[Federal Register Volume 80, Number 151 (Thursday, August 6, 2015)]
[Notices]
[Pages 46979-46981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19292]


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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. RM14-2-002]


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

Before Commissioners: Norman C. Bay, Chairman; Philip D. Moeller, 
Cheryl A. LaFleur, Tony Clark, and Colette D. Honorable.

Order on Request for Clarification and Notice of Comment Procedures

    1. Order No. 809 revised the Commission's regulations relating to 
the scheduling of transportation service on interstate natural gas 
pipelines to better coordinate the scheduling practices of the 
wholesale natural gas and electric industries, as well as to provide 
additional scheduling flexibility to all shippers on interstate natural 
gas pipelines.\1\ Among other things, Order No. 809 expanded the number 
of intraday nomination cycles from the current two to three and 
incorporated by reference into the Commission's regulations certain 
modified standards developed and filed by the North American Energy 
Standards Board (NAESB) that revised the standard nomination timeline 
for interstate natural gas pipelines. Order No. 809 established an 
implementation date of April 1, 2016. On May 28, 2015 the American Gas 
Association, the American Public Gas Association, and the Interstate 
Natural Gas Association of America (collectively, Associations) filed a 
request for the Commission to clarify the manner in which all pipelines 
should implement the standards on April 1, 2016, and a request for 
clarification relating to interpretations of recall rights under 
existing capacity release contracts in light of the transition from two 
to three intraday nomination cycles. As discussed below, we grant the 
request with respect to the manner in which the pipelines should 
implement the standards and request comment on their default proposal 
regarding transitioning capacity release contracts.
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    \1\ Coordination of the Scheduling Processes of Interstate 
Natural Gas Pipelines and Public Utilities, Order No. 809, 80 FR 
23197 (Apr. 24, 2015), FERC Stats. & Regs. ] 31,368 (cross-
referenced at 151 FERC ] 61,049 (2015)).
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I. Background

    2. On April 16, 2015, the Commission issued Order No. 809, which 
revised the Commission's regulations relating to the scheduling of 
transportation service on interstate natural gas pipelines to better 
coordinate the scheduling practices of the wholesale natural gas and 
electric industries, as well as to provide additional scheduling 
flexibility to all shippers on interstate natural gas pipelines. Among 
other things, the Commission revised its regulations to incorporate by 
reference the modified NAESB Wholesale Gas Quadrant (WGQ) Business 
Practice Standards, which revised the standard nomination timeline for 
interstate natural gas pipelines. The current and revised nomination 
timelines are as follows:

------------------------------------------------------------------------
All times Central Clock Time      Current NAESB         Revised NAESB
            (CCT)                   standards             standards
------------------------------------------------------------------------
Timely:
    Nomination Deadline.....  11:30 AM............  1:00 PM.
    Confirmations...........  ....................  4:30 PM.
    Schedule Issued.........  4:30 PM.............  5:00 PM.
    Start of Gas Flow.......  9:00 AM.............  9:00 AM.
Evening:
    Nomination Deadline.....  6:00 PM.............  6:00 PM.
    Confirmations...........  9:00 PM.............  8:30 PM.
    Schedule Issued.........  10:00 PM............  9:00 PM.
    Start of Gas Flow.......  9:00 AM.............  9:00 AM.
Intraday 1:
    Nomination Deadline.....  10:00 AM............  10:00 AM.
    Confirmations...........  1:00 PM.............  12:30 PM.
    Schedule Issued.........  2:00 PM.............  1:00 PM.
    Start of Gas Flow.......  5:00 PM.............  2:00 PM.
    IT Bump Rights..........  bumpable............  bumpable.
Intraday 2:
    Nomination Deadline.....  5:00 PM.............  2:30 PM.
    Confirmations...........  8:00 PM.............  5:00 PM.
    Schedule Issued.........  9:00 PM.............  5:30 PM.
    Start of Gas Flow.......  9:00 PM.............  6:00 PM.
    IT Bump Rights..........  no bump.............  bumpable.
Intraday 3:
    Nomination Deadline.....  ....................  7:00 PM.
    Confirmations...........  ....................  9:30 PM.
    Schedule Issued.........  ....................  10:00 PM.

[[Page 46980]]

 
    Start of Gas Flow.......  ....................  10:00 PM.
    IT Bump Rights..........  ....................  no bump.
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    3. In conjunction with moving the Timely Nomination Cycle 
nomination deadline to 1:00 p.m. CCT, the modified NAESB standards 
adopted in Order No. 809 included revised capacity release standards 
that allow shippers to acquire released capacity in time to be 
nominated in the Timely Nomination Cycle on the same day the shipper 
receives the capacity release.\2\ For example, the modified standards 
require that pipelines post awards for biddable capacity no later than 
12:00 p.m. CCT, instead of 3:00 p.m. CCT as under the previous 
standards.
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    \2\ The Commission's current capacity release program allows a 
firm shipper to sell (or release) its capacity to another entity 
when it is not using it. The pipeline contracts with, and receives 
payment from, the replacement shipper and then issues a credit to 
the releasing shipper. The results of all releases are posted by the 
pipeline on its Internet Web site and made available through 
standardized, downloadable files.
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    4. The Commission required interstate natural gas pipelines to 
implement the revised NAESB standards beginning on April 1, 2016.

