and, in some cases, can exceed the capabilities of the 
smaller diameter pipelines'').
---------------------------------------------------------------------------

    29. The Commission has identified specific areas of concern with 
respect to the lack of coordination between the scheduling practices of 
the industries. In most ISO or RTO markets, a natural gas-fired 
generator does not know if it is going to be dispatched until after the 
ISO or RTO processes day-ahead or real-time market bids and determines 
which resources are economical to run on a particular day or hour. 
Because day-ahead electric generation commitments generally occur after 
the natural gas transportation Timely Nomination Cycle, a natural gas-
fired generator must either submit its nomination for natural gas 
transportation services before it knows when and how much electricity 
it will be committed to produce the next day, or it must wait until it 
receives its day-ahead commitment to nominate natural gas 
transportation services, with the risk that during some periods 
transportation capacity may not be available or economical, given the 
day-ahead market clearing price.\44\ A generator that opts to see if it 
is scheduled before acquiring natural gas and pipeline transportation 
therefore will not be able to obtain natural gas and transportation 
during the time period when these markets are the most liquid.\45\ 
While during many periods of the year interstate natural gas pipelines 
may have available capacity to provide service to gas-fired generators, 
during periods when the pipeline is constrained, the ability of 
generators to arrange transportation service when the market is most 
liquid may be critical to that gas-fired generators' ability to provide 
service.
---------------------------------------------------------------------------

    \44\ A natural gas-fired generator also faces different risks 
depending on whether it enters into long-term natural gas purchase 
arrangements or relies on short-term spot market natural gas 
purchases.
    \45\ Currently, only NYISO provides the results of its day-ahead 
market clearing process to generators before the deadline for 
submitting natural gas transportation nominations for the Timely 
Nomination Cycle. See Table 2, below.
---------------------------------------------------------------------------

    30. Even in areas outside of the ISOs and RTOs, gas-fired 
generators have concerns regarding their ability to revise their 
pipeline nominations during the operating day to respond to changing 
weather conditions and other operational needs when capacity becomes 
constrained. Some natural gas-fired generators have sought to ensure 
reliability by subscribing to firm pipeline service, but have found 
that the standard, nationwide nomination opportunities for interstate 
natural gas pipeline transportation service may not provide them with 
sufficient opportunities to reschedule gas supplies for unanticipated 
weather events after the Timely Nomination Cycle.
    31. The Commission concludes that these concerns, and other issues 
identified during our dialogues with industry, warrant further action 
in this proceeding and the two related proceedings we are instituting 
concurrently with this Proposed Rule. These concerns generally fall 
into two categories.
    32. First, the Commission is concerned about the potential impact 
on the reliable and efficient operation of electric transmission 
systems and interstate natural gas pipelines of divergences between the 
start times of the natural gas and electric operating days, and 
mismatches in the timelines for scheduling interstate natural gas 
pipeline transportation service and scheduling wholesale electric sales 
made by gas-fired generators for the next day. In particular, the 
Commission is concerned that
    (1) the current 9:00 a.m. Central Clock Time (CCT) start of the Gas 
Day occurs in the middle of the morning electric load ramp in some 
regions, creating a situation where electric load is increasing at the 
same time natural gas-fired generators may be running out of their 
daily nomination of natural gas, resulting in the gas-fired generator 
being unable to meet its obligations under the terms of their electric 
offers; and
    (2) in most ISO and RTO regions, the timelines for announcing the 
results of the day-ahead energy market process and committing 
generating units to run the next operating day occur after the deadline 
for the Timely Nomination Cycle (11:30 a.m. CCT), meaning gas-fired 
generators are not certain they will be called upon to operate until 
after the period when pipeline capacity is most available and natural 
gas supply markets are most liquid.
    33. Second, the Commission is concerned that existing interstate 
natural gas pipeline scheduling practices and the application of some 
of the Commission's regulations by pipelines may not provide sufficient 
flexibility to meet the needs of natural gas-fired generators, and 
could be limiting the efficient use of existing pipeline 
infrastructure, thereby making less capacity available to shippers 
(including natural gas-fired generators). Specifically, the limited 
number of standard intraday nomination cycles for

[[Page 18230]]

interstate natural gas pipeline transportation may not be sufficient to 
meet the needs of gas-fired generators to obtain capacity to deliver 
additional natural gas supplies during the electric operating day. In 
addition, even where interstate natural gas pipelines provide 
additional intraday opportunities to obtain transportation service, 
there appears to be a lack of clarity as to how the Commission's 
regulations regarding the ``bumping'' of interruptible customers should 
be applied to those additional nomination cycles. Finally, while some 
pipelines currently permit multiple shippers, including natural gas-
fired generators, the flexibility to share pipeline capacity under a 
single firm transportation contract, the Commission's regulations do 
not require all pipelines to offer shippers this option.
    34. We recognize that making modifications to the nationwide 
natural gas scheduling system and instituting the other reforms 
proposed in these three proceedings will not, and cannot, resolve all 
of the concerns that may arise with increased utilization of natural 
gas by electric generators. However, we conclude that the adjustments 
to the Gas Day and interstate natural gas pipeline nomination timeline 
proposed herein promise to provide significant assistance in helping to 
improve coordination of the natural gas and electric nomination and 
scheduling systems, while maintaining the substantial efficiencies 
gained through standardization of the natural gas scheduling system. 
The Commission intends that these reforms, along with the additional 
actions we propose in Docket Nos. EL14-22-000, et al. and RP14-442-000, 
will serve to better ensure the reliable and efficient operation of 
both interstate natural gas pipeline and electricity systems.
    35. While we are putting forth specific proposals (described in 
more detail below) in these areas, we continue to recognize that the 
natural gas and electricity industries are best positioned to work out 
the details of how changes in scheduling practices can most efficiently 
be made and implemented, consistent with the policies discussed here. 
For this reason, as noted above, we are providing time for the two 
industries to reach consensus on standards in these areas, including 
standards potentially different than the specific proposals herein. 
Participants in the NAESB process should explore whether consensus can 
be reached on any changes to the scheduling practices at issue in this 
Proposed Rule that would address the policy concerns identified herein. 
We urge both the natural gas and electric industries to once again 
marshal their resources and jointly consider all proposals and seek 
reasonable compromise on a broadly supported and comprehensive set of 
standards that will achieve the needed integration of the natural gas 
and electric industry scheduling practices.

B. Gas Day

1. Background and Issues
    36. As noted, the natural gas and electric operating days are each 
24 hours long, but they begin at different times. As a result, each 
electric operating day currently extends over two Gas Days and a gas-
fired generator committed for one electric operating day must manage 
fuel and transportation arrangements across two Gas Days. Several 
commenters in the Docket No. AD12-12-000 proceeding have indicated that 
the current Gas Day start time presents operational challenges because 
it occurs when gas-fired generation is critically needed to ensure that 
supply is available to match demand during the morning electric load 
ramp. As gas-fired generators approach the end of the Gas Day during 
the morning electric load ramp, they could exhaust either the 
contractual entitlements of their transportation contracts or their 
supply of natural gas.\46\ In addition, the Gas Day start time 
straddles a time of peak gas demand for other pipeline shippers, such 
as LDCs.
---------------------------------------------------------------------------

    \46\ Natural gas transportation contracts are based on 
volumetric entitlements over a single Gas Day.
---------------------------------------------------------------------------

    37. In support of an earlier start to the Gas Day, ISO-NE and NYISO 
have expressed concern that gas-fired generators sometimes exhaust 
their daily gas entitlements before the end of the Gas Day and 
subsequently may not be able to meet increasing morning electricity 
demands during the last hours of the Gas Day. When this occurs, ISO-NE 
and NYISO assert that they must search for alternative available 
generating units while electric load is ramping up and approaching its 
morning peak. ISO-NE and NYISO commented that shifting the start of the 
Gas Day earlier would improve gas-electric coordination and, NYISO 
noted, would also improve reliability.\47\ They noted that moving the 
start of the Gas Day earlier would enable gas-fired resources needed 
for the peak morning period to timely nominate and schedule supply to 
support their ability to generate electricity at the start of the 
morning electrical peak,\48\ and would provide generators more 
flexibility in attaining balancing services to avoid derating their 
units.\49\ NYISO also argued that, as a result of its proposed change, 
any generator derates that occurred at the end of the Gas Day would 
occur during the overnight hours, which is a preferable period from an 
electric reliability perspective.\50\
---------------------------------------------------------------------------

    \47\ NYISO Comments, Docket No. AD12-12-000, at 5 (filed June 
25, 2013); ISO-NE Comments, Docket No. AD12-12-000, at 9 (filed July 
5, 2013).
    \48\ ISO-NE Comments, Docket No. AD12-12-000, at 9-10 (filed 
July 5, 2013).
    \49\ NYISO Comments, Docket No. AD12-12-000, at 5 (filed June 
25, 2013); ISO-NE Comments, Docket No. AD12-12-000, at 9-10 (filed 
July 5, 2013).
    \50\ NYISO Comments, Docket No. AD12-12-000, at 5-6 (filed June 
25, 2013).
---------------------------------------------------------------------------

    38. Additional commenters noted support for or willingness to move 
the Gas Day start time earlier. In particular, INGAA and NGSA indicated 
willingness to consider moving the Gas Day earlier, but provided no 
specific suggestions on a new start time.\51\ However, NGSA expressed 
concerns that an earlier start to the Gas Day may introduce safety 
risks associated with manual field operations for field crews.\52\ For 
example, NGSA stated that currently a producer may need to divert gas 
from one pipeline connected to a field to another pipeline, because of 
price changes, market demand, or pipeline maintenance. NGSA stated that 
starting the gas operating day when it is still dark raises safety 
concerns for employees making these adjustments. According to NGSA, 
these concerns will result in either: (1) Increased costs to light all 
production areas to avoid potential safety issues, or (2) a reduced 
ability to use more than one interconnected pipeline.\53\ In addition, 
INGAA asserts that the Commission must ensure that producers are able 
to physically deliver natural gas into a pipeline if the Gas Day is 
moved to an earlier time; otherwise INGAA states that an earlier start 
may not be workable. PJM stated that moving the start of the Gas Day to 
5:00 a.m. CCT could potentially be helpful because the peak electric 
period would no longer split the Gas Day.\54\ While MISO stated it is 
not experiencing issues related to natural gas-fired unit derates, MISO 
indicated that it would support moving the start of the Gas Day earlier 
if it minimizes the uncertainty surrounding fuel procurement for gas-
fired generators, as long as the nomination

[[Page 18231]]

schedule did not also move to an earlier time.\55\
---------------------------------------------------------------------------

