The Federal Energy Regulatory Commission issued a final rule Wednesday that seeks to expand the ability of releasing shippers to recall pipeline capacity from replacement shippers.

The rule, which will be implemented in two phases, directs interstate natural gas pipelines to make tariff filings by May 1 of this year to allow shippers to recall capacity at the evening nomination cycle, and to recall capacity that has not been scheduled by replacement shippers for use on that day. The tariff filings would take effect July 1.

Secondly, the new rulemaking calls for the North American Energy Standards Board to develop over the next six month standards for flowing-day or partial-day recalls. Industry comments on the standards will be due at the Commission on Oct. 1, and reply comments will be due Oct. 15.

“The object of the rule is to make more releases available,” a FERC staff member said, adding that local distribution companies — many of which still are the supplier of last resort, are reluctant to release capacity at all if they can’t recall it when needed.

Commissioner William Massey expressed some reservations about whether the new initiative would undercut reliability and damage liquidity in the secondary market, as some industry members fear. Chairman Pat Wood said he initially raised the same concerns with staff.

“I think what made me comfortable with that [rule] is that what, in fact, you’re doing here is creating more options for the broker capacity market. What you’re creating here is a more interruptible service,'” said Wood.

The rule says “when a releasing shipper [includes] a partial-day recall requirement in their release offer” that the service being offered to the replacement shipper “is akin to interruptible service,” the Commission staffer said. It also offers the replacement shipper the “same protection that the Commission has accorded interruptible shippers” in the event they are bumped by firm nominations, he noted. Specifically, it says no replacement shipper can be bumped unless they have had an opportunity to re-nominate their gas.

The FERC staff member also discounted a concern expressed by NiSource Inc. that the new rule could have a domino effect on gas markets, leaving some markets scrambling to meet customers needs in the wake of capacity recalls. “I think that the replacement shippers…have the opportunity to protect themselves [against this]. If they don’t want to enter into a release that has a partial-day recall requirement in it, they don’t have to. They can…pay more money for a release that doesn’t have this condition in it,” the staffer noted.

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