00-30979. Standards for Business Practices of Interstate Natural Gas Pipelines

Issued November 30, 2000.

AGENCY:

Federal Energy Regulatory Commission.

ACTION:

Final rule and notice of technical conference.

SUMMARY:

The Federal Energy Regulatory Commission is amending § 284.12 of its regulations governing standards for conducting business practices and electronic communication with interstate natural gas pipelines to incorporate by reference the most recent version of the standards, Version 1.4, promulgated August 31, 1999 and November 15, 1999 by the Gas Industry Standards Board (GISB). The Commission also is announcing a technical conference by Commission staff to address the issues raised by a proposal to require pipelines to permit shippers to designate and rank the contracts under which gas will flow on a pipeline's system. Version 1.4 of the GISB standards can be obtained from GISB at 1100 Louisiana, Suite 3625, Houston, TX 77002, 713-356-0060, http://www.gisb.org.

DATES:

The rule will become effective January 10, 2001. The implementation date for the regulations is May 1, 2001. Pipelines must make filings to incorporate Version 1.4 of the GISB standards into their tariffs not less than 30 days prior to May 1, 2001.

ADDRESSES:

Federal Energy Regulatory Commission, 888 First Street, NE. Washington DC, 20426

FOR FURTHER INFORMATION CONTACT:

Michael Goldenberg, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE, Washington, DC 20426, [phone]

Marvin Rosenberg, Office of Markets, Tariffs, and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, [phone]

Kay Morice, Office of Markets, Tariffs, and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, [phone]

SUPPLEMENTARY INFORMATION:

Final Rule and Notice of Technical Conference

The Federal Energy Regulatory Commission (Commission) is amending § 284.12 of its regulations governing standards for conducting business practices and electronic communications with interstate natural gas pipelines. The Commission is incorporating by reference the most recent version of the consensus industry standards promulgated by the Gas Industry Standards Board (GISB), Version 1.4. Pipelines are required to implement these regulations on May 1, 2001. The Commission also is directing its staff to convene a technical conference to discuss whether to adopt the proposed regulation requiring pipelines to permit shippers to designate and rank the contracts under which gas will flow on a pipeline's system.

I. Background

In Order Nos. 587, 587-B, 587-C, 587-G, 587-H, 587-I, and 587-K the Commission adopted regulations to standardize the business practices and communication methodologies of interstate pipelines in order to create a more integrated and efficient pipeline grid.^[1] In those orders, the Commission incorporated by reference consensus standards developed by GISB, a private, consensus standards developer composed of members from all segments of the natural gas industry.

On February 23, 2000, GISB filed with the Commission a letter stating it had adopted a revised version of its business practice and communication standards, Version 1.4. The Version 1.4 standards include the standards for implementing pipeline interactive Internet web sites, which pipelines were required to implement by June 1, 2000, as well as standards for critical notices, and standards for multi-tiered allocations.

GISB also reported on certain issues on which the Commission had requested reports in Order No. 587-G. Of significance here, GISB reported that its Executive Committee was unable to reach consensus on standards for cross-contract ranking and that its confirmations and cross contract ranking subcommittee is considered inactive. In a letter dated June 15, 2000, GISB filed a follow-up report on cross contract ranking. GISB reports that its Executive Committee was unable to achieve consensus with respect to cross contract ranking due to disagreement on certain policy issues and that in the opinion of the Executive Committee no further progress can be made. GISB further reported that its Executive Committee approved standards for title transfer tracking, but that these standards are awaiting the development of the technical standards for information requirements and technical mapping.

On June 30, 2000, the Commission issued a Notice of Proposed Rulemaking (NOPR) proposing to adopt Version 1.4 of the GISB standards and to adopt a regulation requiring pipelines to permit shippers to designate and rank the transportation contracts under which gas will flow on the pipeline's system.^[2] The Commission stated that cross-contract ranking would enable shippers to use their transportation contracts more efficiently by enabling them to allocate gas supplies across their transportation contracts so that the shipper can choose the contract which provides for the most economical transportation.

The Commission found that while the GISB record was not entirely clear on what prevented the adoption of cross-contract ranking standards, there appeared to be agreement on a method (entity-to-entity confirmation) by which such ranking could be achieved. The disputes apparently were over the amount of supplemental information pipelines should provide to shippers and over the method of confirmation with producers, independent of the cross-contract ranking issue. The Commission solicited comments on whether these issues were integral to the cross-contract ranking standard and whether these issues could be dealt with on an individual pipeline basis rather than through a generic rulemaking.

