117 FERC ¶ 61,095 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Parts 38 and 284 

Standards for Business Practices for Interstate Natural Gas Pipelines 

Standards for Business Practices for Public Utilities 

(Docket Nos. RM96-1-027 and RM05-5-001) 

(October 25, 2006) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

SUMMARY: The Federal Energy Regulatory Commission (Commission) proposes to 

amend its open access regulations governing standards for business practices and 

electronic communications with interstate natural gas pipelines and public utilities. The 

Commission is proposing to incorporate by reference certain standards promulgated by 

the Wholesale Gas Quadrant (WGQ) and the Wholesale Electric Quadrant (WEQ) of the 

North American Energy Standards Board (NAESB). These standards will establish 

communication protocols between interstate pipelines and power plant operators and 

transmission owners and operators. Through this rulemaking, the Commission is seeking 

to improve coordination between the gas and electric industries in order to limit 

miscommunications about scheduling of gas-fired generators.
Docket Nos. RM96-1-027 and RM05-5-001 - 2 - 

DATES: Comments are due [insert date 45 days after publication in the FEDERAL 

REGISTER]

ADDRESSES: Comments and reply comments may be filed electronically via the 

eFiling link on the Commission's web site at www.ferc.gov. Documents created 

electronically using word processing software should be filed in the native application or 

print-to-PDF format and not in a scanned format. This will enhance document retrieval 

for both the Commission and the public. The Commission accepts most standard word 

processing formats and commenters may attach additional files with supporting 

information in certain other file formats. Attachments that exist only in paper form may 

be scanned. Commenters filing electronically should not make a paper filing. Service of 

rulemaking comments is not required. Commenters that are not able to file electronically 

must send an original and 14 copies of their comments to: Federal Energy Regulatory 

Commission, Office of the Secretary, 888 First Street, N.E., Washington, D.C., 20426. 

FOR FURTHER INFORMATION CONTACT: 

Marvin Rosenberg 

Office of Energy Markets and Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, DC 20426 

202-502-8292 

Kay Morice 

Office of Energy Markets and Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, DC 20426 

202-502-6507 
Docket Nos. RM96-1-027 and RM05-5-001 - 3 - 

Eric Winterbauer 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, DC 20426 

202-502-8329 

SUPPLEMENTARY INFORMATION:
Table of Contents

 Paragraph Numbers

I. Background .................................................................................................................... 3.

II. Discussion................................................................................................................... 11.

A. Incorporation of Standards by Reference............................................................... 11.

B. Additional Issues Raised by NAESB ..................................................................... 16.

1. Clarifications Regarding Gas Standards............................................................. 17.

a. Use of Gas Indices for Pricing Capacity Release Transactions ..................... 17.

b. Pipelines’ Ability to Permit Shippers to Choose Alternate Delivery Points . 19.

c. Changes to the Intraday Nomination Gas Schedule....................................... 22.

2. Clarifications Regarding Electric Standards....................................................... 24.

a. Standards Relating to RTO/ISO Scheduling.................................................. 24.

b. Other Electric Standards Issues...................................................................... 28.

III. Notice of Use of Voluntary Consensus Standards .................................................... 29.

IV. Information Collection Statement ............................................................................. 30.

V. Environmental Analysis ............................................................................................. 31.

VI. Regulatory Flexibility Act Certification ................................................................... 32.

VII. Comment Procedures ............................................................................................... 33.

VIII. Document Availability ........................................................................................... 36.
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

 

Standards for Business Practices for Docket No. RM96-1-027 

Interstate Natural Gas Pipelines 

Standards for Business Practices for Docket No. RM05-5-001 

Public Utilities 

 

NOTICE OF PROPOSED RULEMAKING 

(October 25, 2006)

1. The Federal Energy Regulatory Commission (Commission) proposes to 

amend parts 38 and 284 of its open access regulations governing standards for business 

practices and electronic communications with interstate natural gas pipelines and public 

utilities. The Commission is proposing to incorporate by reference certain standards 

promulgated by the Wholesale Gas Quadrant (WGQ) and the Wholesale Electric 

Quadrant (WEQ) of the North American Energy Standards Board (NAESB). These 

standards will establish communication protocols between interstate pipelines and power 

plant operators and transmission owners and operators. Through this rulemaking, the 

Commission is seeking to improve coordination between the gas and electric industries in 

order to limit miscommunications about scheduling of gas-fired generators. Improved 

communications should ensure reliability in both industries.