    \51\ INGAA Comments, Docket No. AD12-12-000, at 7 (filed June 
26, 2013); NGSA Comments, Docket No. AD12-12-000, at 9 (filed July 
16, 2013).
    \52\ NGSA Comments, Docket No. AD12-12-000, at 9 (filed July 16, 
2013).
    \53\ Id. n.7.
    \54\ PJM Comments, Docket No. AD12-12-000, at 5 (filed July 3, 
2013).
    \55\ MISO Comments, Docket No. AD12-12-000, at 4 (filed July 3, 
2013).
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2. Commission Proposal
    39. To alleviate some of the problems resulting from the 
misalignment of the gas and electric operating day, the Commission 
proposes to move the start of the Gas Day to earlier than its current 
9:00 a.m. CCT time to better accommodate the load increase during the 
morning for both the electric and natural gas systems, which, in some 
time zones, begins prior to the 9:00 a.m. CCT start of the Gas Day. 
Moving the start of the Gas Day earlier should address instances in 
which gas-fired generators find that they are running out of scheduled 
natural gas capacity during the morning ramp period, and have to wait 
until 9:00 a.m. CCT before being able to rely on their next day gas 
nomination. As a consequence, gas-fired generators should be less 
likely either to incur imbalances on pipelines or inform electric 
transmission operators that they are unavailable.
    40. The Commission is proposing to move the start of the Gas Day to 
4:00 a.m. CCT. 4:00 a.m. CCT would preserve the nationwide scheduling 
efficiencies for natural gas, while reasonably accommodating the timing 
of morning electric ramp periods across all four time zones. As Figures 
1 and 2 below show, a 4:00 a.m. CCT Gas Day start time would occur at 
the beginning of the morning electric ramp in the East, and before the 
morning electric ramp in other regions of the country. Moving the Gas 
Day to 4:00 a.m. CCT as compared to 9:00 a.m. CCT would mean that 
generators in all regions would be able to approach the morning 
electric peak, as well as most of the morning ramp period, with new 
daily gas nominations. This should largely eliminate the concern that 
some gas-fired generators will be unable to run during a substantial 
part of the morning ramp period, because they have burned through their 
nominated gas before the start of the next Gas Day.
[GRAPHIC] [TIFF OMITTED] TP01AP14.002

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

    \56\ Source: Velocity Suite. Data covers 2012/13 winter for all 
regions except SERC, which depicts 2011/12 winter. Figures 1 and 2 
were created with data from Ventyx's Energy Velocity software suite, 
which makes available a dataset of total hourly load for all North 
American ISOs and RTOs, and total hourly historical demand for 
certain non-ISO/RTO planning areas. From these datasets, Commission 
staff isolated data relating to the regions shown above, and focused 
on a ``winter'' period of December 2012, January 2013, and February 
2013 (except where noted by an asterisk). Each line represents the 
average hourly load during said winter period for non-holiday 
weekdays and is normalized to the average peak load for that period 
by dividing by each line's maximum value.

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

[[Page 18232]]

[GRAPHIC] [TIFF OMITTED] TP01AP14.003

    The Commission recognizes that moving the start of the Gas Day to 
4:00 a.m. CCT may result in increased costs to mitigate potential 
safety issues associated with employees conducting manual operations in 
the dark.\58\ However, it is unclear the frequency with which those 
circumstances occur.\59\ On balance, the Commission finds that the 
overall benefits to both industries of moving the Gas Day earlier so 
that the morning ramp period for gas-fired generators and other gas 
consumers is included in a single Gas Day outweigh the potential for 
increased costs that may be incurred. In addition, as discussed below, 
we are also proposing changes in the intraday nomination cycles, which 
should minimize concerns expressed by NGSA and others that an earlier 
start to the Gas Day may adversely affect the ability of shippers to 
balance their gas flows by the next Gas Day. Both industries should 
consider whether modifications to this proposal could reduce overall 
costs without unduly jeopardizing coordination between the industries.
---------------------------------------------------------------------------

    \57\ Source: Velocity Suite. Data covers 2012/13 winter for 
regions except DSW and NWPP, which depict 2011/12 winter.
    \58\ NGSA Comments, Docket No. AD12-12-000, at 10 & n.7 (filed 
July 16, 2013).
    \59\ While NGSA states that there are situations during the 
normal course of business in which a producer may need to make 
manual adjustments to divert gas from one pipeline to another, it 
does not state how often such adjustments are required or the extent 
to which those adjustments would need to be performed at the start 
of the Gas Day. NGSA Comments, Docket No. AD12-12-000, at 10 & n.7 
(filed July 16, 2013).
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C. Natural Gas Transportation Timely Nomination Cycle

1. Background and Issues
    41. In addition to the industries having different start times to 
their operating days, the natural gas and electric industries operate 
on different schedules within those days. As shown in Table 1 above, 
under the current NAESB WGQ Standard 1.3.2 and the Commission's 
regulations,\60\ natural gas pipelines must offer pipeline shippers a 
minimum of four nomination opportunities to schedule natural gas 
transportation. Two of those standard nomination opportunities, the 
Timely Nomination Cycle and the Evening Nomination Cycle, occur the day 
before gas flows, while the other two nomination opportunities, Intra-
Day 1 and Intra-Day 2, are revising nominations the day of gas flow. 
The Gas Day starts at 9:00 a.m. CCT and natural gas pipeline customers 
are required to submit nominations for the Timely Nomination Cycle by 
11:30 a.m. CCT.
---------------------------------------------------------------------------

    \60\ 18 CFR 284.12 (2013).
---------------------------------------------------------------------------

    42. As described above, wholesale electricity markets operated by 
the ISOs and RTOs also use a day-ahead energy market to set contractual 
commitments for the next operating day.\61\ Market participants place 
day-ahead offers and bids to sell and purchase, and these participants 
must make such commitments prior to the close of the market. If the 
market clearing process accepts these commitments, they become binding 
for the following day. Additionally, each ISO and RTO also

[[Page 18233]]

performs a reliability unit commitment process to procure resources, in 
addition to those resources committed to serve the load bid into the 
day-ahead market, as necessary to meet the ISO's or RTO's own forecast 
of the next day's load and, in some cases, other system needs.
---------------------------------------------------------------------------

    \61\ SPP's Integrated Marketplace, including implementation of a 
day-two market launched March 1, 2014. See Southwest Power Pool, 
Inc., 144 FERC ] 61,224 (2013). For the purposes of describing SPP's 
expected operation of its Integrated Marketplace in this order, we 
will refer to SPP's most recently approved schedules that the 
Commission accepted effective as of March 2014.
---------------------------------------------------------------------------

    43. The following table represents the times that bids must be 
submitted and that the ISOs and RTOs post successful bids accepted in 
their respective day-ahead markets. As demonstrated by Table 2, all 
ISOs and RTOs (with the exception of NYISO) publicize accepted day-
ahead dispatch bids after the current 11:30 a.m. CCT nomination 
deadline for the Timely Nomination Cycle for day-ahead natural gas 
transportation nominations.

                           Table 2--Electric Commitment Results Publication Timetable
----------------------------------------------------------------------------------------------------------------
                                                                                         Time for publication of
                            ISO/RTO                              Time for submission of    day-ahead commitment
                                                                       bids (CCT)               bids (CCT)
----------------------------------------------------------------------------------------------------------------
California Independent System Operator Corporation (CAISO)....               12:00 p.m.                3:00 p.m.
ISO New England Inc. (ISO-NE).................................                9:00 a.m.               12:30 p.m.
PJM Interconnection, LLC (PJM)................................               11:00 a.m.                3:00 p.m.
Midcontinent Independent System Operator, Inc. (MISO).........               10:00 a.m.                2:00 p.m.
New York Independent System Operator, Inc. (NYISO)............                4:00 a.m.               10:00 a.m.
Southwest Power Pool, Inc. (SPP)..............................               11:00 a.m.                4:00 p.m.
----------------------------------------------------------------------------------------------------------------

    44. The market for acquiring natural gas supply is most liquid on 
weekday mornings between 8:00 a.m. and 9:00 a.m. CCT, prior to the 
Timely Nomination Cycle deadline, and the majority of shippers place 
nominations for next-day gas transportation service by the Timely 
Nomination Cycle deadline.\62\ Commenters assert that although natural 
gas supply can be purchased throughout the day through a limited 
secondary market, there is a premium for natural gas supply and 
interstate natural gas pipeline transportation capacity services 
procured after the Timely Nomination Cycle.\63\ After the Timely 
Nomination Cycle, the Evening Nomination Cycle beginning at 6:00 p.m. 
CCT offers the only standard opportunity to reschedule gas 
transportation for the next Gas Day.
---------------------------------------------------------------------------

    \62\ November Staff Report at 31-32.
    \63\ Natural gas is traded in bilateral markets. Daily 
transactions are mostly consummated in the morning hours before the 
Timely Nomination Cycle deadline. The ability to find willing buyers 
and sellers to act as counterparties of a commodity transaction is 
greatest during these normal trading periods; the gas market is 
``liquid'' during this time of day.
---------------------------------------------------------------------------

    45. The issue arising from the current timing of the Timely 
Nomination Cycle is whether the electric markets are better served by 
notifying gas-fired generators of their dispatch requirements before 
the deadline for timely nominations or by allowing generators to 
determine the most current gas prices before they must submit their 
bids into the electric markets. Some generators prefer bidding into the 
ISO and RTO markets after the Timely Nomination Cycle deadline so their 
bids to supply electricity reflect the current natural gas prices, 
whereas other generators want to know if they have been committed by 
the ISO or RTO to operate before entering the market to obtain natural 
gas supply and interstate natural gas pipeline transportation 
capacity.\64\ Some ISOs and RTOs are concerned that when their markets 
clear after the deadline for submitting nominations in the Timely 
Nomination Cycle generators may not have procured gas and 
transportation due to uncertainty with bids being accepted by the ISO/
RTO. This fuel uncertainty may result in reliability problems if these 
generators ultimately cannot run as expected.\65\
---------------------------------------------------------------------------

    \64\ See, e.g., Calpine Corporation Comments, Docket No. AD12-
12-000, at 7 (filed Mar. 30, 2012) (``problems may occur when a unit 
that has not been scheduled for dispatch is called upon after the 
first day-ahead nomination period has passed.''); Equipower 
Resources Corp. Comments, Docket No. AD12-12-000, at 3-4 (filed Mar. 
30, 2012) (``natural gas-fired generator is forced to purchase and 
nominate natural gas supplies before it knows whether its output 
will clear the day-ahead market and be assigned a generation 
commitment. . . . Consequently, a generator faces substantial risk 
that it did not purchase the correct volume of natural gas, 
potentially leaving it with a substantial surplus or deficiency of 
natural gas'').
    \65\ PJM Comments, Docket No. AD12-12-000, at 5 (filed July 3, 
2013); NYISO Comments, Docket No. AD12-12-000, at 3 (filed June 28, 
2013).
---------------------------------------------------------------------------