Twenty comments were filed.^[3] Pipelines supported the use of entity-to-entity confirmation, but contended the Commission should not require the provision of supplemental information or working interest owner confirmations. Local Distribution Companies (LDCs) and endusers supported the provision of supplemental information, with endusers supporting a confirmation process based on gas package identifiers. Producers supported a confirmation process with producers or their agents.

II. Discussion

A. Adoption of Version 1.4 of the Standards

The Commission is incorporating by reference into its regulations Version 1.4 of GISB's consensus standards.^[4] Pipelines must implement these standards on May 1, 2001, by making compliance filings as discussed later in this order.^[5]

The adoption of Version 1.4 of the standards updates and improves the standards, particularly in the areas of communication of critical notices and multi-tiered allocations.^[6] GISB approved the standards under its consensus procedures.^[7] No comments objected to the incorporation of these standards. As the Commission found in Order No. 587, adoption of consensus standards is appropriate because the consensus process helps ensure the reasonableness of the standards by requiring that the standards draw support from a broad spectrum of all segments of the industry. Moreover, since the industry itself has to conduct business under these standards, the Commission's regulations should reflect those standards that have the widest possible support. In § 12(d) of the National Technology Transfer and Advancement Act (NTT&AA) of 1995, Congress affirmatively requires federal agencies to use technical standards developed by voluntary consensus standards organizations, like GISB, as means to carry out policy objectives or activities.^[8]

Dynegy requests clarification regarding the implementation of the standards providing for electronic notice of critical events affecting shippers. It asserts that the pipelines should provide a transition period for testing the new communication standards for critical notices before the pipelines rely solely upon Internet communication of such notices and discontinue their current communication methods. Dynegy contends that in Order No. 587-G, the Commission found that Internet communication could be sufficient notice to shippers of operational events, because the shipper could program its computers to trigger a telephone or pager. Dynegy is concerned that before shippers have to rely solely upon Internet communication, they be given the time to test whether their software can trigger a telephone or pager. Dynegy further requests that pipelines be required to continue their current method of communication until the customers software works satisfactorily.

The Commission agrees that pipelines should provide shippers with a reasonable opportunity to test the Internet communications before the pipelines dispense with existing methods of notifying shippers of critical events. Pipelines, however, will not be required to continue existing forms of communication to individual shippers until the individual shipper has been able to configure its software correctly. The shipper should have the responsibility, within a reasonable time period, to correct problems with its own software.

Altra asks that the Commission revise the implementation date for Version 1.4 of the standards so that the implementation of Version 1.4, cross-contract ranking, and title transfer tracking can occur simultaneously. Altra maintains that implementing such changes concurrently will be more economical for software providers as well as pipelines and their customers. The Commission understands that simultaneous implementation may be more efficient and generally attempts to adopt a complete version of the GISB standards at the same time. However, in this case, the Commission finds that the benefits from adopting Version 1.4 of the GISB standard should not be delayed until an indeterminate date when standards for cross-contract ranking and title transfer tracking are adopted.

B. Cross-Contract Ranking

Cross-contract ranking refers to the ability of shippers to allocate gas supplies across transportation contracts so that the shipper can choose the contract which provides for the most economical transportation. Shippers are doing business using a variety of contracts, including their own firm and interruptible contracts, and capacity release contracts with different terms and conditions. The ability to allocate gas supplies among these contracts will enhance shipper flexibility and better enable them to manage their gas supply and capacity portfolios.^[9]

In Order No. 587-G, the Commission deferred adoption of regulations regarding cross-contract ranking to give GISB an opportunity to develop standards governing this practice. GISB, however, was unable to reach consensus on appropriate standards due to policy disagreements among the industry segments, and states that it cannot proceed without further guidance from the Commission on the policy questions presented.^[10] All the industry segments appear to agree that developing standards for cross-contract ranking and confirmation practices can be of benefit to the industry. Because the Commission cannot resolve these issues based solely on the comments, the Commission is directing the Commission staff to establish a technical conference at which the issues can be explored in greater detail.

1. Issues Raised by Cross-Contract Ranking

While the record GISB submitted is not entirely clear, there did appear to be agreement that cross-contract ranking could be achieved through an entity-to-entity confirmation process.^[11] (Appendix B reproduces the set of standards that were considered, but not approved, by GISB's Executive Committee). Disputes developed over whether along with entity-to-entity confirmation pipelines should be required to provide supplemental information to shippers and whether pipelines should confirm with working interest owners rather than exclusively with point operators. The two standards on which agreement could not be reached are standard 2 and standard 3 of proposal CXKR-2.