2. NAESB also filed a report with the Commission including, among other things, a 

list of issues regarding coordination between the gas and electric industries that NAESB 
Docket Nos. RM96-1-027 and RM05-5-001 - 2 - 

could not resolve. In particular, this report highlighted coordination problems between 

the gas industry and the scheduling practices of independent system operators (ISOs) and 

regional transmission organizations (RTOs). The Commission is concerned that, 

although organized markets often rely upon gas-fired generation to meet reliability 

requirements, the current scheduling processes of these market may not afford such 

generators the flexibility necessary to schedule their gas transactions effectively or to 

recover the full costs of such transactions, especially when gas prices are volatile. To 

address these issues, the Commission is establishing proceedings under section 206 of the 

Federal Power Act to examine whether ISOs and RTOs should be required to implement 

scheduling and compensation mechanisms to ensure that gas-fired generators can obtain 

gas when the gas-fired generation is necessary for reliability and that they are 

compensated appropriately when volatility in gas prices creates difficulty in recovering 

gas costs.

I. Background

3. NAESB is a non-profit, private standards development organization established in 

January 2002 to propose and adopt voluntary standards and model business practices 

designed to promote more competitive and efficient natural gas and electric service. 

Since 1995, NAESB and its predecessor, the Gas Industry Standards Board, have been 

accredited members of the American National Standards Institute (ANSI), complying 

with ANSI’s requirements that its standards reflect a consensus of the affected industries. 
Docket Nos. RM96-1-027 and RM05-5-001 - 3 - 

4. NAESB’s standards include business practices that streamline the transactional 

processes of the natural gas and electric industries, as well as communication protocols 

and related standards designed to improve the efficiency of communication within each 

industry. NAESB supports all four quadrants of the gas and electric industries—

wholesale gas, wholesale electricity, retail gas, and retail electricity—and recognizes the 

ongoing convergence of the gas and electric businesses by ensuring that its standards 

receive the input of all industry quadrants when appropriate. All participants in the gas 

and electric industries are eligible to join NAESB, belong to one or more quadrant(s), and 

participate in standards development. 

5. NAESB’s wholesale gas quadrant (WGQ) is composed of five industry segments: 

pipelines, producers, local distribution companies, end users, and services (including 

marketers and computer service companies). NAESB’s wholesale electric quadrant 

similarly includes five industry segments: transmission, generation, marketer/brokers, 

distribution/load serving entities, and end users. NAESB’s procedures ensure that all 

industry members can have input into the development of a standard, whether or not they 

are members of NAESB, and each standard NAESB adopts is supported by a consensus 

of the relevant industry segments. 

6. Since 1996, in Order No. 587 and subsequent orders, the Commission, through its 

notice-and-comment rulemaking process, adopted relevant gas standards by incorporating 
Docket Nos. RM96-1-027 and RM05-5-001 - 4 - 

these standards by reference into its regulations.1

 On April 25, 2006, the Commission by 

a similar process incorporated by reference the first set of NAESB electric standards.2

7. In January 2004, a cold snap highlighted the need for better coordination and 

communication between the gas and electric industries as coincident peaks occurred in 

both industries making the acquisition of gas and transportation by power plant operators 

more difficult. In response to this need, in early 2004, NAESB established a Gas-Electric 

Coordination Task Force to examine issues related to the interrelationship of the gas and 

electric industries and identify potential areas for improved coordination through 

standardization. Because of the importance of such coordination, the NAESB Board of 

Directors established a Gas-Electric Interdependency Committee in September 2004 to 

review coordination issues and identify potential areas for standards development. 