    46. INGAA filed comments indicating a willingness to move the 
Timely Nomination Cycle to 1:00 p.m. CCT to accommodate ISO and RTO 
needs on the condition that the ISOs and RTOs reevaluate their 
schedules for performing their market processes and committing 
generators to ensure that generators will learn from their ISO or RTO 
whether they will be dispatched before nominating for interstate 
natural gas pipeline transportation service.\66\ INGAA contends that 
the Timely Nomination Cycle, confirmation and scheduling process should 
occur during normal business hours to ensure the availability of 
counterparties necessary for the confirmation process. Consistent with 
these comments, INGAA requests that the Timely Nomination Cycle, 
including the confirmation and scheduling notification processes, be 
completed no later than 5:00 p.m. CCT.\67\
---------------------------------------------------------------------------

    \66\ INGAA Comments, Docket No. AD12-12-000, at 3 (filed June 
26, 2013).
    \67\ Id.
---------------------------------------------------------------------------

    47. NGSA similarly commented that any changes to the existing gas 
operating schedule must provide sufficient time between the Timely 
Nomination Cycle scheduling notification and the time that nominations 
are required for the next available cycle.\68\ NGSA notes that it is 
particularly critical that shippers not scheduled during the Timely 
Nomination Cycle have time to secure alternative gas supply and 
transportation arrangements during ordinary business hours. NGSA 
further notes that after nominations are submitted the confirmation 
process itself may require a series of time consuming communications, 
and suggests that operators need a minimum of two hours to communicate 
among all the relevant parties between the close of the Timely 
Nomination Cycle and the time in which nominations are confirmed, and 
possibly longer for instances in which interconnecting pipelines have 
non-conforming nomination cycles. Like INGAA, NGSA stresses that the 
confirmation deadline for the Timely Nomination Cycle must occur during 
normal business hours.
---------------------------------------------------------------------------

    \68\ NGSA Comments, Docket No. AD12-12-000, at 7-8 (filed July 
16, 2013).
---------------------------------------------------------------------------

2. Commission Proposal
    48. The Commission proposes to move the deadline for submitting 
nominations in the Timely Nomination Cycle later than the current 11:30 
a.m. CCT deadline, to 1:00 p.m. CCT, in order to provide sufficient 
time for

[[Page 18234]]

electric utilities to complete their processes for selecting generating 
resources to operate prior to this first, and most liquid, time in the 
natural gas supply and interstate natural gas pipeline transportation 
service markets. It appears that our objective of a later deadline for 
submitting nominations in the Timely Nomination Cycle can be 
accomplished without any other changes to the Timely Nomination Cycle 
or Evening Cycle timelines, including the 4:30 p.m. CCT deadline for 
the pipeline to provide notice of scheduled quantities. The three and a 
half hour period from 1:00 p.m. CCT to 4:30 p.m. CCT is consistent with 
INGAA and NGSA's comments that several hours are needed for pipelines 
to confirm and provide scheduled quantities to shippers. However, the 
industry can consider whether any revisions or changes are necessary to 
accommodate a later Timely Cycle nomination deadline.
    49. To make sure that ISO and RTO market clearing processes will 
sufficiently align with this later proposed nomination deadline for 
submitting nominations in the Timely Nomination Cycle, the Commission 
also is instituting a proceeding under section 206 of the Federal Power 
Act (FPA) \69\ (in a contemporaneous order in Docket No. EL14-22-000 et 
al.) to ensure that the ISOs and RTOs modify their day-ahead market 
processes and scheduling such that generators will receive dispatch 
instructions in sufficient time to be able to acquire natural gas and 
transportation by the start of the Timely Nomination Cycle (as revised 
in the instant proceeding) and to complete their supplemental 
reliability dispatch in sufficient time for generators to use the 
Evening Cycle. In addition, while the comments received by the 
Commission in Docket No. AD12-12-000 mainly discuss the effect of such 
a change on the ISO and RTO markets, a later Timely Nomination Cycle 
deadline also should help ensure that gas-fired generation resources in 
other regions are able to acquire interstate natural gas pipeline 
transportation capacity and natural gas supply in time for day-ahead 
commitments.\70\
---------------------------------------------------------------------------

    \69\ California Independent System Operator Corp., et al, Order 
Initiating Investigation into ISO/RTO Scheduling Practices and 
Establishing Paper Hearing Procedures, 146 FERC ] 61,202 (2014).
    \70\ See Pro Forma OATT Sec.  13.8 (firm day-ahead schedules 
must be submitted by 10:00 a.m. local time).
---------------------------------------------------------------------------

    50. Under the current scheduling timelines, a gas-fired generator 
in ISO and RTO markets that completes its scheduling after the Timely 
Nomination Cycle must decide whether (a) to line-up supply and nominate 
interstate natural gas pipeline transportation during the Timely 
Nomination Cycle without knowing whether the gas-fired generator's 
electric energy bid will subsequently clear the energy market; or (b) 
to wait to see whether its bid clears the energy market, and then line-
up fuel supply and natural gas pipeline transportation in a later 
nomination cycle. If a generator acquires natural gas and 
transportation prior to learning whether it is dispatched, it runs the 
risk of having to dispose of its natural gas supply and interstate 
natural gas pipeline transportation capacity during the less liquid 
Evening or Intra-Day nomination periods.\71\ However, if the generator 
first waits to see if its bid clears the day-ahead market, it must try 
and acquire natural gas and transportation during the less liquid 
Evening or intraday gas transportation nomination cycles. In this 
event, the generator runs the risk of potentially not being able to 
find transportation capacity if the pipeline is fully scheduled.
---------------------------------------------------------------------------

    \71\ See, e.g., Equipower Resources Corp. Comments, Docket No. 
AD12-12-000, at 3-4 (filed Mar. 30, 2012) (a generator that 
purchases capacity and gas during the timely cycle and is not 
dispatched ``is forced to sell excess volumes or purchase the volume 
it is short in the intraday market. But the intraday market is 
highly illiquid and sometimes nonexistent, resulting in the 
generator (1) being exposed to imbalance penalties on the pipeline 
if it cannot find a market for excess gas; (2) being unable to 
operate its generator at expected output; (3) having to purchase 
additional supplies at a premium; or (4) having to sell excess 
supply at a discount'').
---------------------------------------------------------------------------

    51. We recognize that gas-fired generators face commercial business 
decisions that inform whether they prefer to bid into the day-ahead 
electric markets before or after they have secured their gas supply and 
transportation needs. There are also differences of opinion as to 
whether electric scheduling should be completed prior to the submission 
of interstate natural gas pipeline transportation nominations. Some 
favor having the pipelines' Timely Nomination Cycle clear prior to 
submission of bids into ISO/RTO markets, maintaining that gas-fired 
generators will obtain the most accurate gas prices to inform their 
energy bids into the organized markets. Others, however, maintain that 
if electric market schedules clear first, gas-fired generators will 
know by the Timely Nomination Cycle how much natural gas and interstate 
natural gas transportation they need to procure and the generators will 
have less need to obtain transportation and natural gas during less 
liquid times.
    52. Taking these considerations into account, we are proposing that 
the electric markets clear prior to the pipelines' Timely Nomination 
Cycle. We conclude that moving the Timely Nomination Cycle later than 
the current 11:30 a.m. CCT deadline, along with examining whether the 
ISOs and RTOs should modify their day-ahead market processes, could 
expand the options available to gas-fired generators. Currently, gas-
fired generators in some regions are not provided the opportunity to 
buy natural gas and arrange natural gas transportation at a time when 
they know the results of the day-ahead electric market and the natural 
gas markets are most liquid. Gas-fired generators, therefore, must 
either procure natural gas supply and transportation prior to knowing 
whether they were committed or after the close of the Timely Nomination 
Cycle, when the natural gas supply and transportation markets are less 
liquid. Under our proposal, gas-fired generators would have the option 
of arranging natural gas supply and transportation at the Timely 
Nomination Cycle knowing the results of the day-ahead electric market. 
In particular, this would forward the objective of minimizing 
situations in which gas-fired generators, particularly those that opt 
to procure natural gas supply and transportation after the day-ahead 
electric market results are posted, are unable to procure sufficient 
resources to fulfill their electric market commitments and to 
contribute to reliable system operation.
    53. Furthermore, as discussed above, a gas-fired generator's 
inability to know whether its bid in the day-ahead market has been 
selected prior to the deadline for the Timely Nomination Cycle may lead 
to instances in which gas-fired generators must sell off excess natural 
gas supply, procure more expensive natural gas supply, de-rate, or burn 
more expensive fuels. We are concerned that any of these scenarios 
could result in increased electricity costs and a shift away from the 
least-cost mix of supply resources as determined by the ISO or RTO's 
day-ahead dispatch and unit commitment. These circumstances could lead 
to higher costs being passed on to wholesale customers. On the other 
hand, if gas-fired generators know whether they were committed in the 
day-ahead electric market prior to the Timely Nomination Cycle, these 
generators may have a greater opportunity to procure natural gas 
transportation in the Timely Nomination Cycle--when there is the 
greatest opportunity to procure pipeline capacity. This, in turn, could 
reduce the

[[Page 18235]]

potential for gas-fired generators to engage in costly actions that 
raise real-time energy market prices. Thus, electric market outcomes 
may better reflect expected operating costs if gas-fired generators 
were provided with day-ahead market results prior to the Timely 
Nomination Cycle.
    54. We understand that moving the Timely Nomination Cycle to later 
in the day may impose systems and administrative costs on other 
interstate natural gas pipeline shippers. In balancing all of the 
interests of the many affected customers, a 1:00 p.m. CCT start time 
for the Timely Nomination Cycle would appear to provide a reasonable 
balance of the electric and natural gas industries' concerns: the 
natural gas industry will have sufficient time to complete the Timely 
Nomination Cycle during normal business hours, as requested by INGAA 
and NGSA, while electric transmission operators will be able to 
complete their scheduling sufficiently prior to the Timely Nomination 
Cycle to permit gas-fired generators to acquire natural gas and 
pipeline capacity during the Timely Nomination Cycle. After considering 
the potential effects of this proposal, the long-term benefits of 
ensuring a better coordinated natural gas and electric industry appear 
to warrant this change. The industries, however, should consider 
whether a different timeline better fits their combined business needs.