Standard 2 states:

As part of the confirmation and scheduling process upon request, the TSP should make available, via EBB/EDM, supplemental information obtained during or derived from the nomination process. Such supplemental information, if available, should include the TSP's Service Requester Contract and, based upon the TSP's business practice may also, on a mutually agreeable basis, include (1) a derivable indicator characterizing the type of contract and service being provided, (2) Downstream Contract Identifier and/or (3) Service Requester's Package ID.

Standard 3 states:

Absent mutual agreement to the contrary between the TSP and the Operator for confirmations at a production location,^[12] the TSP should support the fact that the operator will confirm with the TSP to only the upstream entity level. These upstream entities should either confirm or nominate (at the TSP's determination) at an entity level with the TSP.

In the NOPR, the Commission proposed to require pipelines to permit shippers to designate and rank the transportation contracts under which gas will flow on each pipeline's system. The Commission generally proposed that such ranking would occur based on the entity-to-entity confirmation standards included in all the GISB proposals. The Commission, however, solicited comment on whether there is a need for a uniform generic standard setting forth additional, limited information pipelines should provide to local distribution companies or shippers and whether the need for additional information applies to all pipelines or is limited only to certain pipelines that currently provide such additional information to LDCs. With respect to the standard regarding production confirmation, the Commission asked for comment addressing the need for confirmations at the working interest level, the costs and benefits of adopting such a requirement for pipelines, shippers, and the overall efficiency of the pipeline grid, and whether a uniform requirement is necessary or whether pipelines should be permitted to choose the method of confirmation with producers that best fits their systems.

2. Comments

All commenters generally support the concept of cross-contract ranking. They differ again on the necessity of requiring supplemental information and on confirmation at receipt points. Dynegy and Altra are indifferent to whether any requirements for supplemental information or producer confirmation are adopted. Altra contends that some of the other issues, such as working interest owner confirmation, are unrelated to the cross-contract ranking issue.

The LDCs ^[13] that filed comments contend that provision of supplemental information concerning the type of contract, which establishes scheduling priority, is necessary for LDCs to plan their system usage, particularly in light of the requirements of retail unbundling. They contend, for instance, that LDCs need to know the priority of gas nominated to their systems so they can plan for the possibility of losing gas supplies during peak periods if interruptible or secondary firm nominations are limited. They further contend that this information on priority is needed to satisfy the requirements of some state unbundling programs that marketers have primary firm capacity for deliveries to LDC city-gates. Con Edison, for instance, raises the question of how entity-to-entity confirmation will permit LDCs to confirm gas deliveries in a situation when two behind-the-city-gate marketers both purchase gas from a third marketer at a downstream market center. It contends that without contract information, the LDC would not be able to match up the information from the marketer delivering the gas to the market center and the two behind-the-city-gate marketers. Distribution argues that the necessary information could be provided through a capacity-type indicator, which would not be burdensome for the pipelines to process. In reply comments, Distribution contends that based on the comments filed, the Commission should convene a technical conference to provide further explanation of why LDCs need supplemental contract information and why providing such information should not be burdensome for the pipelines.

The End User Group supports the concept of cross-contract ranking but claims that the NOPR proposal has two problems: it does not require pipelines to follow the rankings provided by shippers; and it does not provide shippers with the information necessary to determine what packages of gas actually flowed. Rather than aggregating information, as in the entity-to-entity confirmation method, the End Users contend that the confirmation process should be further disaggregated by confirming on a package identification basis.^[14] They contend that frequently a customer will be receiving multiple natural gas packages from a single seller (pursuant to different contracts) and the buyer and the seller have diametrically opposed interests. The seller wants the most expensive gas to have the highest rank, while the buyer seeks to give it the lowest. The End Users contend that unless the confirmation process provides information as to which package actually flows, the shipper cannot accurately determine the package for which it must pay.

The producers (NGSA and IPAA) support a confirmation standard that would require pipelines to confirm with producers or their agents, rather than the standard discussed at GISB that would have required confirmation with all working interest owners. They contend that confirming with producers will enhance efficiency by eliminating the inefficiency of routing all adjustments through a point operator, as is done today. They also maintain that confirmation with producers will better safeguard commercially sensitive information, because producers will no longer have to route their sensitive nomination information through point operators that may have competing financial or business interests. NGSA maintains that confirmation with producers or their agents would be far less burdensome than confirmation with working interest owners.

While the pipelines generally support the cross-contract ranking standards proposed by the Commission, they contend the Commission should not require pipelines to provide the supplemental contractual information requested by the LDCs or new standards for producer confirmation.^[15] They maintain that requiring supplemental information will unnecessarily complicate the confirmation process and the LDCs have not established the need for such information. Enron, for example, contends that the entity-to-entity confirmation standard will help to streamline the confirmation process, but that requiring the provision of supplemental information will defeat the very purpose of attempting to streamline the process. Williston Basin maintains that it understands only a few LDCs seek this supplemental information in order to appease state regulatory authorities and that none of the LDCs on its system require the provision of such information. The pipelines also contend that they are not all in position to confirm gas supplies with individual working interest owners.