8. As a result of these efforts, on June 27, 2005, NAESB filed a status report with the 

Commission. The report included ten business practice standards jointly developed by 

the wholesale gas and electric quadrants, the first such collaboration between the two 

 1

 Standards For Business Practices Of Interstate Natural Gas Pipelines, Order 

No. 587, 61 FR 39053 (July 26, 1996), FERC Stats. & Regs. Regulations Preambles [July 

1996-December 2000] ¶ 31,038 (July 17, 1996). 

2

 Standards for Business Practices and Communication Protocols for Public 

Utilities, 71 FR 26199 (May 4, 2006), FERC Stats. & Regs. Regulations Preambles 

¶ 31,216 (Apr. 25, 2006). 
Docket Nos. RM96-1-027 and RM05-5-001 - 5 - 

quadrants. The standards, in general, address communication processes between 

pipelines, power plant operators, and transmission operators.3

9. Additionally, the report highlights 13 issues involving gas and electric 

interdependency. These issues relate to fundamental differences between the two 

industries, including differences in lead time to prepare for load fluctuations, differences 

in the precision of instrumentation, and differences in the “utility model” used in the 

electricindustry (in which generating capacity is planned for and built for anticipated 

future requirements) and the gas industry’s “market-driven model” (in which gas capacity 

is built only for those contracting for such capacity). 

10. On February 24, 2006, NAESB filed a final report with the Commission on the 

efforts of the Gas-Electric Interdependency Committee. Based on the 13 issues, the final 

report identified six potential areas where existing standards should be reexamined to 

determine whether new or updated business practices could improve communications 

between the gas and electric industries. In these six areas, the report makes requests to 

the Commission to clarify existing policies or identifies areas for standards development. 

 3

 On June 28, 2006, NAESB filed a report advising that the following permanent 

numbers have been assigned to these standards. The standards for the Wholesale Electric 

Quadrant are Gas/Electric Coordination Standards WEQ-011-0.1 through WEQ-011-0.3 

and WEQ-011-1.1 through WEQ-011-1.6. The standards for the Wholesale Gas 

Quadrant are: Additional Standards, Definitions 0.2.1 through 0.2.3 and Standards 0.3.11 

through 0.3.15. 
Docket Nos. RM96-1-027 and RM05-5-001 - 6 - 

Not all such standards development is supported by every segment of each industry, 

however. The requests for clarification include:

• Clarification of Commission orders regarding pipeline discounts and negotiated 

rates as relevant to the ability of shippers releasing capacity to price released 

capacity using gas price indices. 

• Clarification of Commission orders regarding the ability of pipelines to shift gas 

with primary firm transportation within a pipeline path without having to re-offer 

as secondary firm transportation service. 

Potential areas for standards development include: 

• Adding an additional gas intraday nomination cycle with bumping rights to 

provide more flexibility to shippers, including power generators, with firm 

transportation rights such that they can nominate for natural gas supporting their 

market clearing times. 

• Modifying the requirements for organized electric markets so that the markets 

clear in sufficient time to nominate within the existing gas nomination timelines. 

• Requiring gas-fired generators that bid into the day-ahead market to have the 

appropriate gas commercial arrangements to fulfill an accepted bid. 

• Developing the appropriate supporting definitions for new business practices for 

the Wholesale Electric Quadrant, including but not limited to definitions for: 

alternate fuel capability, usable alternate fuel capability, firm, transportation 

service, firm sales service, firm supply, and “must run” generator. 

II. Discussion

A. Incorporation of Standards by Reference

11. The Commission is proposing to incorporate by reference the NAESB WEQ and 

NAESB WGQ definitions and business practice standards providing for coordination and 

communication between natural gas pipelines and the various electric industry operators, 

including RTOs, ISOs and gas-fired power generators. Such coordination should help 

improve the reliability of both the gas and electric industries by ensuring that all parties 

have information relevant to their scheduling and dispatch. 
Docket Nos. RM96-1-027 and RM05-5-001 - 7 - 

