In an effort to further improve price transparency in natural gas markets, FERC last Thursday issued a new rule requiring intrastate gas pipelines involved in interstate services and Hinshaw pipelines to report more transportation and storage transaction data than they currently do and to do so four times annually.

The rule, which takes effect April 1, 2011, requires intrastate pipelines providing transportation services under Section 311 of the Natural Gas Policy Act of 1978 (NGPA) and Hinshaw pipelines operating under Section 1(c) of the Natural Gas Act to report more detailed transportation and storage transaction information than they currently report and to do so on a quarterly basis. Reports currently are filed on an annual or semi-annual basis. Both Section 311 and Hinshaws are intrastate pipelines that provide interstate services.

Under the NGPA, the Federal Energy Regulatory Commission can authorize an intrastate pipeline to transport natural gas “on behalf of” interstate pipelines or local distribution companies served by interstate pipelines under terms and conditions set by the Commission. A pipeline is a Hinshaw line if the interstate gas it transports is received and consumed within the boundary of the same state.

The Commission contends the quarterly reporting requirement for intrastates/Hinshaws will help shippers to make more informed purchasing decisions, and will improve the ability of both shippers and FERC to monitor actual transactions for evidence of market power or undue discrimination.

The rule is intended to close the gap between the more-rigorous reporting requirements for interstate natural gas pipelines and less-demanding requirements for intrastate and Hinshaw pipelines. While not entirely the same, the reporting requirements for intrastate pipelines and Hinshaw pipelines are said to be comparable to those for interstate pipelines as a result of the rule.

The new rule replaces the older “Form 549 Intrastate Pipeline Annual Transportation Report” with a new “Form 549D” on which the pipeline will be required to report: rates charged by the pipeline under each contract; receipt and delivery points and zones or segments covered by each contract; the quantity of natural gas the shipper is entitled to transport, store or deliver; the duration of the contract; and whether there is an affiliate relationship between the pipeline and the shipper.

The Commission also extended its cycle of periodic reviews of the rates charged by these pipelines to five years from three years.

In November 2008, FERC began an inquiry into whether the agency should require certain intrastate pipelines to post details of their transactions with individual shippers in a manner comparable to the reporting requirements that interstate gas pipeline must meet (see NGI, Nov. 24, 2008).

The inquiry arose from a request filed by SG Resources Mississippi LLC (SGRM), an interstate storage provider with market-based rates. SGRM sought a waiver of FERC’s regulations that require interstate pipes to post the rates charged in firm and interruptible transactions by the first nomination for service. It also sought a similar waiver on behalf of all interstate storage providers with market-based rates.

SGRM argued the mandatory disclosure of commercially sensitive pricing information provided prospective customers and competitors, especially those intrastate pipelines providing service under Section 311 of the NGPA, with an unfair competitive advantage. FERC denied both of SGRM’s requests.

However, the agency sought public comments on whether the disparate reporting requirements for interstate and NGPA Section 311 and Hinshaw pipelines have an adverse competitive effect on the interstate pipelines.

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