Week Ending April 1, 2016

FERC Handles Numerous Requests for Waivers Associated with Gas-Electric Coordination Standards; Accepts Bulk of Interstate Pipeline Compliance Filings

This Article Appears as Published in Foster Report No 3093
FERC Handles Numerous Requests for Waivers Associated with Gas-Electric Coordination Standards; Accepts Bulk of Interstate Pipeline Compliance Filings

On 3/29/16 FERC issued an order addressing many interstate natural gas pipeline filings in compliance with Order Nos. 587-W and 809 (RP10-1083-008, et al.)  The pipelines each submitted a tariff filing to comply with the requirements established in orders issued in Docket Nos. RM96-1-038 and RM14-2-003, and RM14-2, respectively. The proposed tariff provisions implement the North American Energy Standards Board (NAESB) Wholesale Gas Quadrant’s (WGQ) revised business practice standards the Commission incorporated by reference in those rules.  Except in certain cases, the tariff records are accepted, to become effective as proposed, subject to further review and conditions.

These filings respond to rules governing the Coordination of the Scheduling Processes of Interstate Natural Gas Pipelines and Public Utilities, Order 587-W, and Coordination of the Scheduling Processes of Interstate Natural Gas Pipelines and Public Utilities, Order 809.

All of the filers, with one exception, filed tariff records with a requested effective date of 4/1/16.  The exception was Southern Star Central Gas Pipeline, Inc. (RP16-439), which filed revised records to be effective for just one day (3/31/16), to be replaced the following day with revised tariffs to be effective starting on April 1.  Southern Star based this filing on its understanding of the Commission’s clarifying order (RM14-2), issued 7/31/15 — clarifying the timing of implementation of the new day-ahead nomination timelines for the Timely and Evening nomination cycles and capacity release timelines for pipelines, and how the pipelines should transition from two to three intraday nomination cycles.

Background.  Order 809, a final rule issued 4/16/15, amended the Commission’s regulations to incorporate by reference standards developed and filed by NAESB relating to the scheduling of transportation service on interstate natural gas pipelines to better coordinate the scheduling practices of the wholesale natural gas and electric industries, as well as to provide additional scheduling flexibility to all shippers on interstate pipelines.  The Commission revised the nationwide Timely Nomination Cycle nomination deadline for scheduling natural gas transportation from 11:30 a.m. Central Clock Time (CCT) to 1:00 p.m. CCT and revised the intraday nomination timeline, to include adding an additional intraday scheduling opportunity during the gas operating day (Gas Day).  The Commission required interstate gas pipelines to comply with the revised NAESB standards incorporated in that rule beginning on 4/1/16.  In addition, the Commission required pipelines to file tariff records to reflect the changed standards by 2/1/16.

On 10/16/15, the Commission issued Order 587-W, a final rule amending its regulations to incorporate by reference the latest version (Version 3.0) of seven business practice standards adopted by the WGQ of NAESB applicable to interstate natural gas pipelines.  These updated standards contain and supplement the revisions to the NAESB scheduling standards previously accepted by the Commission in Order No. 809 as part of the Commission’s efforts “to harmonize gas-electric scheduling coordination.”  In addition, the updated standards revise the codes used to identify receipt and delivery locations in the “Index of Customers.”

The Commission also amended its regulations by making conforming changes to the regulations on interstate gas pipeline filings and postings.

The only protests were directed (RP16-598, RP16-599) to the compliance filings pertaining to Rockies Express Pipeline LLC and Trailblazer Pipeline Co. LLC.

Waivers Granted.  In Order No. 587-V, the Commission set out the principles it would apply generally to waiver requests.  In general, the Commission found that all waivers and extensions of time will be granted only in reference to the individual set of NAESB standards being adopted (in this case the Version 3.0 Standards).  The Commission determined pipelines will need to seek renewal of any such waivers or extensions for each version of the standards the Commission adopts.  The Commission also ruled that waivers or extensions of time will not be granted for standards that merely describe the process by which a pipeline must perform a business function, if it performs that function, and where the standard does not require the pipeline to perform the business function.  In such a case, as long as the pipeline does not perform the business function, it does not trigger a requirement to comply with the standard and hence no waiver or extension of time is required.

