FERC has approved Tennessee Gas Pipeline’s request to use price indexes taken from Natural Gas Intelligence’s (NGI) Daily Gas Price Index for calculating cash-outs on its system, replacing indexes from Natural Gas Week. Also, instead of the six points currently referenced in its Rate Schedules LMS-MA and LMS-PA, the new form will include 12 receipt points.

Tennessee said the changes were requested by certain shippers and noted that “Natural Gas Intelligence publishes multiple region-specific indices, which reflect the market-determined pricing points prevailing on Tennessee’s system.”

Eight of the receipt region names are matched with corresponding listings in NGI. They are: Tennessee Line 500, Tennessee Line 800; Tenn Zone 4 200L, Tennessee Zone 4 313 Pool, Tennessee Zone 4 Marcellus, Tennessee Zone 5 200L and Tennessee Zone 6 200L.

Both Tennessee Zone 0 South and Tennessee Zone 0 North will use NGI’s Tennessee Zone 0 South listing because the North listing does not meet FERC’s liquidity requirements and the pipeline deems the South number a reasonable substitute.

Since NGI does not publish Tennessee Zone 2 and 3 quotes, those points will use a Columbia Gas index price. And because the NGI index for Tennessee Zone 5 300L does not have enough liquidity, Tennessee will use Texas Eastern M-3 for that point. For Tennessee Zone 6 300L (deficient liquidity), the NGI point used will be Transco Zone 6 NY.

The six current receipt points are Texas Offshore, Texas Onshore, Louisiana Onshore, Louisiana Offshore, Zones 2-4 Appalachia and Zones 5-6 New England.

Tennessee also proposes to use NGI’s daily indices, and to perform its own calculation of the weekly Pooling Area Price (PAP) for each receipt region instead of using NGI’s weekly published index prices. The weekly PAP for each receipt region will be equal to the simple arithmetic average of the region’s daily quotes. The pipeline is doing its own calculation because NGI averages the five weekday quotes without counting the fact that the Friday quote should be counted three times to account for Saturday and Sunday flows.

The changes “will better reflect the price of gas supply entering Tennessee’s pipeline system,” the pipeline said in its filing, which was approved on Monday (Dec. 1). Tennessee is aiming to incorporate the changes in its tariff by Feb. 1.