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FERC Declines to Rehear Gas-Power Scheduling Order No. 809

FERC has denied a request from a group of utilities and state regulators from Southwest states for rehearing of Order No. 809, which was issued earlier this year to revise regulations related to the scheduling of transportation service on interstate natural gas pipelines to better coordinate scheduling practices of the wholesale gas and electric industries [RM14-2].

Desert Southwest Pipeline Stakeholders (DSPS) -- the Arizona Corporation Commission, Arizona Public Service Co., El Paso Electric Co., Public Service Company of New Mexico, Salt River Project Agricultural Improvement and Power District, Tucson Electric Power Co. and UNS Gas, Inc. -- had objected to the Federal Energy Regulatory Commission's decision in the rule to maintain the no-bump rule.

FERC issued Order No. 809 in April (see Daily GPIApril 16, 2015), adopting two proposals submitted by the North American Energy Standards Board (NAESB) to revise the interstate natural gas nomination timeline and make conforming changes to their standards. The order moved the Timely Nomination Cycle deadline for scheduling gas transportation from 11:30 a.m. CCT to 1 p.m. CCT and added a third intraday nomination cycle during the gas operating day to help shippers adjust their scheduling to reflect changes in demand. A proposal to move the start of the gas day to 4 a.m. CCT was not included in the final rule.

A month later, DSPS requested a rehearing. DSPS argued that FERC erred in retaining the no-bump rule and in arbitrarily ignoring changed circumstances and new evidence they said demonstrates that there is no longer justification for providing interruptible shippers preference access to firm capacity.

The rule, which states that a shipper that is currently flowing gas cannot lose its capacity because another shipper with a higher priority (firm transportation) has decided to increase its receipt of gas, was hotly debated in the lead-up to adoption of Order No. 809 (see Daily GPIMarch 20, 2014July 31, 2013Aug. 24, 2012). Gas producers were generally in support of FERC's decision to maintain the rule (see Daily GPIDec. 2, 2014).

Among other things, DSPS argued that the no-bump rule precludes firm shippers from using their firm capacity rights to meet evening peak electric demands in the Desert Southwest.

But FERC was not swayed to rehear Order No. 809.

"We continue to find insufficient justification for revising the nationwide no-bump cycle and overturning the natural gas industry consensus that was achieved," FERC said. "As several commentators maintained, and as the Commission has previously recognized, interruptible shippers need some stability in the nomination process...retaining the no-bump rule cycle was strongly supported in the NAESB process and a consensus of the gas industry, as well as many in the electric industry, voted to maintain the No-Bump Rule in the last intraday cycle."

FERC also requested when it adopted Order No. 809 that the natural gas and electric industries, through NAESB, explore the potential for faster, computerized scheduling when shippers and confirming parties all submit electronic nominations and confirmations.

Last month, NAESB filed a report "indicating that due to the press of implementing the revised nomination standards by April 1, 2016, it would not begin the development of computerized scheduling standards until after that date," according to FERC. But, "while we recognized the time commitments in implementing the revised nomination timeline, the Commission requests that the natural gas and electric industries, through NAESB, begin considering the development of standards related to faster, computerized scheduling and file such standards or a report on the development of such standards with the Commission by Oct. 17, 2016," FERC said.

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