D. Modified Intra-Day Nomination Timeline

1. Background and Comments Received
    55. In addition to the Timely and Evening Nomination Cycles, 
pipelines currently must offer shippers at least two opportunities to 
nominate natural gas during the day that gas is flowing. These 
nomination opportunities are known as the Intra-Day 1 and Intra-Day 2 
nomination cycles. The current nomination deadline for Intra-day 1 is 
10:00 a.m. CCT on the current Gas Day, with confirmation at 2:00 p.m. 
CCT, for gas flow at 5:00 p.m. CCT that same Gas Day, and the deadline 
for Intra-day 2 nominations is 5:00 p.m. CCT on the current Gas Day 
with confirmation and flow at 9:00 p.m. CCT that same Gas Day. As with 
nominations made at the Timely or Evening Cycles, nominations for firm 
service at the Intra-Day 1 cycle can ``bump'' an already scheduled 
interruptible nomination. Pursuant to the ``No-Bump Rule,'' however, 
nominations for firm service made at the Intra-Day 2 cycle cannot 
``bump'' scheduled interruptible service.
    56. Some pipelines offer additional intraday nomination cycles or 
other enhanced services.\72\ Even if additional nomination cycles are 
not detailed in the pipeline's tariff, some pipelines' tariffs provide 
that the pipeline will make best efforts to accommodate such 
incremental nominations throughout the day on a best efforts basis.\73\ 
These enhanced nomination opportunities are not standardized across the 
nation, however, and therefore are not available to all shippers. 
Consequently, for gas transactions that require transportation on more 
than one pipeline, these additional intraday nomination opportunities 
may have limited value because the pipelines without enhanced 
nomination opportunities may not confirm the nominations. Thus, if not 
all pipelines in the nomination chain offer additional nomination 
opportunities, a shipper transporting gas on a pipeline that offers 
such enhanced nominations may not be able to take advantage of that 
opportunity, and therefore may not be able to schedule its capacity 
until the next nation-wide nomination cycle.
---------------------------------------------------------------------------

    \72\ See, e.g., Texas Gas Transmission LLC., 137 FERC ] 61,093 
(2011); Florida Gas Transmission Co., LLC, 141 FERC ] 61,161 (2012) 
(order accepting pipeline proposal to add an Intra-day 3 Nomination 
Cycle to accommodate anticipated flow changes for the final six 
hours of the gas day).
    \73\ See, e.g., Tennessee Gas Pipeline Company, LLC's Tariff, 
GT&C Section IV.2(e).
---------------------------------------------------------------------------

    57. A number of commenters \74\ suggested that the standard, 
nation-wide nomination opportunities that are currently available may 
not provide gas-fired generators or other shippers with sufficient 
flexibility to adjust their nominations to respond to real-time changes 
in their need for natural gas. These commenters requested that 
additional, standardized intraday nomination opportunities be required 
on interstate natural gas pipelines.
---------------------------------------------------------------------------

    \74\ See, e.g., APS Comments, Docket No. AD12-12-000, at 5 
(filed Apr. 19, 2013), NYISO Comments, Docket No., AD12-12-000, at 
3-2 (filed June 28, 2013) ISO-NE Comments, Docket No. AD12-12-000, 
at 6 (filed July 5, 2013), Desert Southwest Pipeline Stakeholders 
Comments, Docket No. AD12-12-000, at 14 (filed Jan. 31, 2014).
---------------------------------------------------------------------------

    58. For example, ISO-NE and NYISO suggest that the lack of 
nomination opportunities impacts their ability to use gas-fired 
generation capacity to respond to real time events.\75\ Specifically, 
ISO-NE asserts that it is unable to anticipate which or when gas-fired 
units will be able to respond to real time dispatch requests, and that 
this uncertainty results in ISO-NE asking multiple units to come 
online.
---------------------------------------------------------------------------

    \75\ ISO-NE Comments, Docket No. AD12-12-000, at 6-7 (filed July 
7, 2013), NYISO Comments, Docket No. AD12-12-000, at 3 (filed June 
28, 2013).
---------------------------------------------------------------------------

    59. In addition, APS and the Desert Southwest Pipeline Stakeholders 
\76\ (DSPS) argue that gas-fired generators in their region typically 
hold firm pipeline transportation capacity but cannot make full use of 
that capacity to respond to a contingency that occurs during or after 
their peak load period because of a lack of sufficient opportunities to 
adjust nominations. According to APS and DSPS, the peak demand for 
electricity in Arizona typically does not occur until approximately 
5:00 p.m. Pacific Time, while the only intraday nomination deadlines 
are 8:00 a.m. Pacific Time (Intra-Day 1) and the no-bump 3:00 p.m. 
Pacific Time (Intra-Day 2).\77\ APS and DSPS maintain that firm 
shippers should have superior rights to interruptible shippers and 
should not be limited to bumping interruptible service only at 8:00 
a.m. Pacific Time. APS and DSPS notes that they need to use gas-fired 
generators to balance Variable Energy Resource production in the 
Southwest. APS and DSPS state that during the extreme summer months 
when capacity is often constrained, gas-fired electric utilities in the 
Southwest routinely have to submit their final flow day nomination for 
their gas requirements 2 to 9 hours before its system hits its peak 
with 16 to 23 hours remaining in the current Gas Day. Accordingly, APS 
suggests that, at a minimum, two additional intraday nomination cycles 
be added; one bumpable cycle between the current Intra-Day 1 and Intra-
Day 2 cycles and another nomination opportunity after Intra-Day 2.\78\ 
NRG also supports the addition of a nomination cycle after Intra-day 2.
---------------------------------------------------------------------------

    \76\ The core members of the DSPS include The Arizona 
Corporation Commission, Arizona Public Service Company, El Paso 
Electric Company, New Mexico Gas Company, Inc., Public Service 
Company of New Mexico, Salt River Project Agricultural Improvement 
and Power District, Southwest Gas Corporation, and Tucson Electric 
Power Company/UNS Gas, Inc.
    \77\ APS Comments, Docket No. AD12-12-000, at 4 (filed Apr. 19, 
2013).
    \78\ Id. at 5-6.
---------------------------------------------------------------------------

    60. DSPS also proposes that the current NAESB nomination timeline 
be modified to add an additional intraday nomination opportunity.\79\ 
DSPS proposes that the Intra-Day 1 cycle would continue to permit 
bumping and maintain the current nomination deadline of 10:00 a.m. CCT 
on the current Gas Day, but that Intra-Day 2 would provide an 
additional bumping opportunity with a nomination deadline of 7:00 p.m. 
CCT, with confirmation at

[[Page 18236]]

9:00 p.m. CCT, for gas flow at 10:00 p.m. on the current Gas Day. DSPS 
also proposes a no-bump Intra-Day 3 cycle with a nomination deadline of 
10:00 p.m. CCT, with confirmation at 1:00 a.m. CCT for gas flow at 1:00 
a.m. on the current Gas Day. DSPS asserts that its proposal would 
provide IT shippers with a final no-bump cycle that guarantees that an 
IT shipper that is scheduled in Intra-Day 2 cannot be bumped in the 
final cycle of the current Gas Day and would therefore have a minimum 
of eleven hours of flow.\80\
---------------------------------------------------------------------------

    \79\ DSPS Comments, Docket No. AD12-12-000, at 28-29 (filed Jan. 
31, 2014).
    \80\ DSPS Comments, Docket No. AD12-12-000, at 29 (filed Jan. 
31, 2014).
---------------------------------------------------------------------------

    61. Tennessee Valley Authority (TVA) argues that the Commission's 
No-Bump Rule creates an artificial barrier to firm service and should 
be removed.\81\ TVA indicated that it has contracted for firm service, 
including enhanced services for each of its gas-fired generation 
facilities, but claims those services have limited value when 
attempting to nominate capacity at an intraday cycle because the No-
Bump Rule allows interruptible transmission service to have priority 
over firm service in the Intra-Day 2 nomination cycle.
---------------------------------------------------------------------------

    \81\ See, e.g., TVA Response, Docket No. AD12-12-000, at 3-4 
(filed July 29, 2013). See also APS Comments, Docket No. AD12-12-
000, at 7-9 (filed Apr. 19, 2013).
---------------------------------------------------------------------------

    62. Several commenters, including INGAA, were open to the creation 
of additional standard nomination cycles.\82\ They noted that, while 
several pipelines offer services that provide additional flexibility, 
these services and nomination opportunities are not standardized or 
available to all shippers. INGAA requests, however, that gas flow for 
any additional nomination cycles should occur at least eight hours 
prior to the end of the Gas Day.\83\ NGSA commented that it is willing 
to consider additional intraday nomination cycles provided that (1) the 
No Bump Rule remains intact for any nomination opportunities after the 
existing Intra-Day 2 cycle; (2) changes in nominations after business 
hours are voluntary and mutually agreeable to all parties to the 
transaction; (3) bumped parties are afforded sufficient time between 
the pipeline's confirmation deadline and the next nomination deadline 
to secure alternative supply and transportation arrangements; and (4) 
consideration is given to upstream gas supply limitations and 
producers' ability to respond to nomination changes.\84\ NGSA also 
states that it supports individual pipeline efforts to offer enhanced 
nomination cycles beyond the NAESB standardized schedule.
---------------------------------------------------------------------------

    \82\ INGAA Comments, Docket No. AD12-12-000, at 5 (filed June 
26, 2013).
    \83\ INGAA Comments, Docket No. AD12-12-000, at 6 & n.6 (filed 
June 26, 2013) (noting that such timing would be a ``natural 
extension of the current NAESB nomination standards,'' and reasoning 
that because the gas flow for the current Intra-Day 1 cycle is one 
third of the way through the Gas Day, and the gas flow for the 
Intra-Day 2 cycle is halfway through the Gas Day, that is seems 
logical for gas flow for a third intraday opportunity to begin two-
thirds of the way through the Gas Day).
    \84\ NGSA Comments, Docket No. AD12-12-000, at 7 (filed July 16, 
2013).
---------------------------------------------------------------------------

2. Commission Proposal
    63. To address concerns that the current standard, nation-wide 
intraday nomination opportunities do not provide shippers--especially 
natural gas-fired generators--with sufficient flexibility, the 
Commission proposes to modify the current natural gas nomination 
timeline so that in addition to the Timely and Evening nomination 
cycles, shippers will have four intraday cycles to reschedule gas 
rather than the existing two. The additional intraday nomination cycles 
will maximize shippers' ability to make significant changes in their 
intraday nominations, as well as provide firm shippers an additional, 
bumpable late-afternoon nomination cycle. These proposed revisions will 
provide gas-fired generators as well as other pipeline customers with 
greater flexibility to revise their nominations to adjust to system 
conditions and changes to load throughout the Gas Day. The last change 
to the standardized intraday nomination schedule occurred in 1998, in 
Order No. 587-G, and with the advancements in computer technology over 
the last 15 years, pipelines today should be able to provide greater 
nomination flexibility.\85\
---------------------------------------------------------------------------

    \85\ Order No. 587-G, FERC Stats. & Regs. ] 31,062 at 30,672.
---------------------------------------------------------------------------

    64. The timelines we propose below are based on the proposed 
adoption of 4:00 a.m. CCT as the start of the Gas Day. The proposed 
intraday nomination schedules seek to preserve a reasonable number of 
hours between the intraday nomination periods and the end of the Gas 
Day.\86\ This will provide shippers with reasonable opportunities to 
reschedule gas based on the amount of contract demand or flow 
remaining.\87\ While we propose nomination times below, we continue to 
recognize that the natural gas and electricity industries are best 
positioned to work out the details of how changes in scheduling 
practices can most efficiently be made and implemented, consistent with 
the policies discussed here. NAESB may also consider different 
approaches to providing flexibility.\88\ The Commission proposes the 
following new timeline for intraday nominations:
---------------------------------------------------------------------------