3. Establishment of a Technical Conference

All of the commenters find that development of standards for cross-contract ranking could benefit the industry by giving shippers more flexibility in using their capacity. It also appears from the comments that since the standards were debated at GISB, some industry members have clarified or revised their proposals or put forward new proposals. In addition, some of the comments appear to go beyond the limited issue of cross-ranking, but link the cross-contract ranking issue with other issues relating to standardization of the confirmation process.

Given the issues raised and the new proposals included in some of the comments, the Commission needs additional information to determine how best to proceed. It is, therefore, directing staff to convene a technical conference in which the industry and staff can discuss these issues to clarify what is in dispute and to determine if common ground can be found. The technical conference will be transcribed so that the Commission and those who cannot attend can be apprised of the discussion. Staff also will establish a schedule for further comments to be filed based on the discussion at the technical conference.

Among the issues that should be considered at the conference are:

• How confirmation takes place using entity-to-entity confirmation and contract confirmation.
• How package identification currently is used in nomination and confirmation processes.
• How the issues relating to cross-contract ranking differ depending on the nomination model used by the pipeline, i.e, pathed, non-pathed, or pathed non-threaded.
• Whether cross-contract ranking can be achieved efficiently without entity-to-entity confirmation.
• Whether verification of a shipper's contractual priority needs to occur on a daily basis through the confirmation process or whether priority can be verified in other ways, for example, by examining the shipper's contract or using the Index of Customers.
• Whether a uniform resolution of the need for supplemental information is needed or whether this issue can be resolved on a case-by-case basis, for example, by requiring those pipelines that previously provided contract information to continue that practice, while not imposing additional burdens on other pipelines.
• Whether, if confirmation of transportation priority is needed, a priority indicator, as Distribution suggests, would be a reasonably burden-free method of transmitting the information.
• Whether entity-to-entity confirmation has value in simplifying the confirmation process or whether further disaggregation to the gas package identification level is necessary.
• Whether gas package identification would protect customers against the possibility that the seller will allocate all gas supplies to the highest price contract or whether such protection can be better achieved through the contract between buyer and seller. For instance, even if confirmation was at the package identification level, the seller would still rank the most expensive package first.
• Whether the proposal to limit confirmations to producers, rather than working interest owners, meaningfully reduces the confirmation burden.
• Whether producers can use independent third-parties, as opposed to commercially interested point operators, to handle the confirmation process with respect to that information considered the most sensitive.

III. Notice of Use of Voluntary Consensus Standards

Office of Management and Budget Circular A-119 (§ 11) (February 10, 1998) provides that federal agencies should publish a request for comment in a Final Rule when the agency is seeking to issue or revise a regulation that contains a standard identifying whether a voluntary consensus standard or a government-unique standard is being proposed. In this final rule, the Commission is incorporating by reference Version 1.4 (August 31 and November 15, 1999 ) of the voluntary consensus standards developed by GISB.

IV. Information Collection Statement

OMB's regulations in 5 CFR 1320.11 require that it approve certain reporting and recordkeeping requirements (collections of information) imposed by an agency. Upon approval of a collection of information, OMB shall assign an OMB control number and an expiration date. Respondents subject to the filing requirements of this Rule shall not be penalized for failing to respond to these collections of information unless the collections of information display valid OMB control numbers.

The collections of information related to this Final Rule fall under the existing reporting requirements of: FERC-545, Gas Pipeline Rates: Rate Change (Non-Formal) (OMB Control No. 1902-0154) and FERC-549C, Standards for Business Practices of Interstate Natural Gas Pipelines (OMB Control No. 1902-0174). The following burden estimates are related only to this rule and include the costs of complying with GISB's version 1.4 standards. The burden estimates are primarily related to start-up for implementing the latest version of the standards and data sets and will not be on-going costs.