Several pipelines sought waiver of the requirements of Order 587-W, or extensions of time in which to comply with that order. The Commission first granted waivers to five pipelines that already had qualified for them, B-R Pipeline Co. (B-R), Total Peaking Services, LLC, USG Pipeline Co., LLC, KPC Pipeline, LLC, and NGO Transmission, Inc., all of which only have one source of gas or one customer.  They requested continuation of previously granted waivers of the gas quality posting requirements.  The Commission found it appropriate to grant the requested waivers because these pipelines typically have one source of gas, one customer, and do not separately measure gas quality.  However, the referenced pipelines must comply with the gas quality reporting standards if, in the future, they decide to separately measure gas quality.

Another four pipelines, DBM Pipeline, LLC, Rendezvous Pipeline Co., LLC, Black Hills Shoshone Pipeline, LLC, and Portland General Electric Co. (PGE), which do not separately measure gas quality, also requested and received continuation of previously granted waivers of the WGQ gas quality posting requirements.

MarkWest New Mexico, LLC and MarkWest Pioneer, LLC requested continuation of previously granted waivers of Standards 4.3.23 (as it relates to gas quality posting), 4.3.89 through 4.3.93, and 4.3.95 due to the small size and configuration of their pipelines.  The Commission found it appropriate to grant these the requested waivers.

And National Grid LNG, LP was granted continuation of previously granted waiver of Standard 4.3.23 (as it relates to gas quality posting) given its “unique operational and market circumstances.”  NG LNG operates an LNG storage facility which is not physically connected to the interstate pipeline grid.

Waivers Rejected.  Four pipelines, USG Pipeline, DBM Pipeline, Rendezvous, and NGO Transmission, requested waiver of Version 3.0 Standard 4.3.95.  The Commission explained it will deny the requested waivers because the Standard is conditional and does not apply unless the pipeline performs the business function.  NAESB Standard 4.3.95 requires a pipeline to measure or calculate hydrocarbon liquid dropout from one of two prescribed methods if its tariff contains gas quality provisions pertaining to the measurement of hydrocarbon liquid dropout.  In support of their requests, the pipelines stated that their tariffs do not contain such provisions. Thus, according to the Commission, in each case the pipeline complies with the Standard 4.3.95.  However, these pipelines must make a compliance filing within 20 days to include Standard 4.3.95 in their respective tariffs.

A similar result was applied in the case of eight pipelines that requested waiver of Standards 4.3.96 through 4.3.98.  These standards also are conditional and do not apply unless the pipeline actually performs the business function.  Standard 4.3.96 requires pipelines to provide hourly gas quality information “to the extent that the pipeline is required to do so in its tariff or general terms and conditions, a settlement agreement, or by order of an applicable regulatory authority.” Further, Standards 4.3.97 and 4.3.98 specify how the data for Standard 4.3.96 should be provided. Because the pipelines state that their respective tariffs do not require them to provide hourly gas quality information, “they do not require a waiver….”  The pipelines will be in compliance by simply including the referenced Standards in their tariff.

Waivers of Pooling Standards.  Eight pipelines requested continuation of their respective waivers of the Standards governing pooling.  In support of their waiver requests these pipelines explain that it is currently not feasible for them to provide pooling services.  However, FERC responded, “these Standards only apply in situations where it is feasible for a pipeline to provide pooling services. Thus, we find no need to grant the requested waivers and find that the proffered explanations do not support our issuance of the requested waivers.”

Waivers of Gas/Electric Operational Communications Standards.  Two pipelines, NG LNG and Rendezvous, requested continuation of their respective waivers of the Standards applicable to gas/electric operational communications.  The waiver requests were denied again because the Standards are conditional and do not apply unless the pipeline performs the business function.