    \86\ The Appendix indicates the number of hours remaining in the 
Gas Day for each of the proposed intraday nomination opportunities.
    \87\ As discussed earlier, supra at text accompany n.26, 
intraday nominations are limited by the remainder of a shipper's 
daily quantity relative to the remaining hours of the Gas Day. Under 
the current standard nomination timeline, a 4:00 a.m. CCT start of 
the Gas Day would have meant that shippers could only revise their 
nomination at Intra-day 1 for an effective flow time of 5:00 p.m. 
CCT by less than half of their remaining entitlements. 
Comparatively, under the Commission's proposed nomination timeline, 
shippers could revise their nomination at Intra-Day 1 for an 
effective time of 12:00 p.m. CCT for up to 66 percent of their 
entitlements.
    \88\ For example, NAESB could consider whether more frequent 
nominations could be accommodated if all parties in the confirmation 
chain scheduled electronically.
---------------------------------------------------------------------------

     Intra-Day 1. To accommodate the proposed move of the start 
of the Gas Day from 9:00 a.m. CCT to 4:00 a.m. CCT, the proposed Intra-
Day 1 cycle would provide an early morning opportunity for shippers to 
nominate gas with nominations submitted by 8:00 a.m. CCT and an 
effective time of 12:00 p.m. CCT.
     Intra-Day 2. The proposed Intra-Day 2 cycle would replace 
the current Intra-Day 1 mid-morning nomination cycle and would permit 
bumping. We propose to move the current deadline for shippers to submit 
gas nominations for delivery the same Gas Day from 10:00 a.m. CCT to 
10:30 a.m. CCT. In addition, nominations would become effective at 4:00 
p.m. CCT, rather than at 5:00 p.m. under the current standards.
     Intra-Day 3. The proposed Intra-Day 3 cycle would provide 
an additional bumping opportunity for firm shippers, with nominations 
submitted by 4:00 p.m. CCT, notice to bumped shippers would be provided 
at 6:00 p.m. CCT, and the nomination would become effective at 7:00 
p.m. CCT.
     Intra-Day 4: Intra-Day 4 would replace the current no-bump 
cycle. We propose to move the current nomination deadline from 5:00 
p.m. CCT to 7:00 p.m. CCT, which will provide interruptible shippers 
bumped during the Intra-Day 3 cycle with one hour to reschedule bumped 
service. The effective flow time for Intra-Day 4 would be at 9:00 p.m. 
CCT.\89\
---------------------------------------------------------------------------

    \89\ The Commission at this time is not proposing specific 
deadlines for upstream and downstream pipelines to confirm the 
nominations for the revised intra-day timeline, but leaves such 
determinations to the industry.
---------------------------------------------------------------------------

    65. The Commission's proposal to modify the current intraday 
nomination timeline to provide four intraday nomination cycles, instead 
of the existing two, will create additional national nomination 
opportunities that would be available to all shippers, not just those 
shipping on interstate pipelines that voluntarily allow more flexible 
nomination opportunities.

[[Page 18237]]

Thus, the proposal would enhance scheduling flexibility for intraday 
transactions that require transportation on more than one pipeline. 
Further, the addition of standardized nationwide intraday nomination 
opportunities should benefit all firm shippers and enhance gas-fired 
generators' ability to respond to real time events by providing 
additional opportunities for capacity procurement.
    66. The proposed addition of a new Intra-Day 1 early morning cycle 
is consistent with the proposed change to the start of the Gas Day from 
9:00 a.m. CCT to 4:00 a.m. CCT. Currently, gas flow for Intra-Day 1 
starts one-third of the way, or eight hours, into the Gas Day.\90\ We 
propose to retain that same time span between the newly proposed start 
of the Gas Day and the flow of gas for Intra-Day 1 nominations that 
will flow that same day.
---------------------------------------------------------------------------

    \90\ INGAA Comments, Docket No. AD12-12-000, at 6 & n.6 (filed 
June 26, 2013).
---------------------------------------------------------------------------

    67. We propose to maintain a mid-morning bumpable intraday 
nomination opportunity for shippers that need to respond to forecasted 
changes in weather or other events occurring later than the early 
morning cycle. We propose to move the nomination deadline one half hour 
later from 10:00 a.m. CCT to 10:30 a.m. CCT and to move the effective 
or gas flow time one hour earlier from 5:00 p.m. CCT to 4:00 p.m. CCT. 
The gas flow time for this proposed Intra-Day 2 Cycle will be half way 
through the proposed 4:00 a.m. to 4:00 a.m. Gas Day, and thus confirmed 
nominations in our proposed Intra-Day 2 Cycle will flow for 12 hours, 
as under the existing Intra-Day 2 Cycle.\91\ We are proposing that 
nominations for this intraday cycle be submitted by 10:30 a.m., in 
order to give pipelines two and a half hours to confirm those 
nominations before the 1:00 p.m. deadline for day-ahead nominations to 
be submitted in the Timely Nomination Cycle.
---------------------------------------------------------------------------

    \91\ Consistent with INGAA's comments, the Commission proposes 
to adjust the Intra-Day 1 and Intra-Day 2 nomination cycles so that 
they remain eight and twelve hours after the start of the proposed 
gas flow day. See INGAA Comments, Docket No. AD12-12-000, at 5 
(filed June 26, 2013).
---------------------------------------------------------------------------

    68. The new proposed late-afternoon Intra-Day 3 cycle that permits 
bumping will provide firm shippers, including gas-fired generators, 
with greater ability to use the reserved firm service for which they 
are paying. Under the Commission's current regulations, pipelines must 
give scheduling priority to an intraday nomination submitted by a firm 
shipper over nominated and scheduled volumes for interruptible 
shippers.\92\ The ability of firm shippers to make the most use of the 
service for which they pay a monthly reservation charge is compromised 
by their inability to bump interruptible service after the current 
Intra-Day 1 nomination cycle. Over the last fifteen years, pipelines 
have increasingly held firm shippers to much stricter tolerances on gas 
flow, so that firm shippers may need additional intraday nomination 
opportunities to maintain flow rates.\93\ Pipelines also have 
increasingly held gas-fired generators' natural gas transportation 
nominations to much stricter tolerances.\94\ In light of these changes, 
the additional bumping nomination opportunity will help gas-fired 
generators with firm service, and other firm shippers, realign their 
nominations in accord with weather or other operational changes within 
the Gas Day. West Coast shippers, in particular, are unable under the 
current standards to use their firm service to adjust to system 
conditions and load changes by making an intraday nomination after 8:00 
a.m. Pacific Time if such nomination would bump scheduled interruptible 
service. The proposed new Intra-Day 3 cycle, which is a 4:00 p.m. CCT 
late-afternoon bump cycle, should provide firm shippers, even those on 
the West Coast, with sufficient time to react to revised weather 
forecasts and other demand changes and schedule needed quantities. 
Under this proposal, pipelines would provide notice of bumping to 
affected shippers at 6:00 p.m. CCT, and the nominations would become 
effective at 7:00 p.m. CCT.
---------------------------------------------------------------------------

    \92\ 18 CFR 284.12(b)(1)(i)(A) (2013). Because we are proposing 
to include in the regulations the standard nomination cycles which 
specify when interruptible shippers' scheduled quantities can and 
cannot be reduced, the first sentence of section 284.12(b)(1)(i)(A) 
to which the text refers is no longer necessary and we propose to 
remove it.
    \93\ See El Paso Natural Gas Co., 114 FERC ] 61,305, at P 29 
(2006).
    \94\ See, e.g., Trailblazer Pipeline Co. LLC, 143 FERC ] 61,084 
(2013) (Commission approved enhanced nomination service requiring 
electronic flow measurement and flow control facilities). See also 
Texas Gas Transmission Corp., Docket No. CP82-407-000, 2002 Annual 
Report of Blanket Certificate Activities, http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=10463248.
---------------------------------------------------------------------------

    69. The proposed Intra-Day 4 cycle will provide interruptible 
shippers with an opportunity to reschedule bumped volumes after notice 
of bumping in the new proposed Intra-Day 3 cycle.\95\ The deadline for 
submitting nominations in the Intra-Day 4 cycle would be at 7:00 p.m. 
CCT, one hour after notice of bumping in the Intra-Day 3 cycle. As NGSA 
maintains, and as the Commission has previously recognized, 
interruptible shippers need some stability in the nomination system. In 
Order No. 587-G, the Commission accepted a consensus of the gas 
industry, including both firm and interruptible shippers, and accepted 
standards that provide that the last intraday nomination opportunity 
would not permit bumping of interruptible service. In adopting this 
standard, the Commission recognized that making the last intraday 
nomination opportunity no-bump would provide stability to the 
nomination system.\96\ We continue to recognize that such stability is 
needed, and the proposed intraday nomination schedule we outline here 
is intended to provide a reasonable balance between the interests of 
firm and interruptible shippers. Maintaining the No-Bump Rule during 
the proposed Intra-Day 4 cycle will provide such assurances for 
interruptible shippers, while allowing bumping during the proposed new 
Intra-Day 3 cycle will permit firm shippers to utilize the higher 
priority service for which they are paying.
---------------------------------------------------------------------------

    \95\ See Texas Gas Transmission, LLC, 137 FERC ] 61,093 (2011), 
order on compliance, 138 FERC ] 61,176 (2012) (Texas Gas) (accepting 
one hour advance notice to bumped interruptible shippers).
    \96\ Standards for Business Practices of Interstate Natural Gas 
Pipelines, Order No. 587-G, (Apr. 23, 1998), FERC Stats. & Regs., 
Regulations Preambles July 1996-December 2000 ] 31,062 (1998), order 
on rehg, Order No. 587-I, 63 FR 53565, 53569 (Oct. 6, 1998), FERC 
Stats. & Regs., Regulations Preambles July 1996-December 2000 ] 
31,067 (1998).
---------------------------------------------------------------------------

    70. In summary, given the proposed 4:00 a.m. start of the Gas Day, 
our proposed schedule for four intraday nomination opportunities 
appears to provide a reasonable balance between the interests of firm 
and interruptible shippers. The 4:00 p.m. CCT late-afternoon bump cycle 
should provide firm shippers, even those on the West Coast, with 
sufficient time to react to revised weather forecasts and other demand 
changes. Interruptible shippers will be provided with advance notice 
and an opportunity to reschedule bumped volumes, as is the case under 
the current standards.\97\ However, as indicated above, the industry 
should consider these proposals and determine if they can reach 
consensus on revisions that they believe better fit the business 
practices of the industries.
---------------------------------------------------------------------------

    \97\ See Texas Gas, 138 FERC ] 61,176 (accepting one hour 
advance notice to bumped interruptible shippers).
---------------------------------------------------------------------------