Public Reporting Burden: (Estimated Annual Burden)

Data collection	Number of respondents	Number of responses per respondent	Estimated burden hours per response	Total annual hours
FERC-545	93	1	38	3,534
FERC-549C	93	1	1,766	164,238

The total annual hours for collection (including recordkeeping) are estimated to be 167,772. The average annualized cost for all 93 respondents is projected to be the following:

	FERC-545	FERC-549C
Annualized Capital/ Startup Costs	$195,996	$9,108,655
Annualized Costs (Operations & Maintenance)	0	0
Total Annualized Costs	195,996	9,108,655

In the Notice of Proposed Rulemaking (NOPR), the Commission proposed to adopt a regulation requiring pipelines to permit cross-contract ranking. However, this rule does not adopt that proposed regulation but instead directs staff to convene a technical conference to discuss whether to adopt the proposed regulation. For this reason, the burden estimates have been adjusted to remove the burden included in the NOPR for complying with the Commission's proposed regulation requiring pipelines to permit cross-contract ranking. The burden estimate for FERC-545 is unchanged because the exclusion of cross-contract ranking will not create a significant difference in the original burden estimate for tariff filings. However, the burden estimate for FERC-549C has been reduced to eliminate the burden estimate associated with the cross-contract ranking proposal in the NOPR.

The Commission regulations adopted in this rule are necessary to further the process begun in Order No. 587 of creating a more efficient and integrated pipeline grid by standardizing the business practices and electronic communications of interstate pipelines. Adoption of these regulations will update the Commission's regulations relating to business practices and communication protocols to conform to the latest version, Version 1.4, approved by GISB.

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. The information required in this Final Rule will be reported directly to the industry users and later be subject to audit by the Commission. This information also will be retained for a three year period. The implementation of these data requirements will help the Commission carry out its responsibilities under the Natural Gas Act and conforms to the Commission's plan for efficient information collection, communication, and management within the natural gas industry.

Interested persons may obtain information on the reporting requirements by contacting the following: Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426 [Attention: Michael Miller, Office of the Chief Information Officer, phone [phone], fax [phone], E-mail [e-mail]]; or the Office of Management and Budget [Attention: Desk Officer for the Federal Energy Regulatory Commission, phone [phone], fax [phone]].

V. Environmental Analysis

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.^[16] The Commission has categorically excluded certain actions from these requirements as not having a significant effect on the human environment.^[17] The actions taken here fall within categorical exclusions in the Commission's regulations for rules that are clarifying, corrective, or procedural, for information gathering, analysis, and dissemination, and for sales, exchange, and transportation of natural gas that requires no construction of facilities.^[18] Therefore, an environmental assessment is unnecessary and has not been prepared in this final rule.

VI. Regulatory Flexibility Act Certification

The Regulatory Flexibility Act of 1980 (RFA)^[19] generally requires a description and analysis of final rules that will have significant economic impact on a substantial number of small entities. The regulations adopted here impose requirements only on interstate pipelines, which are not small businesses, and, these requirements are, in fact, designed to reduce the difficulty of dealing with pipelines by all customers, including small businesses. Accordingly, pursuant to § 605(b) of the RFA, the Commission hereby certifies that the regulations proposed herein will not have a significant adverse impact on a substantial number of small entities.

VII. Document Availability

In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page (http://www.ferc.fed.us) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5 p.m. Eastern time) at 888 First Street, N.E., Room 2A, Washington, DC 20426.

From FERC's Home Page on the Internet, this information is available in both the Commission Issuance Posting System (CIPS) and the Records and Information Management System (RIMS).

—CIPS provides access to the texts of formal documents issued by the Commission since November 14, 1994.

—CIPS can be accessed using the CIPS link or the Energy Information Online icon. The full text of this document is available on CIPS in ASCII and WordPerfect 8.0 format for viewing, printing, and/or downloading.

—RIMS contains images of documents submitted to and issued by the Commission after November 16, 1981. Documents from November 1995 to the present can be viewed and printed from FERC's Home Page using the RIMS link or the Energy Information Online icon. Descriptions of documents back to November 16, 1981, are also available from RIMS-on-the-Web; requests for copies of these and other older documents should be submitted to the Public Reference Room.

User assistance is available for RIMS, CIPS, and the Website during normal business hours from our Help line at [phone] (E-Mail to [e-mail]) or the Public Reference Room at [phone] (E-Mail to [e-mail]).

During normal business hours, documents can also be viewed and/or printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC Website are available. User assistance is also available.

VIII. Implementation Date

Pipelines must implement these regulations on May 1, 2001. Pipelines must file revised tariff sheets to incorporate Version 1.4 of the standards into their tariffs since their tariffs incorporated by reference an older version number.^[20] To the extent pipelines have individual tariff provisions based on these standards, pipelines also will have to conform their tariffs to the new standards.^[21] The tariff changes must be filed not less than 30 days prior to the date for implementing Version 1.4 of the standards.

IX. Effective Date

These regulations are effective January 10, 2001. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major rule” as defined in Section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Part 284

• Continental shelf
• Incorporation by reference
• Natural gas
• Reporting and recordkeeping requirements

By the Commission.

David P. Boergers,

Secretary.

In consideration of the foregoing, the Commission proposes to amend Part 284, Chapter I, Title 18, Code of Federal Regulations, as set forth below.

