NGI The Weekly Gas Market Report
The leadership of the Gas Industry Standards Board’s (GISB) topdecision-making committee has been in the hands of the pipelinesand producers for a number of years, but the gavel has been passedto service companies and distributors in 1999. This changing of theguard has left some feeling uneasy as they wonder whether a radicalchange in direction is in store for the standards-setting group inthe year ahead.
There will be “a different flavor to the leadership,” concededJim Buccigross, counsel for software provider TransCapacity and thenew chairman of GISB’s 25-member executive committee. “This is thefirst time in a while that the services and LDCs have led,” hesaid, but he doesn’t anticipate a “fundamental change” in directionas a result.
In fact, Buccigross doubts his style of leadership will be thatmuch different from his predecessor Michael Bray, who stepped downas head of the GISB committee due to his decision to retire fromDuke Energy. “Like Bray, I hope to be able to bring people to thetable on issues.” Michael Novak, assistant general manager ofNational Fuel Gas Distribution, will be second-in-command on thepanel. He replaces Jerry Hahn, who retired from Texaco Natural Gas.
Buccigross sees some plusses to a service company chairing thecommittee that develops standards for the gas industry and setsGISB priorities. “We have strong feelings sometimes on which waythings should go,” but – unlike the various gas industry segments -“we’re not necessarily locked into [specific] positions by oureconomics…” As a service company, “we have to understand all ofthe various segments’ concerns,” he said. In the end, “clarity” ofnew standards is most important.
At the same time, however, Buccigross believes the job may be a”little more difficult” in some respects simply because he andNovak are new and represent different sectors of the gas industry.Some GISB members undoubtedly will wonder “who the [heck] are theseguys, where are they coming from,” he said in an interview withNGI.
In the upcoming year, the new chairman sees the organization”continuing” its development of standards for electronic bulletinboards (EBBs) that are accessed via the Internet. The executivecommittee already has passed standards on “the infrastructure [thetype of connection and look of the main screen] and nominationspart,” which are due to be ratified by GISB members within a fewweeks and implemented next September. “We will continue to setstandards on flowing gas, invoicing and capacity release.”
Other issues that the group hopes to set standards on in 1999are imbalance netting and trading, cross-contract ranking,long-term purchase and sales contracts, and operational flow orders(OFOs) and critical notices, Buccigross said. He doesn’t expect anyof the issues to trigger the same level of controversy thatsurrounded the debate over intra-day nominations and title-transfertracking. “Certainly there’ll be some compromise and give-and-takefrom the various segments of the industry, but I don’t see any ofthese being lightning rod issues.”
Nevertheless, there is one issue – the development of standardsfor FERC’s capacity-auction proposal – that could cause someheartburn for Buccigross and others in GISB. He conceded thestandards organization is deeply divided on this issue, with theopposition insisting it is a policy issue that GISB should stayclear of in 1999. But “depending on what the Commission does, they[the executive committee] may” have no other choice than to take itup. FERC hasn’t asked GISB to address the matter yet, but he isn’truling out the possibility.
Buccigross believes the gas industry would prefer GISB to assumesome kind of role in the issue. “Realistically…if the FERC says’we want to come up with some regulations and we’d like GISB to doit [the standards],’ kind of pragmatically people in the industrywould rather have a say in that and would rather have it throughGISB as opposed to…where FERC comes down from the mountain andsays ‘here are the regulations.'”
That aside, Buccigross thinks the most important GISBdevelopment in the upcoming year will be standards for the EBBInternet. These will provide shippers with a “common look and feel”to thepipeline EBBs accessed via the Internet. Shippers whoalready are doing transactions on the EBB Internet complain that,without standards, “it looks so much different on Pipeline A thanit looks on Pipeline B,” he said.
In addition, such standards would “open up electroniccommunications to a whole new class of shippers – that being thelow-volume kind of shipper” that can’t justify the costs associatedwith an electronic data interchange (EDI) system, Buccigross said.While EDI is ideally suited for the large shippers that do ahundred or more nominations a day, the EBB Internet is made toorder for smaller shippers that do “fewer than half a dozen” perday.
Developing a standardized long-term purchase and sales contract,similar to the standardized contract that exists for short-termtransactions, also will top GISB’s agenda in the upcoming year, henoted. Industry has been clamoring for a standardized format forlong-term contracts since last year. Now that GISB has finalizedthe contentious title-transfer tracking and intra-day nominationsissues, “maybe we’ll have more time to be able to look at that.”
GISB also plans to work on developing standards that wouldrequire pipelines to use the Internet to “broadcast” OFOs andcritical notices directly to affected shippers, Buccigross noted.Shippers no longer would have to search through pipelines’ EBBs fornotices that might affect them, he said, but rather would benotified by electronic mail. For further convenience, the E-mailcould be hooked up to a beeper or some other “real-time” system toalert shippers about OFOs when they’re out of their offices. TheGISB task force exploring the issue will meet for the first timelater this month, but still “I believe that’s something that can beaccomplished this year.”
Likewise, Buccigross has “every confidence” that standards forcross-contract ranking will be a reality by the end of the year.These would allow shippers that have “multiple contracts on apipeline to rank their nominations, their gas flow across thosecontracts, so in a situation where there’s not enough [capacity],they’ll be able to say ‘keep this one [contract] whole and havethis take the swing.”
He’s equally optimistic about standards for the trading ofimbalances by shippers on pipelines. “This will be standardized.They’ll be datasets. You’ll be able to do it electronically,”Buccigross said. “So if I’m running a positive imbalance and you’rerunning a negative imbalance, and it’s coming to the end of theaccounting period…we can come together and basically trade themso that in a perfect world we would both come up zero, but inreality we’ll both be able to minimize our imbalances.”
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