E. Clarification Regarding the ``No-Bump'' Rule for Pipelines With 
Enhanced Nomination Services

    71. As we have stated before, the NAESB nomination timelines 
establish only the minimum requirements, and pipelines may propose 
additional nomination opportunities that better fit

[[Page 18238]]

their own system needs.\98\ Many pipelines have implemented enhanced 
nomination services for firm shippers, providing shippers additional 
nomination opportunities. Some pipelines specifically developed these 
services to provide gas-fired generation with the ability to effectuate 
gas deliveries quickly to meet changing demand throughout the Gas Day 
while managing such things as weather changes and the variable nature 
of renewable supply sources.\99\ Other pipelines provide more than the 
current four standard nomination times for all shippers.\100\
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    \98\ Standards for Business Practices for Interstate Natural Gas 
Pipelines; Standards for Business Practices for Public Utilities, 
Order No. 698, FERC Stats. & Regs. ] 31,251, at P 69 (2007).
    \99\ See Texas Gas, 138 FERC ] 61,176 at P 4.
    \100\ See e.g. Texas Eastern Transmission LP Tariff, 4.1, 
Scheduling of Storage and Transportation Services, 1.0.0 (flexible 
intraday nominations), Tennessee Gas Pipeline Tariff, Fourth Revised 
Sheet No. 313 (hourly nomination changes).
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    72. The current NAESB WGQ Standard 1.3.2 provides that bumping is 
not allowed during the Intraday 2 Nomination Cycle. In Texas Gas 
Transmission, LLC, the Commission accepted an enhanced nomination 
schedule with eleven additional nominations that permits interruptible 
shippers to be bumped until the nomination deadline for the Intra-Day 2 
cycle (currently 5:00 p.m. CCT), but provided preliminary notice of 
bumping prior to 5:00 p.m. and permitted any bumped shipper to 
renominate bumped volumes at the 6:00 p.m. CCT enhanced nomination 
cycle or any of the subsequent enhanced nomination cycles.\101\
---------------------------------------------------------------------------

    \101\ Texas Gas, 137 FERC ] 61,093, order on compliance, 138 
FERC ] 61,176; Gulf South Pipeline Co. LP, 141 FERC ] 61,262 (2012).
---------------------------------------------------------------------------

    73. Participants at the conferences noted that the interaction of 
these enhanced nomination services with the No-Bump Rule was not clear. 
We provide clarification below as to how the Commission policy would be 
implemented under the proposals in this NOPR. Under the current NAESB 
WGQ standards and the Texas Gas policy, pipelines may propose to bump 
shippers up to 5:00 p.m. CCT as long as they provide notice and 
renomination opportunities similar to those accepted in Texas Gas. 
Under the revised intraday nomination timelines proposed here, the 
Commission believes that pipelines offering enhanced nomination 
services should be permitted to bump interruptible shippers at least 
until the time when the bumping notice under the newly proposed Intra-
Day 3 schedule is provided (in the Commission's proposal 6:00 p.m. 
CCT). The proposed Intra-Day 4 nomination cycle would guarantee that 
any bumped interruptible shipper will have an opportunity to renominate 
its bumped volumes at 7:00 p.m. If a pipeline proposes enhanced 
nomination services that permit bumping of interruptible services after 
6:00 p.m., the Commission will consider the proposal on a case-by-case 
basis to determine whether such proposal provides an adequate 
subsequent opportunity to renominate any bumped volumes.
    74. In addition, an issue has arisen with respect to the 
interaction of enhanced nominations and WGQ Standard 1.3.39, which 
provides that bumping affecting transactions on pipelines will occur at 
grid-wide synchronization times only.\102\ Some of the pipelines 
offering enhanced nomination services would have been unable to offer 
such enhanced nomination services if they could not reduce the gas flow 
of the bumped interruptible shipper on the same schedule as they 
increase flow for the firm shippers.\103\ These proposals conflicted 
with Standard 1.3.39 because they would have permitted all 
interruptible shippers to be bumped at other than grid-wide nomination 
periods. In these circumstances, the Commission accepted proposals (and 
granted waivers of Standard 1.3.39) to permit bumping of interruptible 
shippers at other than grid-wide nomination times when the pipelines 
have proposed alternative opportunities for interruptible shippers to 
renominate bumped volumes at the enhanced nomination periods.\104\
---------------------------------------------------------------------------

    \102\ Under the current NAESB system, the daily grid-wide 
synchronization times for scheduled flow are 9:00 a.m. CCT, 5:00 
p.m. CCT, and 9:00 p.m. CCT. Standard 1.3.41.
    \103\ See Texas Gas, 137 FERC ] 61,093, order on compliance, 138 
FERC ] 61,176; Gulf South, 141 FERC ] 61,262.
    \104\ See ANR Pipeline Co., 145 FERC ] 61,089 (2013); Gulf 
South, 141 FERC ] 61,262 at P 33; Trans-Union Interstate Pipeline 
L.P, et al., 141 FERC ] 61,167, at P 41 (2012) (granting waiver to 
Texas Gas Transmission LLC).
---------------------------------------------------------------------------

    75. The Commission finds the continuation of this approach with 
respect to enhanced nomination proposals by pipelines reasonably 
balances the interest of firm and interruptible customers by permitting 
the firm shippers to utilize the rights for which they pay reservation 
charges and by permitting interruptible shippers to renominate bumped 
volumes as quickly as possible. NAESB should consider revisions to 
Standard 1.3.39 and Standard 1.3.41 to reflect these policies to 
alleviate the need for pipelines to seek waiver or make other filings 
regarding Standard 1.3.39.\105\
---------------------------------------------------------------------------

    \105\ Until such changes are adopted by the Commission, 
pipelines intending that firm shippers be able to bump interruptible 
service during enhanced nomination periods must include in their 
tariff filings a revision to their incorporation by reference of the 
NAESB standards indicating that this standard is not incorporated.
---------------------------------------------------------------------------

F. Multi-Party Transportation Contracts

    76. The Commission is also proposing to revise its regulations to 
require pipelines to offer multi-party transportation contracts, under 
which multiple shippers can share interstate natural gas pipeline 
capacity under a single service agreement. While some pipelines already 
offer this option, the Commission does not currently require pipelines 
to do so. Companies have indicated that providing more flexibility to 
shippers to use their capacity, such as by allowing multiple parties to 
share transportation service, might permit more efficient and effective 
use of transportation capacity.
    77. The Commission's regulations require that all transfers of firm 
pipeline capacity from one shipper to another shipper take place 
pursuant to the capacity release program in section 284.8 of our 
regulations to assure that such capacity transfers are transparent and 
not unduly discriminatory.\106\ Utilizing capacity release to 
effectuate sharing of capacity between entities makes sharing of 
capacity less efficient due to the need to comply with the capacity 
release posting and bidding requirements as well as the need for the 
replacement shipper to enter into a contract with the pipeline for each 
release. In recent years, however, the Commission has accepted several 
pipeline proposals to offer multiple shippers the option of entering 
into a single contract for transportation service, with a single agent 
or asset manager managing the capacity under the contract.\107\ As 
approved by the

[[Page 18239]]

Commission, this option permits several shippers to share the subject 
capacity without the need to use the capacity release program to 
transfer the capacity among themselves. In order to satisfy the 
Commission's shipper-must-have-title policy, the pipelines proposed, 
and the Commission accepted, tariff provisions ensuring that each 
shipper under a multi-party service agreement agree to be jointly and 
severally liable for all obligations of all shippers and the agent 
under the single service agreement.\108\ The Commission has permitted 
multi-party transactions even when the shippers under such an agreement 
are not affiliated with one another.\109\
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    \106\ See Pipeline Service Obligations and Revisions to 
Regulations Governing Self-Implementing Transportation and 
Regulation of Natural Gas Pipeline After Partial Wellhead Decontrol, 
Order No. 636, FERC Stats. & Regs. ] 30,939, at 30,416-20, order on 
reh'g, Order No. 636-A, FERC Stats. & Regs. ] 30,950, at 30,554 
(1992). See also Regulation of Short-Term Natural Gas Transportation 
Services and Regulation of Interstate Natural Gas Transportation 
Services, Order No. 637, FERC Stats. & Regs. ] 31,091, at 31,300 
(2000).
    \107\ Southern Natural Gas Co., 124 FERC ] 61,145 (2008) 
(pipeline modified Rate Schedule FT to allow a single contract 
option for multiple shippers affiliated with a single agent or asset 
manager); Florida Gas Transmission Co., LLC, 128 FERC ] 61,284 
(2009), order on compliance filing, Docket No. RP09-922-001 (Nov. 
17, 2009) (pipeline modified provisions of Rate Schedules FT and IT 
to allow a single contract option for multiple shippers that have 
designated a single agent on their behalf); Transcontinental Gas 
Pipe Line Corp., Docket No. RP10-1099-000 (Sept. 14, 2010) 
(delegated letter order) (pipeline modified provisions of Rate 
Schedules IT, PAL and Pooling, and ICTS to allow a single contract 
option for multiple shippers that have designated a single agent on 
their behalf); Tennessee Gas Pipeline Co., L.L.C., 142 FERC ] 61,200 
(2013) (pipeline modified provisions of Rate Schedules FT, IT and 
PAL to allow a single contract option for multiple shippers that 
have designated a single agent on their behalf).
    \108\ See, e.g., Southern, 124 FERC ] 61,145 at P 12. As the 
Commission explained, multi-party agreements must include joint and 
several liability to comply with the Commission's shipper-must-have-
title policy. Without joint and several liability, shippers under 
the multi-party agreement that are not liable for the total charges 
under the agreement would be in violation of the Commission's 
shipper-must-have-title policy to the extent they used capacity in 
excess of that for which they were liable to pay.
    \109\ See, e.g., Florida Gas Transmission Co., LLC, 126 FERC ] 
61,055 (2009).
---------------------------------------------------------------------------

    78. This contracting flexibility has been utilized by entities to 
meet their collective load obligations in a more efficient manner. For 
example, certain affiliated utilities of Southern Company, which have 
long operated as an integrated public utility electric system through 
the joint commitment and economic dispatch of their gas-fired 
generating resources, have entered into a single interstate natural gas 
pipeline transportation service agreement, with Southern Company 
Services (their affiliated agent) arranging for the gas supplies used 
in their generating facilities.\110\ Under this single transportation 
service agreement, on any given day Southern Company Services can use 
up to its overall contractual entitlement under the service agreement 
to provide service to any one of its affiliated utilities.
---------------------------------------------------------------------------

    \110\ See, e.g., Southern Natural Gas Co., Transmittal, Docket 
No. RP01-205-016 (May 14, 2009); Southern, 124 FERC ] 61,145. The 
affiliates were Alabama Power Company, Georgia Power Company, Gulf 
Power Company, Mississippi Power Company, Savannah Electric and 
Power Company and Southern Power Company.
---------------------------------------------------------------------------

