Federal regulators moved Thursday to give gas pipeline operators explicit permission to exchange non-public operational information with PJM and other RTOs.

The Federal Energy Regulatory Commission approved a Notice of Proposed Rulemaking (RM13-17) that it said would improve planning and reliability by revising the commission’s Standards of Conduct.

The proposed rule is the first regulatory change by FERC since it began an inquiry on gas-electric interdependence in February 2012 (AD12-12-000) due to concerns over gas-fired generators obtaining reliable fuel supply during the winter heating season.

While the commission has urged increased communication between gas pipelines and electric grid operators, numerous parties filed written comments or told FERC at regional conferences that they feared sharing operational information would run afoul of commission rules.

The Interstate Natural Gas Association of America (INGAA), for example, told FERC that pipelines could be accused of violating the Natural Gas Act’s prohibitions against undue discrimination for providing a grid operator with non-public transmission information without simultaneously disclosing that information to all other shippers or potential shippers.

Communication Permitted

As a result, the commission said last week, it was proposing revisions to its Standards of Conduct rules to provide assurances. “This is just to clarify that this [communication] is permitted under our current regulations,” said Commissioner Cheryl LaFleur.

Natural gas generation provided nearly 19% of PJM’s electricity in 2012, a nearly 40% jump over its production in 2011. In ISO-NE, natural gas’ share has increased ten-fold in 20 years, from 5% in 1990 to 51% in 2011.

Commissioners said they expect to take additional actions to prevent a collision between the needs of gas heating customers and gas-fired electric generators.

“We’re going to get a cold winter one of these years and we have to make sure we have enough energy to go around,” said Commissioner Philip Moeller.

The new regulations, (proposed sections 38.3(a) and 284.12(b)(4) of the commission’s regulations) would allow electric grid operators and gas pipelines to share non-public information for reliability and operational planning. In a presentation, commission staff said information sharing should be the rule “not just during emergencies, but also for day-to-day operations, planned outages, and scheduled maintenance.”

No List

The NOPR does not propose a list of non-public, operational information that can be shared, but gives examples, including:

• real-time and anticipated system conditions with potential to change gas flows;
• actual and anticipated electric service interruptions to gas compressor locations;
• actual and projected gas transportation restrictions to electric generators;
• real-time flow and operational capacity data at receipt and delivery points;
• nominated and scheduled quantities of shippers who are or who supply gas-fired generators; and,
• scheduled dates and duration of generator, pipeline, and transmission maintenance and planned outages.

Assurances

Much of the NOPR explains why communications between the two industries does not violate applicable rules and laws.

It notes, for example, that the commission’s Standards of Conduct apply to communications only within the same organization and do not limit communications between unaffiliated pipelines and electric transmission providers.

It also notes that the Federal Power and Natural Gas acts only prohibit “undue” preferences, advantages and prejudices. “A difference in treatment is not unduly discriminatory when the difference is justified,” the commission said.

The undue discrimination provisions are intended to ensure equal treatment for “similarly situated” customers.

“Transmission operators are not similarly situated to other customers because they require access to non-public scheduling and other types of information from a variety of sources to help them ensure the reliability and integrity of the transportation and transmission systems. In addition, natural gas pipelines are generally not customers of electric transmission operators. Likewise, in the case of RTOs/ISOs, they are not shippers on pipelines,” the commission said.

The commission also noted that gas pipelines and electric transmission operators have long shared non-public information with their counterparts. “For example, pipeline operators routinely exchange nomination and scheduling information with other pipeline operators and with upstream and downstream entities (that may be shippers on the pipeline) to confirm transportation nomination requests and to coordinate flows between the parties. Transmitting electric utilities similarly coordinate the sharing of non-public interchange schedule information on a routine basis through mechanisms such as, for example, e-Tags.”

No-Conduit Rule

The NOPR includes a “No-Conduit Rule” to prohibit recipients of non-public information from relaying that information to marketing employees or others who could profit from it.

Comments will be accepted for 30 days after posting of the NOPR in the Federal Register.

FERC contacts:

Technical Information: Caroline Daly, Office of Energy Policy & Innovation, (202) 502-8931, caroline.daly@ferc.gov

Legal Information: Anna Fernandez, Office of the General Counsel, (202) 502-6682, anna.fernandez@ferc.gov