The Federal Energy Regulatory Commission last week unveiled afinal rule it hopes will put an end to the industry stalemate overthe hotly debated issues of intra-day nominations, operationalbalancing agreements (OBAs) and communications protocols.

With the Gas Industry Standards Board (GISB) deadlocked on theseissues, the Commission stepped in as referee and issued regulationsat its Wednesday meeting that would, among other things, give firmintra-day nominations priority over already nominated and scheduledinterruptible service. The new rules also would permit firmintra-day noms submitted on the day prior to gas flow to go intoeffect at 9 a.m. the following day.

Unlike with GISB, FERC’s proposals on these sticky issueselicited little resistance from the gas industry, includingpipelines. “…[N]early all of the commenters came together tosupport our decision to resolve these contentious issues,” remarkedChairman James Hoecker. Indeed, the industry even backed theCommission’s move to intercede in the process.

The Commission was “happy to referee” this dispute, whichrequired the resolution of some “fairly knotty issues,” Hoeckersaid. “We stand ready to do it again if it becomes necessary.” Hedoesn’t believe that “making these kinds of hard calls…denigratesin any way GISB’s important role.” While reaching “consensus amongGISB members has not always been [easy],” Hoecker said he believesthe organization nevertheless performs “extremely well.”

The final rule also calls for pipelines to enter into OBAs atall intrastate and interstate pipeline-to-pipeline interconnects.In addition, it would allow a pipeline’s shippers to tradeimbalances among themselves when such imbalances would have similaroperational impact on the pipe’s system.

Significantly, the new rule also would require that pipelinespost all information and conduct all business on a public Internetbeginning June 1, 1999. It calls for shippers to be notified ofcritical events, such as operational flow orders (OFOs), by postingthe information on pipeline web sites and via Internet e-mail, orby posting it to shippers’ Internet addresses. In addition, itspells out standards for displaying information on pipelines’ websites, and requires pipelines to retain electronic recordssummarizing transactions for three years.

The changes “will give parties more access to pertinentinformation in a much more user friendly fashion,” than the naturalgas pipelines’ electronic bulletin boards (EBBs), remarkedCommissioner Linda Breathitt. Some pipelines are concerned thatthis aspect of the ruling signals FERC’s intent to require afull-scale discarding of the EBB-based system within a year.

The final ruling is a “vindication” by FERC of the electronicdata interchange (EDI) system, which uses the Internet to movefiles, over that of EBB-based systems, according to Greg Lander,president of TransCapacity. Effective June 1, 1999, alltransactions currently performed on EBBs will be done over EDI, andEBBs will become back-up systems only, he said.

Currently, the pipelines provide EBBs to shippers for free, butthis basically will cease after June 1, 1999. If pipes choose tocontinue to provide the service, they either will have to chargethe user for the costs, have their shareholders bear the costs, orbuild a GISB-compliant EBB and maintain it according to certainstandards, Lander noted.

The EDI system puts shippers more in control and on equalfooting with pipelines, while EBBs relegated them to nothing morethan data entry clerks for pipes, he said. This is FERC’s way oftransitioning the industry to the computer-to-computer Internetmode.

The rule also calls for title transfer tracking. Pipelines don’thave to provide this service, but if they do, they can charge forit, Lander said. It also requires pipelines to coordinate and workwith third parties, such as TransCapacity, that provide titletransfer tracking.

Implementation of all the technical standards for intra-day nomsis anticipated by Sept. 1 of this year; by June 30 for OBA andimbalance-trading standards; and by Dec. 31 for critical-noticestandards, according to the Commission. Pipelines will be requiredto adopt and comply with standards for posting information on theirweb sites by the first day of the month following 90 days afterpublication of the order in the Federal Register.

Commissioner Vicky Bailey said FERC’s action in this case wasimportant “because it does demonstrate the positive role that theCommission can play in helping voluntary standards organizations,”in both the gas and electric industries. “It reflects the best of acollaborative process.”

Susan Parker

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