The Commission also denied NG LNG’s requested waivers of Standards 0.3.11 through 0.3.13 because these require power plant gas coordinators and pipelines to establish procedures to communicate material changes in circumstances that may impact hourly flow rates and require a pipeline to attempt to accommodate such changes consistent with a pipeline’s tariff.  NG LNG’s system does not connect with any power plants.

However, the pipelines must comply with Standards 0.3.14 and 0.3.15.  Standard 0.3.14 requires pipelines to provide notification of operational flow orders (OFOs) and other critical notices to Balancing Authorities, Reliability Coordinators, and Power Plant Gas Coordinators.  Similarly, Standard 0.3.15 requires Balancing Authorities and Reliability Coordinators to establish written operational communication procedures with the pipeline to be used during extreme conditions.  Even without directly connected generators, the Commission noted that pipelines need to provide balancing authorities and electric utilities with relevant information as to conditions that might affect their electrical systems.  The pipelines are required to provide such information only when the balancing authority or electric utility requests it.  According to the Commission, establishing communication protocols is important in any case in which a pipeline’s practices may affect the electric grid. Accordingly, NG LNG and Rendezvous are required to make a compliance filing within 20 days to include these Standards in their tariffs.

Waivers of Interstate Pipeline Standards of Conduct Reporting Requirements.  Four pipelines, B-R, USG Pipeline, Honeoye Storage Corp., and NG LNG, requested and were granted limited (partial) waivers of the Standard 4.3.23 regarding the Standards of Conduct reporting requirements.

Among Other Waiver Considerations.  FERC addressed waiver pleadings throughout this order one by one.  For instance, eight pipelines requested a continuation of their waiver of Standard 5.3.65, which is a business practice standard that requires a pipeline to support indexed based releases.  The requesting pipelines asserted that that there are no representative indexed references for their respective pipelines, and that shippers are unlikely to request such releases. The Commission granted USG Pipeline, Panther, Trans-Union, PGPipeline, Total Peaking, B-R, PGE, and Ryckman a continuation of their requested waivers.  However, the pipelines will be required to support an index-based release when requested by a releasing shipper.  In supporting such a release, the pipeline will need to pay whatever licensing costs are necessary to cover its processing of the release.

Also, Texas Gas Transmission, LLC and Gulf South Pipeline, LP may have continuation of their limited waivers of Standard 1.3.39, which provides that “[b]umping that affects transactions on multiple Transportation Service Providers should occur at grid-wide synchronization times only.”  Both pipelines stated that the Commission accepted their tariff filings to establish Enhanced Nominations Service (ENS) for firm shippers.  The Commission found the continued waiver will afford the pipelines’ ENS customers the additional opportunities to utilize such capacity included in this firm service.

Similarly, ANR Pipeline Co. has its limited waiver of Standard 1.3.39.  ANR states that its tariff provides for seven total nomination cycles, with bumping allowed in the standard NAESB Evening, Intraday 1, and Intraday 2 nomination cycles, and limited bumping by Rate Schedule Firm Transportation Service (FTS)-3 shippers in the standard NAESB Intraday 3 nomination cycle and additional non-standard Morning and Last Intraday nomination cycles.  ANR asserted that two additional non-standard nomination cycles are limited to receipt and delivery points located in its Northern Segment, and were approved by the Commission as part of its Order No. 637 compliance filing in 2001.  The Commission granted ANR a continuation of its requested limited waiver of the Standard “as it pertains to its additional non-standard nomination cycles.  This will afford ANR’s Rate Schedule FTS-3 customers the additional opportunities to utilize such capacity included in this firm service.”

ANR also may continue holding its limited waiver of Standard 1.3.2(v), limited only to that portion of the standard which states that bumping is not allowed during the Intraday 3 Nomination Cycle.  The limited waiver will allow FTS-3 shippers to bump interruptible service in the Intraday 3 nomination cycle.

Eight pipelines requested a continuation of their variances pertaining to Standard 1.3.2, for a 15 minute extension of the deadlines for nominations leaving the control of the nominating party, and for receipt of nominations by transporter.  The pipelines also requested this variance for the new Intraday 3 nomination cycle.  Generally, the referenced pipelines stated that the Commission has previously granted an extension of the nomination cycle deadlines, and that they continue to operate on the same basis on which the variance previously was granted.  “For good cause shown,” the Commission granted the referenced pipelines an extension of this variance.

