Notice of Proposed FERC Rulemaking: Coordination of the Scheduling Processes of Interstate Natural Gas Pipelines and Public Utilities

By Katrina Olsen, and Katherine Vorhis

On March 20, 2014, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (Proposed Rule) that, if adopted, will effectively require interstate natural gas pipelines to change their scheduling practices to better align with the needs of electricity markets, as well as to offer greater flexibility to all shippers on interstate pipelines.  The Proposed Rule aims to address coordination challenges associated with increased reliance on gas-fired electric generation.   The Proposed Rule is based upon comments filed in Docket No. AD12-12-000 and discussions arising from technical conferences that focused on coordination between natural gas and electric scheduling practices.

In the Proposed Rule and two contemporaneous orders, FERC proposed three main areas of revision to the natural gas scheduling system:

1)      Moving the start of the natural gas operating day from 9:00 am Central Clock Time (CCT) to 4:00 am CCT, to ensure that gas-fired generators can maintain gas supplies during the morning electric ramp periods;

2)      Moving the first day-ahead gas nomination opportunity (Timely Nomination Cycle) for pipeline scheduling from 11:30 am CCT to 1:00 pm CCT, to allow electric utilities to finalize their scheduling before gas-fired generators make purchase arrangements and submit nomination requests to the pipelines;

3)      Modifying the intraday nomination timeline to include four intraday nomination cycles, instead of the current two, to provide greater flexibility to pipeline shippers.  The cycles would occur at 8:00 am CCT, 10:30 am CCT, 4:00 pm CCT, and 7:00 pm CCT.  Note that bumping, under the proposed rules, would not be permitted during the final cycle.

In addition to the above revisions, FERC also clarifies its position on bumping, taking the stance that, under the revised intraday nomination timelines set forth in the Proposed Rule, “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.”  Lastly, if adopted, the Proposed Rule would require pipelines to offer multi-party transportation contracts, whereby multiple shippers can share interstate natural gas pipeline capacity under a single service agreement.  Some pipelines currently offer this option, but the Proposed Rule would require all pipelines to do so.

The electric and natural gas industries, through the North American Energy Standards Board (NAESB), have 180 days after the Proposed Rule’s publication in the Federal Register in which to reach a consensus on revisions to the Proposed Rule.  Regardless of whether or not NAESB is able to reach consensus on any revisions to the Commission’s proposals, comments are to be filed within 240 days after publication of the Proposed Rule.

The NOPR is available in its entirety at: https://www.ferc.gov/whats-new/comm-meet/2014/032014/M-1.pdf.

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