II. Request for Clarification

    5. On May 28, 2015, as supplemented on June 26, 2015, the 
Associations filed a request to clarify the date interstate natural gas 
pipelines must implement the modified NAESB standards as required by 
Order No. 809. The Associations ask the Commission to act expeditiously 
on the clarifications, which are discussed below.
    6. The Associations state that the April 1, 2016 implementation 
date does not explicitly define whether the implementation date refers 
to the date for which the nominations are effective or the date on 
which the day-ahead nominations (Timely and Evening Nomination Cycles) 
are to be made. For example, if the effective date of the nominations 
is April 1, 2016, should the new day-ahead nomination schedules be used 
on March 31, 2016? The Associations believe it is essential that the 
entire industry implement the same scenario and propose that the 
Commission clarify that implementation will become effective for the 
Gas Day that begins at 9:00 a.m. CCT on April 1, 2016. Under that 
scenario, the Timely and Evening Nomination Cycle deadlines on March 
31, 2016, for the April 1, 2016 Gas Day will be 1:00 p.m. CCT and 6:00 
p.m. CCT, respectively, and the new nomination deadlines for the 
intraday cycles will become effective on April 1, 2016. The 
Associations also propose that, for transition purposes, the new 
timeline for biddable capacity releases will be utilized for all 
biddable releases effective on March 31, 2016 or thereafter.\3\ The 
Associations include in their initial request for clarification 
Appendices A and B explaining how their proposal will be implemented.
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    \3\ Associations' Request for Clarification at Appendix B.
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    7. The Associations also propose that the Commission establish 
default provisions for capacity release transactions with the right to 
recall capacity into which the parties entered prior to April 1, 2016 
and that extend through April 1, 2016. In the absence of mutual 
agreement to the contrary, the Associations propose such transactions 
shall have the default rights set forth below. In their supplemental 
filing, the Associations explain their proposal in more detail, stating 
that it is not unduly speculative to presume that long-term capacity 
releases consummated before April 1, 2016 will contain recall 
provisions based on the obsolete scheduling timeline and may not 
function as intended after the new scheduling standards are 
implemented. The Associations state that, currently, releasing shippers 
can specify whether releases are recallable and select which cycles are 
subject to recall rights. The Associations recognize that capacity 
release transactions with recall rights may vary, and that the parties 
to the transactions may want to come to an agreement as to the capacity 
release recall rights that will be available for the Intraday 3 
Nomination Cycle beginning April 1, 2016. They believe that specifying 
default outcomes in the absence of the parties' agreement would assist 
the parties to these transactions in defining the capacity release 
recall rights that will be available on April 1, 2016 and thereafter, 
and smooth the transition to the new nomination timeline.
    8. Accordingly, the Associations request that for capacity release 
transactions with the right to recall capacity entered into prior to 
April 1, 2016, for periods that include April 1, 2016, and terminate 
thereafter, the Commission establish default rights as follows: \4\
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    \4\ The Associations state that for all other transactions, the 
capacity release recall rights will not change.
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    [ssquf] If the transaction only specifies that recalls are 
permitted at the Intraday 1 Nomination Cycle, then for periods that 
include April 1, 2016, and thereafter, recalls only will be permitted 
at the Intraday 1 Nomination Cycle.
    [ssquf] If the transaction only specifies that recalls are 
permitted at the Intraday 2 Cycle, then for periods that include April 
1, 2016, and thereafter, recalls will be permitted at the Intraday 2 
Nomination Cycle and Intraday 3 Nomination Cycle.
    [ssquf] If the transaction specifies that recalls are permitted at 
the Intraday 1 Nomination Cycle and the Intraday 2 Nomination Cycle, 
then for periods that include April 1, 2016, and thereafter recalls 
will be permitted at the Intraday 1 Nomination Cycle, Intraday 2 
Nomination Cycle and Intraday 3 Nomination Cycle.
    9. The Associations state that shippers releasing capacity for 
periods that straddle April 1, 2016, should notify the pipeline by way 
of a letter in advance of that date if they do not want the default 
rights specified above to apply to the transaction. They state that the 
letter should memorialize that the default recall rights do not apply 
and indicate the mutual agreement of the releasing and replacement 
shippers.\5\ They state that, in the absence of such a letter provided 
to the pipeline by a shipper in advance of April 1, 2016, recall rights 
will transition according to the default rights specified above as an 
administrative transition matter without any further action. The 
Associations state that the transition of recall rights for these types 
of capacity release transactions, whether by default or through mutual 
agreement, should be administrative and should not impact other 
attributes of the capacity release, e.g., prices or quantities, and as 
such, implementation of the transition of such recall rights would not 
require posting or allow or require re-bidding. Finally, the 
Associations state that the releasing shipper should have the ability 
to recall