FERC proceeded to grant limited extensions of time to implement certain requirements.  Three pipelines, High Point Gas Transmission, LLC, American Midstream (Midla), LLC, and American Midstream (AlaTenn), LLC, requested an extension of time until 9/1/17 to implement certain Version 3.0 standards.  The Commission found their request is adequately supported.

Trailblazer Pipeline, Rockies Express, and Tallgrass Interstate Gas Transmission, LLC (TIGT) each filed a request for an extension of time until 8/31/16 to implement certain Version 3.0 Standards.  The pipelines stated that Tallgrass – their parent company – is implementing its CONNECT pipeline management system in a standalone software environment that is static and based on the previously applicable NAESB standards.  Thus, the pipelines claimed to be unable to avail themselves of the current version of the vendor’s software that includes changes to satisfy the requirements.

The pipelines further stated that Tallgrass has instructed the vendor to prepare interim software patches that will ensure that the pipelines can satisfy NAESB Version 3.0 as soon as practical.  The pipelines believe that the patches necessary to bring CONNECT into compliance with Version 3.0 will be developed, tested, and implemented by August 31.

Indicated Shippers protested both Trailblazer’s and Rockies Express’s requests for an extension of time.

Nevertheless, FERC concluded that the pipelines have provided good cause to grant their requests for time extensions, but some caveats were imposed on the companies.

Next, the Commission also generally approved requests from 61 pipelines for an extension of time to implement standards relating to various EDI, EDM, and Internet Electronic Transport (IET) requirements until such time as the pipelines are requested by a Part 284, open access customer to provide such electronic data services.

FERC denied PG Pipeline’s request for extension of time to comply with Standard 1.3.5 – which provides that “[a]ll nominations should include shipper defined begin dates and end dates.”  All nominations excluding intraday nominations should have roll-over options, explained the Commission.  Specifically, shippers should have the ability to nominate for several days, months, or years, provided the nomination begin and end dates are within the term of shipper’s contract.

FERC explained that Standard 1.3.5 does not appear to require the provision of data using EDI/EDM, and Interactive website requirements.  “Nevertheless, to the extent the standard is related to EDI/EDM, the standard includes business practices that may be implemented without the use of EDI/EDM.”  As such, PG Pipeline has not supported its request for extension of time to comply.

The Commission also denied requests from five pipelines, Leaf River, Bluewater, SG Resources, Pine Prairie, and Wyckoff, for an extension of time to comply with Version 3.0 Definitions 0.2.5, 4.2.11, 4.2.20, and 5.2.2 for a period of 90 days following the receipt of a request by a shipper.  Further, Cimarron and Dauphin Island requested an extension of time to comply with Definitions 10.2.35 and 10.2.36.  In addition, Trans-Union requested an extension of time to comply with Definition 0.2.5 until such time as Trans-Union receives a request for such services.  Lastly, NG LNG requested an extension of time to comply with various Definitions.  The Commission denied all the requests for extensions of time to comply with Version 3.0 Definitions.

Request to Revise Nominations in Additional Nomination Cycle.  The Commission ruled that Tennessee’s proposal to modify its tariff to allow shippers requesting a change in nominations in the last hourly nomination cycle to submit a change by 8:00 a.m. CCT, rather than an hour in advance as is currently required by its tariff, goes beyond the scope of a compliance filing as directed in Order Nos. 587-W and 809.  If Tennessee wishes to include such language in its tariff, it may file an application for approval to do so pursuant to section 4 of the Natural Gas Act.

Other Waivers/Compliance Deficiencies.  The last part of this order addressed additional pipeline-specific waiver requests and imposed various limited conditions on individual pipelines whose compliance submissions were found to be deficient in some way.  The deficiencies do not appear to be significant.

 

Copyright © 2016 by Concentric Energy Publications, Inc.  All rights reserved.

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