00-17162. Standards for Business Practices of Interstate Natural Gas Pipelines

Issued June 30, 2000.

AGENCY:

Federal Energy Regulatory Commission.

ACTION:

Final rule; Order establishing implementation date for imbalance trading.

SUMMARY:

The Federal Energy Regulatory Commission is establishing November 1, 2000, as the date by which pipelines are required to comply with the regulation requiring pipelines to permit shippers to offset imbalances on different contracts held by the shipper and to trade imbalances. (18 CFR 284.12(c)(2)(ii)). This regulation was adopted in Order No. 587-G. (63 FR 20072).

DATES:

Pipelines must comply with 18 CFR 284.12(c)(2)(ii) by November 1, 2000.

ADDRESSES:

Federal Energy Regulatory Commission 888 First Street, N.E. 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, N.E., Washington, DC 20426. [phone]

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

SUPPLEMENTARY INFORMATION:

United States of America

Federal Energy Regulatory Commission

Before Commissioners: James J. Hoecker, Chairman; William L. Massey, Linda Breathitt, and Curt Hébert, Jr. Standards For Business Practices Of Interstate Natural Gas Pipelines.

[Docket No. RM96-1-014]

Order No. 587-L

Order Establishing Implementation Date for Imbalance Trading

Issued June 30, 2000.

In Order No. 587-G, ^[1] the Commission adopted a regulation, 18 CFR 284.12(c)(2)(ii), requiring pipelines to permit shippers to offset imbalances on different contracts held by the shipper and to trade imbalances. Through trading of imbalances, shippers would be able to avoid penalties, without compromising the operational reliability of the pipeline's system. ^[2] In Order No. 587-G, the Commission deferred implementation of this regulation until the Gas Industry Standards Board (GISB) had an opportunity to develop standards related to imbalance trading.

The Commission further recognized the importance of imbalance trading in Order No. 637. ^[3] The Commission found that penalties can operate to distort the workings of the market and that imbalance trading plays an important role in the Commission's overall penalty policy because shippers can use imbalance trading to better manage their penalty exposure without jeopardizing the integrity of the pipeline's operations. The Commission further found that imbalance trading was of sufficient importance to shippers' ability to manage their business that pipelines would not be permitted to implement new imbalance services (such as park and loan services) before they implement imbalance trading. ^[4]

On February 23, 2000, GISB filed with the Commission a report on its standards development progress. GISB reports that its Executive Committee approved standards for imbalance trading and netting and title transfer tracking and that these standards are awaiting the development of the technical standards for information requirements and technical mapping. On February 11, 2000, the Executive Committee also established an Expedited Data Development Subcommittee whose first charge is to complete the technical standards for imbalance trading promptly. ^[5]

Because of the importance of imbalance trading to the overall Commission policy regarding pipeline penalties, the Commission is establishing November 1, 2000 as the date by which pipelines are to comply with the requirement to provide imbalance trading to their shippers. Since GISB has been working since February 2000 on developing the technical standards, this date should provide GISB and the pipelines with sufficient opportunity to complete the technical standards and implement imbalance trading. To implement imbalance trading on their systems, pipelines must file revised tariff sheets not less than 30 days nor more than 60 days prior to November 1, 2000. ^[6]

The Commission orders:

Each interstate pipeline must comply with § 284.12(c)(2)(ii) of the Commission regulations by November 1, 2000.

By the Commission.

David P. Boergers,

Secretary.

Footnotes

1.  Standards For Business Practices Of Interstate Natural Gas Pipelines, Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), III FERC Stats. & Regs. Regulations Preambles ¶ 31,062 (Apr. 16, 1998), on reh'g, Order No. 587-I, 63 FR 53565 (Oct. 6, 1998), III FERC Stats. & Regs. Regulations Preambles ¶ 31,067 (Sep. 29, 1998).

2.  Order No. 587-G, 63 FR at 20081, III FERC Stats. & Regs. Regulations Preambles ¶ 31,062, at 30,677-80.

3.  Regulation of Short-Term Natural Gas Transportation Services and Regulation of Interstate Natural Gas Transportation Services, Order No. 637, 65 FR 10156, 10198 (Feb. 25, 2000), III FERC Stats. & Regs. Regulations Preambles ¶ 31,091, at 31,308 (Feb. 9, 2000), Order No. 637-A, 65 FR 35705 (Jun. 5, 2000), III FERC Stats. & Regs. Regulations Preambles ¶ 31,099 (May 19, 2000).

4.  Order No. 637, 65 FR at 10199, III FERC Stats. & Regs. Regulations Preambles ¶ 31,091, at 31,311; Order No. 637-A, 65 FR at 35737, III FERC Stats. & Regs. Regulations Preambles ¶ 31,099, at 31,601-602.

5.  See http://www.gisb.org/​edd.htm (June 8, 2000) (announcing formation of Expedited Data Development Subcommittee).

6.  18 CFR 154.207.