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

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

Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7532; 43 U.S.C. 1331-1356.

2. In § 284.12

a. Paragraphs (b)(1)(i) through (v) are revised to read as set forth below.

b. In paragraph (b)(2), remove the words “1100 Louisiana, Suite 4925” and add, in their place, the words “1100 Louisiana, Suite 3625”.

§ 284.12

Standards for pipeline business operations and communications.

* * * * *

(b) * * *

(1) * * *

(i) Nominations Related Standards (Version 1.4, August 31, 1999);

(ii) Flowing Gas Related Standards (Version 1.4, August 31, 1999) with the exception of Standards 2.3.29 and 2.3.30;

(iii) Invoicing Related Standards (Version 1.4, August 31, 1999);

(iv) Electronic Delivery Mechanism Related Standards (Version 1.4, November 15, 1999) with the exception of Standard 4.3.4; and

(v) Capacity Release Related Standards (Version 1.4, August 31, 1999).

* * * * *

Note:

The following Appendices will not appear in the Code of Federal Regulations

Appendix A

Comments Filed—Docket No. RM96-1-015

Commenter	Abbreviation
Altra Energy Technologies, Inc.	Altra
American Gas Association	AGA
ANR Pipeline Company and Colorado Interstate Gas Company	ANR
Cincinnati Gas & Electric Company, Union Light, Heat and Power Company, and Lawrenceburg Gas Company	Cincinnati
Columbia Gulf Transmission Company	Columbia Gulf
Consolidated Edison Company of New York, Inc. and Orange and Rockland Utilities, Inc	Con Edison
Duke Energy Gas Transmission (Algonquin Gas Transmission Duke Company, East Tennessee Natural Gas Company, and Texas Eastern Transmission Corporation)	Duke
Dynegy Marketing and Trade	Dynegy
El Paso Energy Corporation Interstate Pipelines (El Paso Natural Gas Company, Gulf States Transmission Corporation, Midwestern Gas Transmission Company, Mojave Pipeline Company, Southern Natural Gas Company, and Tennessee Gas Pipeline Company)	El Paso Energy
End User Group (Arizona Public Service Company, The Boeing Company, Defense Energy Support Center, Midland Cogeneration Venture Limited Partnership, Midwest Energy, Inc., Salt River Project, Phelps Dodge Corporation, and Tennessee Valley Authority)	End User Group
Enron Interstate Pipelines	Enron
Independent Petroleum Association of America	IPAA
Interstate Natural Gas Association of America	INGAA
Kinder Morgan Interstate Pipelines (Natural Gas Pipeline Company of America and Kinder Morgan Interstate Gas Transmission LLC)	Kinder Morgan
Koch Gateway Pipeline Company	Koch
National Fuel Gas Distribution Corporation	Distribution
Natural Gas Supply Association	NGSA
Panhandle Eastern Pipe Line Company and Trunkline Gas Company	Panhandle
Williams Gas Pipeline Company (Transcontinental Gas Pipe Line Corporation, Texas Gas Transmission Corporation, Williams Gas Pipelines Central, Inc., Northwest Pipeline Corporation, Cove Point LNG Limited Partnership, and Kern River Gas Transmission Company)	Williams
Williston Basin Interstate Pipeline Company	Williston Basin

Appendix B

Cross-Contract Ranking Standards GISB Considered, But Did Not Adopt

Standards Considered at the November 11, 1999 GISB Executive Committee Meeting

CXKR-1

S1 Proposed Standard 1

Absent mutual agreement to the contrary, the standard level of confirmation should be entity to entity.

S2 Revised Proposed Standard 2

As part of the confirmation and scheduling process between a Transportation Service Provider (TSP) and a Local Distribution Company (LDC), upon request by the LDC, the TSP should make available, via EBB/EDM, supplemental information obtained during or derived from the nomination process necessary for the LDC to meet its statutory and/or regulatory obligations. Such supplemental information, if available, should include the TSP's Service Requester Contract and, based upon the TSP's business practice may also, on a mutually agreeable basis, include (1) a derivable indicator characterizing the type of contract and service being provided, (2) Downstream Contract Identifier and/or (3) Service Requester's Package ID .

S3 Proposed Standard 3

Absent mutual agreement to the contrary between the TSP and the Operator for confirmations at a production location, the TSP should support the fact that the operator will confirm with the TSP to only the upstream entity level. These upstream entities should either confirm or nominate (at the TSP's determination) at an entity level with the TSP.

D1 Proposed Definition 1

Production locations includes wellheads, platforms, plant tailgates (excluding straddle plants) and physical wellhead aggregation points.