[[Page 46981]]

capacity under a transaction's existing provisions if it wishes to 
terminate the transaction, even if the releasing shipper and the 
replacement shipper are unable to reach agreement on a non-default 
recall transition.
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    \5\ The Associations note that, as a supplement to the letter, 
the releasing shipper can memorialize in the special terms and 
conditions that the default rights do not apply to prospective 
releases, consistent with the letter.
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III. Commission Determination

A. Implementation Date

    10. As requested, the Commission finds the timing proposed by the 
Associations to effectuate a reasonable implementation of Order No. 
809. We agree that having all pipelines follow the same schedule will 
provide for a smoother transition and help shippers by ensuring that 
they can conduct transactions on all pipelines under the same 
timetable.
    11. We accept the schedules proposed by the Associations as 
described in full in Appendices A and B to their request for 
clarification. In general, the new day-ahead nomination timelines will 
apply as of March 31, 2016 for those nominations that will become 
effective April 1, 2016. Specifically, the Timely and Evening 
Nomination Cycle deadlines on March 31, 2016 for the April 1, 2016 Gas 
Day will be 1:00 p.m. CCT and 6:00 p.m. CCT, respectively. Otherwise, 
the intraday nomination timelines on March 31, 2016 will follow the 
existing timeline.
    12. With respect to capacity releases, the new biddable release 
schedule will start at 9:00 a.m. CCT on March 31, 2016, for all 
releases with contracts to be effective on March 31, 2016, April 1, 
2016, or thereafter. Non-biddable releases effective on March 31, 2016 
will follow the existing posting schedule for the Intraday 1 and 
Intraday 2 Nomination Cycles, and will follow the new day-ahead 
nomination schedule for the Timely and Evening Nomination Cycles.\6\
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    \6\ For example, a non-biddable release for the Timely 
Nomination Cycle on March 31, 2016 (to become effective April 1, 
2016) must submit its notice by 12 a.m. CCT.
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B. Default Capacity Release Recall Rights

    13. The Commission sees value in establishing a default 
interpretation of capacity release contractual recall provisions to 
assist parties in effectuating the transition between the two intraday 
and three intraday nomination schedules. While parties may vary such a 
default interpretation by agreement, a default may reduce the burden of 
negotiation on those parties satisfied with the default interpretation.
    14. Such a request, however, goes beyond merely clarifying the 
implementation date adopted in Order No. 809 and should be subject to 
notice and comment to establish that the default interpretation is 
reasonable. In particular, the Commission seeks comment on a number of 
aspects of the proposal. Commenters should address the merits of 
establishing a default approach or propose an alternative approach. 
Commenters should address whether the default should apply to all 
agreements into which the parties have entered before April 1, 2016 (as 
proposed by the Associations), or should only apply to releases entered 
into by an earlier date, such as the date of issuance of Order No. 809, 
which put the parties on notice that the nomination schedule would 
change as of April 1, 2016, and therefore permitted negotiations as to 
the applicability of recall conditions for releases that are still in 
effect on April 1, 2016 or thereafter. They also should address whether 
the default that should apply when the transaction specifies that 
recalls are permitted only at the Intraday 2 Nomination Cycle is to 
permit recalls at Intraday 2 and 3 (as proposed by the Associations) or 
only Intraday 3. Finally, commenters should address the proposal that 
``the releasing shipper should have the ability to recall capacity 
under a transaction's existing provisions if it wishes to terminate the 
transaction, even if the releasing shipper and the replacement shipper 
are unable to reach agreement on a non-default recall transition.'' \7\ 
Comments should address how this provision would operate and why the 
general default provisions should not apply to a contract in dispute if 
the parties are unable to reach agreement (and have not sought 
Commission resolution of the dispute).
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    \7\ Associations' Supplemental Filing at 3.
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    15. Initial comments will be due 20 days from the date of this 
order and reply comments will be due 30 days from the date of this 
order.
The Commission orders:
    (A) The Commission grants the Associations' requested clarification 
as to the implementation date of Order No. 809, as discussed in the 
body of this order.
    (B) Initial comments on the Associations' proposed default recall 
rights for capacity release transactions are due 20 days from the date 
of this order with reply comments due 10 days thereafter.

    By the Commission.

    Issued: July 31, 2015.
Kimberly D. Bose,
Secretary.
[FR Doc. 2015-19292 Filed 8-5-15; 8:45 am]
BILLING CODE 6717-01-P