    79. The use of shared capacity can make the purchase of firm 
pipeline capacity more affordable, including for gas-fired generators. 
For example, a gas-fired generator could decide to defray its pipeline 
capacity costs by sharing capacity among a number of generators or by 
sharing capacity with a LDC that has differing peak needs for natural 
gas transportation service. Similarly, an industrial plant, which has a 
relatively constant need for gas when its plant is operating but which 
has the flexibility to reduce its operations and gas usage on 
relatively short notice, could arrange to share its capacity with 
another shipper, such as a gas-fired generator, which only needs gas 
during short intervals and which has less control over when it runs. 
Permitting such entities to enter into a single contract with the 
pipeline gives those entities the flexibility to choose contracting 
partners with complementary needs for pipeline capacity and to enter 
into an ongoing contractual relationship concerning how they will share 
the capacity.
    80. In order to provide this contracting flexibility to shippers on 
all interstate pipelines, the Commission proposes to revise Part 284 of 
its regulations to require interstate natural gas pipelines that offer 
firm transportation service under subpart B or G of Part 284 to allow 
multiple shippers associated with a designated agent or asset manager 
to be jointly and severally liable under a single firm transportation 
service agreement, subject to reasonable terms and conditions. 
Consistent with the multi-party contract tariff provisions the 
Commission has previously approved, such reasonable terms and 
conditions may include requirements that (1) the shippers and agent 
demonstrate their agency relationship in writing and (2) the shippers 
are willing to be treated collectively as one shipper for nomination, 
allocation, and billing purposes under the contract.
    81. The Commission proposes only to require pipelines to offer 
multi-party service agreements for firm service, because a primary 
benefit of such service agreements is the fact they permit parties to 
share firm capacity without the need to engage in capacity releases. 
However, we recognize that some pipelines currently offer multi-party 
service agreements to interruptible, as well as firm customers. The 
Commission requests comment on whether the Commission should require 
pipelines to offer multi-party service agreements for interruptible 
transportation service.

III. Notice of Use of Voluntary Consensus Standards

    82. Office of Management and Budget Circular A-119 (section 11 
(February 10, 1998) provides that federal agencies should publish a 
request for comment in a NOPR when the agency is proposing to use a 
government-unique standard in lieu of a voluntary consensus standard, 
provide a statement which identifies such standards and provides a 
preliminary explanation for the proposed use of a government-unique 
standard in lieu of a voluntary consensus standard. While the 
Commission previously has adopted NAESB standards regarding natural gas 
and electric utility scheduling, NAESB has thus far been unable to 
reach consensus on standards coordinating the scheduling between these 
two industries because these issues involve policy questions more 
appropriate for resolution by the Commission.\111\ In this NOPR, the 
Commission is proposing, and seeking comment on whether, revisions to 
the NAESB standards are necessary to provide more efficient 
coordination between the two industries to reduce costs and to promote 
the provision of reliable service. However, the Commission is providing 
NAESB an opportunity, as it has in the past, to consider these policy 
goals and develop consensus standards that may better fit the business 
practices of the two industries.
---------------------------------------------------------------------------

    \111\ North American Energy Standards Board, Gas-Electric 
Harmonization Committee Report, at 4 (September 2012) (``although 
this Committee has identified discrete areas where standards could 
be considered, the Committee recognizes that the ability of NAESB to 
reach consensus on certain standards may not be possible absent 
further policy guidance by regulators or other appropriate public 
bodies'').
---------------------------------------------------------------------------

IV. Information Collection Statement

    83. The following collections of information contained in this 
proposed rule are being 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 burden estimates are for one-time 
implementation of the information collection requirements of this NOPR 
(including tariff filing, documentation of

[[Page 18240]]

the process and procedures, and IT work), and ongoing burden.
    84. The collections of information related to this NOPR fall under 
FERC-545 (Gas Pipeline Rates: Rate Change (Non-Formal)) \112\ and FERC-
549C (Standards for Business Practices of Interstate Natural Gas 
Pipelines).\113\ The following estimates of reporting burden are 
related only to this NOPR and anticipate the costs to pipelines for 
compliance with the Commission's proposals to (1) move the start of the 
Natural Gas Operating Day earlier than the current 9:00 a.m. CCT, (2) 
start the first day-ahead gas nomination opportunity (Timely Nomination 
Cycle) later than 11:30 a.m. CCT, (3) add additional intraday 
nominations, and (4) allow multiple shippers to share pipeline capacity 
under a single firm transportation service agreement. The burden 
estimates are for one-time tariff filing, implementation, and on-going 
costs.
---------------------------------------------------------------------------

    \112\ FERC-545 covers rate change filings made by natural gas 
pipelines, including tariff changes.
    \113\ FERC-549C covers Standards for Business Practices of 
Interstate Natural Gas Pipelines.
---------------------------------------------------------------------------

Public Reporting Burden

                                                                     NOPR in RM14-2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Number of        Average burden
                                                               Number of        responses per        hours per         Total annual    Total annual cost
                                                           respondents \114\      respondent          response         burden hours        ($) \115\
                                                                         (1)                (2)                (3)    (1) x (2) x (3)  .................
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          FERC-545 (OMB Control No. 1902-0154)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tariff Filing (one-time) \116\...........................                166                  1                 10              1,660           $138,892
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          FERC-549C (OMB Control No. 1902-0174)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Implementation of proposed business standards, including                 166                  1                240             39,840         $3,071,664
 process, procedures, and IT support (one-time) \117\....
Annual operations, including 2 additional intraday                       166                  1                365             60,590         $4,268,566
 nominations (ongoing) \118\.............................
                                                          ----------------------------------------------------------------------------------------------
    Total one-time (for FERC-545 and FERC-549C)..........  .................  .................  .................             41,500         $3,210,556
                                                          ----------------------------------------------------------------------------------------------
    Total ongoing (for FERC-549C)........................  .................  .................  .................             60,590         $4,268,566
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Information Collection Costs: The Commission seeks comments on the 
costs to comply with these requirements. We estimate the total costs 
for all respondents to be:
---------------------------------------------------------------------------

    \114\ An estimated 166 natural gas pipelines (Part 284 program) 
are affected by this NOPR. Although some natural gas pipeline 
companies may utilize business practices that satisfy parts of the 
proposals in this NOPR (e.g., provide additional nomination 
opportunities), the full cost of industry compliance is estimated 
for the total number of approximately 166 potential respondents.
    \115\ Wage data is based on the Bureau of Labor Statistics data 
for 2012 (``May 2012 National Industry-Specific Occupational 
Employment and Wage Estimates, [for] Sector 22--Utilities'' at 
http://bls.gov/oes/current/naics2_22.htm) and is compiled for the 
top 10 percent earned. For the estimate of the benefits component, 
see http://www.bls.gov/news.release/ecec.nr0.htm.
    \116\ The mean hourly cost of tariff filings and implementation 
for interstate natural gas pipelines is $83.67. This represents the 
average composite wage (salary and benefits for 2,080 annual work-
hours) of the following occupational categories: ``Legal'' ($128.02 
per hour), ``Computer Analyst'' ($83.50 per hour), and ``Office and 
Administrative'' ($39.49 per hour). Wage data is available from the 
Bureau of Labor Statistics at http://bls.gov/oes/current/naics2_22.htm and is compiled for the top 10 percent earned. For the 
estimate of the benefits component, see http://www.bls.gov/news.release/ecec.nr0.htm.
    \117\ The average hourly cost is $77.10. This represents the 
average composite wage (salary and benefits for 2,080 annual work-
hours) of the following occupational categories: ``Legal'' ($128.02 
per hour), ``Computer Analyst'' ($83.50 per hour), ``Gas Plant 
Operator'' ($57.40) and ``Office and Administrative'' ($39.49 per 
hour).
    \118\ For ongoing operations, we estimate 1 hour per calendar 
day per respondent (or 365 hours annually per respondent). The 
average hourly cost is $70.45. This represents the average composite 
wage (salary and benefits for 2,080 annual work-hours) of the 
following occupational categories: ``Computer Analyst'' ($83.50 per 
hour), and ``Gas Plant Operator'' ($57.40).

 Year 1 (including the one-time tariff-filing, and 
implementation and ongoing costs)): $7,479,122
 Years 2 and 3, each (ongoing costs only): $4,268,566

    Title: FERC-545, Gas Pipeline Rates: Rates Change (Non-Formal); and 
FERC-549C, Standards for Business Practices of Interstate Natural Gas 
Pipelines.
    Action: Proposed revisions to information collections.
    OMB Control Nos.: 1902-0154 and 1902-0174.
    Respondents: Business or other for profit enterprise (Natural Gas 
Pipelines).
    Frequency of Responses: One-time filing and implementation and 
ongoing.
    Necessity of Information: The proposals in this NOPR would, if 
implemented, upgrade the industry's current business practices by 
specifically: (1) Creating or revising standards to start the natural 
gas operating day earlier than the current 9:00 a.m. CCT; (2) creating 
or revising standards to delay the start of the first day-ahead gas 
nomination opportunity for pipeline scheduling until after 11:30 a.m. 
CCT; (3) creating or revising standards to add two additional intraday 
nomination cycles in the afternoon and evening, and (4) allow multiple 
shippers to share pipeline capacity under a single firm transportation 
service agreement.
    The implementation of these standards and regulations will promote 
additional efficiency and reliability of the gas industry's operations.
    Internal Review: The Commission has reviewed the requirements 
pertaining to business practices of natural gas pipelines and made a 
preliminary determination that the proposed revisions are necessary to 
establish more efficient coordination between the natural gas and 
electric industries. Requiring such information ensures common business 
practices for participants engaged in the sale of electric energy at 
wholesale and the

[[Page 18241]]

transportation of natural gas. These requirements conform to the 
Commission's plan for efficient information collection, communication, 
and management within the natural gas pipeline 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.
    85. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street NE., Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director, email: 
[email protected], phone: (202) 502-8663, fax: (202) 273-0873].
    86. Comments concerning the collections of information and the 
associated burden estimates, should be sent to the Commission 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, telephone: (202) 395-4638, 
fax: (202) 395-4718]. For security reasons, comments to OMB should be 
submitted by email to: [email protected]. Comments submitted 
to OMB should include Docket Number RM14-2-000 and OMB Control Numbers 
1902-0154 and 1902-0174.