S4 Proposed Standard 4

When nominated quantities exceed available capacity, the Transportation Service Provider (TSP) should first utilize its tariff requirements to assign capacity to each service level for each Service Requester (SR). The TSP should then use the SR's provided scheduling ranks to determine how the available quantities should be distributed within a single service level. The SR's provided scheduling ranks (as applicable) should be used as follows:

For reductions identified at or upstream of the constraint location, the order for application of ranks is Receipt Rank (Priority), Upstream Rank (Priority), Delivery Rank (Priority), Downstream Rank (Priority).

For reductions identified at or downstream of the constraint location, the order for application of ranks is Delivery Rank (Priority), Downstream Rank (Priority), Receipt Rank (Priority), Upstream Rank (Priority).

S5 Proposed Standard 5

When applying a confirmation reduction to an entity at a location, the Transportation Service Provider (TSP) should use the Service Requester's (SR's) scheduling ranks provided on all nominations for that location and entity to determine the appropriate nomination(s) to be reduced, except where superseded by the TSP's tariff, general terms and conditions, or contractual obligations. The SR's provided scheduling ranks (as applicable) should be used as follows:

For receipt side reductions, the order for application of ranks is Upstream Rank (Priority), Receipt Rank (Priority), Delivery Rank (Priority), and Downstream Rank (Priority).

For delivery side reductions, the order for application of ranks is Downstream Rank (Priority), Delivery Rank (Priority), Receipt Rank (Priority), and Upstream Rank (Priority).

P1 Proposed Principle 1

In order to effectuate cross contract ranking, the level of confirmation at a location should occur at the entity to entity level.

S6 Revised Proposed Standard 6

Transportation Service Providers should utilize Standard 1.3.7 for ranks submitted in a nomination.

CXKR-2

Retain all standards in CXKR-1 with the exception of Standard S2 which would be revised to read as follows:

S2 Amended Revised Proposed Standard 2

As part of the confirmation and scheduling process upon request, the TSP should make available, via EBB/EDM, supplemental information obtained during or derived from the nomination process. Such supplemental information, if available, should include the TSP's Service Requester Contract and, based upon the TSP's business practice may also, on a mutually agreeable basis, include (1) a derivable indicator characterizing the type of contract and service being provided, (2) Downstream Contract Identifier and/or (3) Service Requester's Package ID.

CXKR-3

P1 New Principle

In order to effectuate cross contract ranking, the level of confirmation at a location should occur at the entity-to-entity level.

S1 New Standard

The standard level of confirmation should be entity to entity.

S4 New Standard

When nominated quantities exceed available capacity on a Transportation Service Provider's (TSP's) system, such TSP should first utilize its tariff requirements to assign capacity to each service level for each Service Requester (SR). The TSP should then use the SR's provided scheduling ranks as provided in the SR's nomination to determine how the available quantities should be distributed within a single service level.

The SR's provided scheduling ranks (as applicable) should be used as follows:

For reductions identified at or upstream of the constraint location, the order for application of ranks is Receipt Rank (Priority), Upstream Rank (Priority), Delivery Rank (Priority), Downstream Rank (Priority).

For reductions identified at or downstream of the constraint location, the order for application of ranks is Delivery Rank (Priority), Downstream Rank (Priority), Receipt Rank (Priority), Upstream Rank (Priority).

S5 New Standard

When applying a confirmation reduction to an entity (Service Requester (SR)) at a location, the Transportation Service Provider (TSP) should use such SR's scheduling ranks as provided on that SR's nominations at that location to determine the appropriate nominations(s) to be reduced, except where superceded by the TSP's tariff, general terms and conditions, or contractual obligations.

The SR's provided scheduling ranks (as applicable) should be used as follows:

For receipt side reductions, the order for application of ranks is Upstream Rank (Priority), Receipt Rank (Priority), Delivery Rank (Priority), Downstream Rank (Priority).

For delivery side reductions, the order for application of ranks is Downstream Rank (Priority), Delivery Rank (Priority), Receipt Rank (Priority), Upstream Rank (Priority).

Footnotes

1.  Standards For Business Practices of Interstate Natural Gas Pipelines, Order No. 587, 61 FR 39053 (Jul. 26, 1996), III FERC Stats. & Regs. Regulations Preambles ¶ 31,038 (Jul. 17, 1996), Order No. 587-B, 62 FR 5521 (Feb. 6, 1997), III FERC Stats. & Regs. Regulations Preambles ¶ 31,046 (Jan. 30, 1997), Order No. 587-C, 62 FR 10684 (Mar. 10, 1997), III FERC Stats. & Regs. Regulations Preambles ¶ 31,050 (Mar. 4, 1997), Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), III FERC Stats. & Regs. Regulations Preambles ¶ 31,062 (Apr. 16, 1998), Order No. 587-H, 63 FR 39509 (July 23, 1998), III FERC Stats. & Regs. Regulations Preambles ¶ 31,063 (July 15, 1998); Order No. 587-I, 63 FR 53565 (Oct. 6, 1998), III FERC Stats. & Regs. Regulations Preambles ¶ 31,067 (Sept. 29, 1998), Order No. 587-K, 64 FR 17276 (Apr. 9, 1999), III FERC Stats. & Regs. Regulations Preambles ¶ 31,072 (Apr. 2, 1999).

