Editor’s Note: “From a Legal Perspective”
appears regularly in District Energy
magazine to address legal issues of current
importance to the district energy industry.
It is intended for educational purposes only
and does not constitute legal advice.
On April 16, 2015, the Federal Energy Regulatory Commis- sion (FERC) concluded a three- year effort to improve the
coordination between wholesale natural
gas and electricity markets. In response
to a growing demand for natural gas for
electric generation, FERC identified a
critical need for improvement in coordination between the two historically isolated industries. These efforts culminated
in FERC issuing Order No. 809, which
incorporates into its regulations several
changes to the interstate natural gas
nomination timeline designed to ensure
more reliable and efficient operations of
gas and electric systems. This final rule
took effect July 8, 2015, and pipeline tariffs must incorporate the new standards
by April 1, 2016.
FERC Issues Order to
Joel Greene, Attorney, Jennings, Strouss & Salmon PLC;
and Melissa Alfano, Attorney, Jennings, Strouss & Salmon PLC
In March 2014, FERC issued a notice
of proposed rulemaking (NOPR) for
industry comments proposing modifica-
tions to the NAESB standards that would
•;move the start of the Gas Day from
9 a.m. central clock time (CCT) to 4 a.m.
CCT to better align the Gas Day with the
demands of gas-fired generators, driven
by the electric morning ramp and peak;
•;move the start of the first day-ahead
gas nomination opportunity for pipeline
scheduling (Timely Nomination Cycle)
from 11: 30 a.m. CCT to 1 p.m. CCT to
provide sufficient time for electric utilities to complete their processes for selecting day-ahead generating resources
before the Timely Nomination Cycle;
•;provide four intraday nomination cycles,
as opposed to the two that were already
required, predominantly to accommodate west coast natural gas shippers’
desire to secure firm service earlier in
the Gas Day by interrupting (or “
bumping”) interruptible service; and
•;require pipelines to offer multiparty
transportation contracts to allow multiple shippers to share capacity under a
single transportation service agreement.
For each of these proposed changes,
FERC provided the natural gas and
electric industries 180 days to reach
consensus through the NAESB standards
process. Ultimately, the NAESB WGQ
reported to FERC that it had updated its
business practice standards to incorporate the proposed changes, though the
modified standards revised the nomination timeline to provide for three (rather
than the proposed four) intraday nomination cycles in addition to the existing
Timely and Evening Nomination Cycles.
Though a consensus was not reached on
moving the start of the Gas Day to 4 a.m.
CCT, NAESB took the position that nomination cycles are not dependent upon
a specific start time to the Gas Day and
are implementable with whichever time
FERC chooses as a start of the Gas Day.
THE FINAL RULE
In the final rule, FERC modified its
regulations to incorporate the NAESB revised standards. The final rule ( 1) moved
the Timely Nomination deadline ahead,
( 2) added a third intraday gas nomination
cycle and ( 3) required pipelines to offer
FERC’s existing regulations incorporate by reference the interstate natural
gas pipeline scheduling business practice
standards of the North American Energy
Standards Board’s (NAESB) Wholesale Gas
Quadrant (WGQ). NAESB is a consensus
standards organization composed of
representatives of all segments of the
natural gas and electric power industries.
Since 1996, these standards have established nationwide timelines that the
industry and FERC have determined are
necessary to establish a more efficient
and integrated pipeline grid.
In February 2012, FERC Commissioner Philip Moeller posed several
questions to the natural gas and electric
industries designed to elicit input to
improve the coordination between the
two markets and to define the roles that
the North American Reliability Corp. and
NAESB will play in that coordination.
FERC invited comments on these questions and convened five regional conferences and two technical conferences to
obtain industry input.
DEPARTMENTS | FROM A LEGAL PERSPECTIVE |||||||||||||||