00-33324. Standards for Business Practices of Interstate Natural Gas Pipelines

December 21, 2000.

AGENCY:

Federal Energy Regulatory Commission.

ACTION:

Notice of staff technical conference.

SUMMARY:

In Order No. 587-M, 65 FR 7728 (Dec. 11, 2000), the Federal Energy Regulatory Commission directed its staff to convene a technical conference concerning standards to permit shippers to designate and rank the contracts under which gas will flow on a pipeline's system. This notice establishes the date for the conference and the procedures by which interested parties can seek to participate in the conference.

DATES:

The conference will be held February 27, 2001. Those interested in making presentations or participating in discussions should indicate their interest by January 16, 2001 by a letter addressed to the Secretary, Federal Energy Regulatory Commission.

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.

SUPPLEMENTARY INFORMATION:

Take notice that on February 27, 2001, the Staff of the Federal Energy Regulatory Commission will hold a public conference to discuss cross-contract ranking and confirmation standards as directed by the Commission in Order No. 587-M.^[1] The conference will begin at 9:30 a.m. at the Commission's offices, 888 First Street, N.E., Washington, DC. All interested persons are invited to attend.

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. The Gas Industry Standards Board (GISB) had considered a standard for cross-contract ranking which relied on entity-to-entity confirmation, but a number of parties raised objections to using this method of confirmation. As set forth in Order No. 587-M, the purpose of this conference is to obtain additional information about how confirmation is now conducted, to clarify what issues are in dispute, and to determine if common ground between the parties can be found. Among the issues identified by the Commissions to 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 would be a reasonably burden-free method of transmitting the information.^[2]

• 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 limiting 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.

In order to understand the issues raised by the parties, information is needed on the methods by which pipelines currently conduct nominations and confirmations. The conference, therefore, will be organized in two stages. The first stage will consist of presentations of factual information describing how the current nomination and confirmation process operates. The second will involve discussions among market participants as to the issues raised with respect to whether and how to standardize the confirmation process to permit cross-contract ranking.

The presentations should provide perspective on the ways in which pipelines across the grid now conduct nominations and confirmations. Such information should include: how different pipelines confirm, whether using the contract and entity-to-entity models or other models; how nominations and confirmations differ depending on whether the pipeline uses the pathed, non-pathed, or pathed non-threaded model; how package IDs are used; and the different confirmation models used in the production area.

Persons interested in making presentations or participating in the discussions should indicate their interest by January 16, 2001, by a letter addressed to the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, and should refer to Docket No. RM96-1-015. Each request to participate must include a contact person, telephone number and E-mail address.

Each request also must indicate whether the person is interested in making a presentation or participating in the issue discussion. For those interested in making presentations, the request should indicate what topics the presentation will cover and how broadly the speaker can address nomination and confirmation practices with respect to multiple pipelines. Because of the need to limit the number of presentations, those with common interests are encouraged to choose a single spokesperson to represent their interests. Those interested in participating in the issue discussion should indicate what topics they are interested in discussing.

After receipt of the requests, a subsequent notice will be issued setting forth the conference format. Depending on the number of presentations, it may be necessary for presenters to meet with staff prior to the conference or through conference calls to coordinate the presentations.

The conference will be transcribed, so those not attending can review the proceedings. Additional comments on the issues raised by the conference can be filed within 30 days of the conference.

The Capitol Connection offers all Open and special FERC meetings live over the Internet as well as via telephone and satellite. For a reasonable fee, you can receive these meetings in your office, at home or anywhere in the world. To find out more about The Capitol Connection's live Internet, phone bridge, or satellite coverage, contact David Reininger or Julia Morelli at [phone] or visit the website (www.capitolconnection.gmu.edu). The Capitol connection also offers FERC Open Meetings through its Washington, DC area television service.

In addition, National Narrowcast Network's Hearing-On-The-Line service covers all FERC meetings live by telephone so that interested persons can listen at their desks, from their homes, or from any phone, without special equipment. Billing is based on time on-line. Call [phone].

Those interested in obtaining transcripts of the conference need to contact Ace Federal Reporters, at 202-347-3700. Anyone interested in purchasing videotapes of the meeting should call VISCOM at [phone].

Questions about the conference should be directed to: Michael Goldenberg, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426; 202-208-2294, [e-mail].

Linwood A. Watson, Jr.,

Acting Secretary.

Footnotes

1.  Standards for Business Practices of Interstate Natural Gas Pipelines, Order No. 587-M, 65 FR 77285(Dec. 11, 2000), 93 FERC ¶ 61,223 (November 30, 2000), III FERC Stats. & Regs. Regulations Preambles ¶  _(Nov. 30, 2000).

2.  See Comments on Proposed Rule of National Fuel Gas Distribution Corporation, Docket No. RM96-1-015, at 8 (filed August 7, 2000) (proposing use of capacity-type indicator to transmit information about transportation priorities).