2.  Standards For Business Practices Of Interstate Natural Gas Pipelines, Notice of Proposed Rulemaking, 65 FR 41885 (July 7, 2000), IV FERC Stats. & Regs. Proposed Regulations ¶ 32,552 (June 30, 2000).

3.  Those filing comments are listed on Appendix A along with the abbreviation used throughout the order.

4.  The Commission also is amending § 284.12(b)(2) of its regulations to reflect the change in GISB's address.

5.  See the discussion of compliance procedures in Section VIII, Implementation Date, at text accompanying note 20.

6.  Pipelines previously had been required to implement the interactive Internet standards in Version 1.4 by June 1, 2000. See 18 CFR 284.12(c)(3)(i)(B). The following are the changes from the Version 1.3 standards previously adopted by the Commission. Standards that have been revised are: 1.3.24, 3.3.17, 4.2.7, 4.2.8, 4.3.2, 4.3.8, 4.3.9, 4.3.28, 4.3.29, 4.3.34, 5.3.2, and 5.3.30. New standards are: 0.1.1, 0.1.2, 0.3.1, 1.3.47 through 1.3.63, 1.3.79, 2.3.32 through 2.3.35, 3.3.23 through 3.3.25, 4.1.22 through 4.1.38, 4.2.9 through 4.2.19, 4.3.36 through 4.3.85, 5.2.2, and 5.3.31 through 5.3.42. Revised data sets are: 1.4.1 through 1.4.7, 2.4.1 through 2.4.6, and 3.4.1 through 3.4.4. New data sets are 5.4.18 and 5.4.19.

7.  This process first requires a super-majority vote of 17 out of 25 members of GISB's Executive Committee with support from at least two members from each of the five industry segments—interstate pipelines, local distribution companies, gas producers, end-users, and services (including marketers and computer service providers). For final approval, 67% of GISB's general membership must ratify the standards.

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

9.  For example, a shipper may nominate gas from a single producer under two contracts: a firm contract with the pipeline and a capacity release contract which has a minimum volume commitment. If that shipper receives less gas from its producer than it has nominated, it might prefer to allocate more of its gas to the capacity release contract to satisfy its minimum volume commitment. Cross-contract ranking would permit the shipper to allocate its gas to the most economical contract.

10.  The Commission previously has resolved issues on which the GISB members could not reach consensus, so that GISB could move forward and develop the necessary technical standards to implement the Commission's determination. Standards For Busines Practices Of Interstate Natural Gas Pipelines, Order No. 587-G, 63 FR 20072, 20073, 20075-78 (Apr. 23, 1998), III FERC Stats. & Regs. Regulations Preambles ¶ 31,062, at 30,663, 30-667-72 (Apr. 16, 1998)(establishing priority for firm and interruptible transportation in intra-day nominations).

11.  See Proposed Standard 1 of CXKR-1 and CXKR-2 and New Standard S-1 of CXKR-3.

12.  Production location was defined to include wellheads, platforms, plant tailgates (excluding straddle plants) and physcial wellhead aggregation points. CXKR 1, Proposed Principle 1.

13.  See comments to Cincinnati, Con Edison, Distribution, AGA.

14.  The GISB standards define a package identifier as “a way to differentiate between discrete business transactions.” Nominations Related Standards 1.2.5, 18 CFR 284.12(b)(i).

15.  See Comments by INGAA, Enron, ANR, Columbia Gulf, Kinder Morgan, Koch, Panhandle, Williams, Williston Basin.

16.  Order No. 486, Regulations Implementing the National Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 (1987).

17.  18 CFR 380.4

18.  See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27).

19.  5 U.S.C. 601-612.

20.  See Texas Eastern Transmission Corporation, 77 FERC ¶ 61,175, at 61,646 (1996) (pipelines incorporating standards by reference in their tariffs must include number and version).

21.  In filing to implement Version 1.4, pipelines need to change all references to GISB standards in their tariffs to Version 1.4. The version number applies to all standards contained in GISB's Version 1.4 Standards Manuals, including standards that have not changed from prior versions.