V. Environmental Analysis

    87. 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.\119\ The 
Commission concludes that neither an Environmental Assessment nor an 
Environmental Impact Statement is required for this NOPR under section 
380.4(a)(27) of the Commission's regulations, which provides a 
categorical exemption for rules that are for the sale, exchange, and 
transportation of natural gas under sections 4, 5 and 7 of the Natural 
Gas Act that require no construction of facilities.\120\
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    \119\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \120\ See 18 CFR 380.4(a)(27) (2013).
---------------------------------------------------------------------------

VI. Regulatory Flexibility Certification

    88. The Regulatory Flexibility Act of 1980 (RFA) \121\ generally 
requires a description and analysis of proposed rules that will have 
significant economic impact on a substantial number of small entities. 
The RFA mandates consideration of regulatory alternatives that 
accomplish the stated objectives of a rule and that minimize any 
significant economic impact on a substantial number of small entities. 
The Small Business Administration's (SBA) Office of Size Standards 
develops the numerical definition of a small business as matched to 
North American Industry Classification System Codes (NAICS).\122\ The 
SBA has established a size standard for pipelines transporting natural 
gas, stating that a firm is a small entity if its annual receipts are 
less than $25.5 million.\123\ Approximately 166 interstate pipeline 
entities are potential respondents subject to the NOPR reporting 
requirements. For the year 2012, eleven companies unaffiliated with 
larger companies had annual revenues of less than $25.5 million (7 
percent of 166 potential respondents) and are defined by the SBA as 
``small entities.'' The Commission anticipates that the estimated 
compliance cost of the proposals in this NOPR is $7,479,122 (or $45,055 
per entity) in Year 1 (one-time and ongoing costs), and $4,268,566 (or 
$25,714 per entity) in Years 2 and 3 (ongoing cost), regardless of 
entity size. The Commission does not consider the estimated impact per 
company to be significant. Adoption of consensus standards helps ensure 
the reasonableness of the standards by requiring that the standards 
draw support from a broad spectrum of industry participants 
representing all segments of the industry.
---------------------------------------------------------------------------

    \121\ 5 U.S.C. 601-612.
    \122\ 13 CFR 121.101.
    \123\ 13 CFR 121.201, subsection 486.
---------------------------------------------------------------------------

    89. Accordingly, pursuant to Sec.  605(b) of the RFA,\124\ the 
regulations proposed herein should not have a significant economic 
impact on a substantial number of small entities.
---------------------------------------------------------------------------

    \124\ 5 U.S.C. 605(b).
---------------------------------------------------------------------------

VII. Comment Procedures

    90. 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 November 28, 2014. As noted above, on this 
date commenters should submit comments on any consensus proposals that 
may result from the 180-day period provided to the industries to 
address these matters and issues through NAESB, as well as comments on 
the Commission's proposals. Comments must refer to Docket No.RM14-2-
000, and must include the commenter's name, the organization they 
represent, if applicable, and their address in their comments.
    91. The Commission encourages comments to 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. Documents created electronically using word processing 
software should be filed in native applications or print-to-PDF format 
and not in a scanned format. Commenters filing electronically do not 
need to make a paper filing.
    92. Commenters that are not able to file comments electronically 
must send an original of their comments to: Federal Energy Regulatory 
Commission, Secretary of the Commission, 888 First Street NE., 
Washington, DC 20426.
    93. 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

    94. 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 the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, 
Washington DC 20426.
    95. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary 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.
    96. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's Online 
Support at 202-502-6652 (toll free at 1-866-208-3676) or email at 
[email protected], or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
[email protected].

List of Subjects in 18 CFR Part 284

    Natural gas, Reporting and recordkeeping requirements.


[[Page 18242]]


    By direction of the Commission. Commissioner Clark is dissenting 
with a separate statement attached.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
    In consideration of the foregoing, the Commission proposes to amend 
Part 284, Chapter I, Title 18, Code of Federal Regulations, as follows.

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

0
1. The authority citation for Part 284 continues to read as follows:

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

0
2. In Sec.  284.12, paragraph (a)(1)(ii) is revised to read as follows:
    (a) * * *
    (1) * * *
    (ii) Nominations Related Standards (Version 2.0, November 30, 2010, 
with Minor Corrections Applied Through December 2, 2011), with the 
exception of Standards 1.3.1, 1.3.2, and 1.3.41;
* * * * *
0
3. In Sec.  284.12, revise paragraph (b)(1)(i), redesignate paragraph 
(b)(1)(ii) as paragraph (b)(1)(iv) and add new paragraphs (b)(1)(ii), 
(b)(1)(iii), and b(1)(v) to read as follows:
    (b) * * *
    (1) * * *
    (i) Standard time for the gas day should be 4 a.m. to 4 a.m. 
(central clock time or CCT).
    (ii) A pipeline must support the following standard nomination 
cycles (all times are central clock time):
    (A) Timely Nomination Cycle. The deadline for shippers to submit 
gas nominations to a pipeline for delivery the next gas day is 1:00 
p.m.; the pipeline must provide notice to shippers of scheduled 
quantities by 4:30 p.m.; and scheduled quantities for the Timely 
Nomination Cycle shall be effective for flow at 4:00 a.m. on the next 
gas day.
    (B) Evening Nomination Cycle. The deadline for shippers to submit 
gas nominations to a pipeline for delivery the next gas day is 6:00 
p.m.; the pipeline must provide notice to shippers of scheduled 
quantities and provide notice to interruptible shippers whose scheduled 
quantities will be reduced by an Evening Nomination by a firm shipper 
by 10:00 p.m.; and scheduled quantities for the Evening Nomination 
Cycle shall be effective for flow at 4:00 a.m. on the next gas day.
    (C) Intraday 1. The deadline for shippers to submit gas nominations 
to a pipeline for delivery the same gas day is 8:00 a.m.; the pipeline 
must provide notice to shippers of scheduled quantities and provide 
notice to interruptible shippers whose scheduled quantities will be 
reduced by an Intraday 1 Nomination by a firm shipper by 11:00 a.m.; 
and scheduled quantities for the Intraday 1 Nomination Cycle shall 
become effective for flow at 12:00 p.m. the same gas day.
    (D) Intraday 2. The deadline for shippers to submit gas nominations 
to a pipeline for delivery the same gas day is 10:30 a.m.; the pipeline 
must provide notice to shippers of scheduled quantities and provide 
notice to interruptible shippers whose scheduled quantities will be 
reduced by an Intraday 2 Nomination by a firm shipper by 2:00 p.m.; and 
scheduled quantities for the Intraday 2 Nomination Cycle shall become 
effective for flow at 4:00 p.m. the same gas day.
    (E) Intraday 3. The deadline for shippers to submit gas nominations 
to a pipeline for delivery the same gas day is 4:00 p.m.; the pipeline 
must provide notice to shippers of scheduled quantities and provide 
notice to interruptible shippers whose scheduled quantities will be 
reduced by an Intraday 3 Nomination by a firm shipper by 6:00 p.m.; and 
scheduled quantities for the Intraday 3 Nomination Cycle shall become 
effective for flow at 7:00 p.m. the same gas day.
    (F) Intraday 4. The deadline for shippers to submit gas nominations 
to a pipeline for delivery the same gas day is 7:00 p.m.; the pipeline 
must provide notice to shippers of scheduled quantities by 9:00 p.m.; 
and scheduled quantities for the Intraday 4 Nomination Cycle shall 
become effective for flow at 9:00 p.m. the same gas day. An 
interruptible shipper's scheduled quantities cannot be reduced as a 
result of an Intraday 4 Nomination by a firm shipper.
    (iii) When an interruptible shipper's scheduled volumes are to be 
reduced as a result of an intraday nomination by a firm shipper, the 
interruptible shipper must be provided with advance notice of such 
reduction and must be notified whether penalties will apply on the day 
its volumes are reduced.
* * * * *
    (v) A pipeline must allow multiple shippers associated with a 
designated agent or asset manager to be jointly and severally liable 
under a single firm transportation service agreement, subject to 
reasonable terms and conditions.
* * * * *
    Note: The following appendix will not appear in the Code of Federal 
Regulations

APPENDIX

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Maximum %
         Nomination cycle           Nomination deadline     Notification of       Nomination effective     Bumping of IT    Hours until      change in
                                           (CCT)               schedule                  (CCT)                            end of gas day    nomination
--------------------------------------------------------------------------------------------------------------------------------------------------------
Timely...........................  1:00 p.m............  4:30 p.m............  4:00 a.m. Next Day.......  N/A...........              24             100
Evening..........................  6:00 p.m............  10:00 p.m...........  4:00 a.m. Next Day.......  Yes...........              24             100
Intra-Day 1......................  8:00 a.m............  11:00 a.m...........  12:00 p.m. Current Day...  Yes...........              16             ~66
Intra-Day 2......................  10:30 a.m...........  2:00 p.m............  4:00 p.m. Current Day....  Yes...........              12              50
Intra-Day 3......................  4:00 p.m............  6:00 p.m............  7:00 p.m. Current Day....  Yes...........               9            37.5
Intra-Day 4......................  7:00 p.m............  9:00 p.m............  9:00 p.m. Current Day....  No............               7           ~29.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

UNITED STATES OF AMERICA
Federal Energy Regulatory Commission

Coordination of the Scheduling Processes of Interstate Natural Gas 
Pipelines and Public Utilities

Docket No. RM14-2-000

(Issued March 20, 2014)

CLARK, Commissioner, dissenting:

    My dissent from today's order stems from factors related to both 
its timing and its process going forward.
    For the past several months, a number of groups have been 
organizing efforts to develop a framework that might ultimately lead to 
a gas-electric industry consensus proposal. While the success of these 
efforts is no sure thing, I would have preferred that we give industry 
more time. A firm deadline of perhaps another 3-4 months should have 
been sufficient to determine whether these efforts stood any chance of 
success. The downside risk of giving these groups more time seems small 
considering that the timeline envisioned in this order still puts the 
proposed solutions in

[[Page 18243]]

place after next winter. Even if industry-led efforts failed, the 
Commission would still have had enough time to put forward a proposal 
similar to this in time for the winter of 2015-16. I fear that by 
releasing this NOPR now, we are doing a disservice to those involved in 
industry-led efforts, by giving them just enough time to get started, 
but also ensuring they do not have enough time to complete their work. 
In retrospect, if the Commission was not fully supportive of giving 
these groups until the middle of this year to complete discussions, we 
should have saved everyone the hassle and simply issued a NOPR months 
ago.
    My second concern is related to a concurrent NAESB process the 
Commission proposes simultaneous to this NOPR. As a consensus-driven 
organization, NAESB is dependent on all parties having a reason to 
negotiate and compromise upon sometimes difficult technical issues in 
which there are vested interests. I worry this effort may be less-than-
fruitful now that the Commission has already set out its marker and put 
its thumb on the scale. Parties that might have had an interest in 
negotiating in good faith may see little reason to do so if they feel 
like they will ultimately get from this Commission most of what they 
wanted in the first place. We have effectively short-circuited any 
chance for industry to collaborate or compromise in the spirit of true 
negotiation, perhaps consigning the NAESB process to the same fate we 
have now given to other consensus-driven efforts.
    For these reasons, I respectfully dissent.
-----------------------------------------------------------------------
Tony Clark

Commissioner

[FR Doc. 2014-06757 Filed 3-31-14; 8:45 am]
BILLING CODE 6717-01-P