12. The standards, for example, would require gas-fired power plant operators and 

pipelines to establish procedures to communicate material changes in circumstances that 

may affect hourly flow rates. These standards would ensure that pipelines have relevant 

planning information that will assist in maintaining the operational integrity and 

reliability of pipeline service, as well as providing gas-fired power plant operators with 

information as to whether hourly flow deviations can be honored. They would further 

improve communication by requiring pipelines to provide electric transmission operators, 

including ISOs and RTOs, and power plant operators to sign up to receive from 

connecting pipelines operational flow orders and other critical notices. These standards 

will ensure that operators of the electric grid can stay abreast of developments on gas 

pipelines that can affect the reliability of electric service. The standards require that, 

upon request, a gas-fired power plant operator must provide to the appropriate electric 

balancing authority or electric reliability coordinator pertinent information regarding its 

service levels for gas transportation (firm or interruptible) and for gas supply (firm, fixed 

or variable quantity, or interruptible). This information should assist reliability 

coordinators in assessing the relative reliability of various gas-fired generators.4

 4

 Adoption of these standards is in accordance with § 12(d) of the National 

Technology Transfer and Advancement Act of 1995, in which Congress requires federal 

agencies to use technical standards developed by voluntary consensus standards 

organizations, like the WGQ, as a means to carry out policy objectives or activities. Pub 

L. No. 104 113, §12(d), 110 Stat. 775 (1996), 15 U.S.C. § 272 note (1997). 
Docket Nos. RM96-1-027 and RM05-5-001 - 8 - 

13. To incorporate these standards by reference, the Commission is proposing to 

amend parts 38 and 284 of its regulations to include the appropriate standards.5

 The 

Commission is also proposing to amend section 38.1 so that it applies to gas-fired power 

plant owners and operators and to public utilities that own, operate or control facilities 

used to effectuate wholesale power sales. 

14. The Commission is not proposing that pipelines and public utilities make tariff 

filings to include these standards in their tariffs in this rulemaking. These standards 

would be included in later standard versions when NAESB updates its wholesale gas and 

electric standards and, if the Commission decides to incorporate these later standard 

versions into its regulations, pipelines and public utilities will then be required to include 

these standards in their tariffs. 

15. Four of the standards require pipelines, RTOs/ISOs and/or gas-fired power plant 

operators to establish procedures to communicate information with each other.6

 For 

instance, standard WEQ-011-1.2 requires pipelines and gas-fired power plant operators to 

establish procedures to communicate hourly gas-flow information. With respect to these 

standards, we propose to require each pipeline and relevant public utility to demonstrate 

 5

 The standards for the Wholesale Electric Quadrant are: Gas/Electric 

Coordination Standards WEQ-011-0.1 through WEQ-011-0.3 and WEQ-011-1.1 through 

WEQ-011-1.6. The standards for the Wholesale Gas Quadrant are: Additional 

Standards, Definitions 0.2.1 through 0.2.3 and Standards 0.3.11 through 0.3.15. 

6

These standards are WEQ-011-1.2 and WGQ Standard 0.3.12; WEQ-011-1.4; 

WEQ-011-1.5; and WEQ-011-1.6 and WGQ Standard 0.3.15. 
Docket Nos. RM96-1-027 and RM05-5-001 - 9 - 

compliance by filing a statement as to whether it has established the required procedures 

with each relevant entity on its system or taken appropriate action, as required by the 

standards. While the Commission expects that the parties would be able to negotiate 

acceptable provisions, if an intractable dispute should arise, the parties can submit the 

dispute to the Commission for resolution. This is similar to what the Commission has 

required in previous rulemaking proceedings.7

 

B. Additional Issues Raised by NAESB

16. NAESB identified six issues for which it requests clarification of existing 

Commission policy or puts forward potential areas for standards development that some 

industry participants believe might assist in resolving coordination problems between the 

gas and electric industries. These revisions and enhancements, however, did not 

command a consensus of the industries sufficient to pass as NAESB standards. We 

discuss below the two requests for clarification. We then discuss the issues for which 

NAESB requested guidance needs for to NAESB to deliberate on potential new 

standards. 

 7

 See Standards for Business Practices of Interstate Natural Gas Pipelines, 

85 FERC ¶ 61,371 (1998). In a similar situation (a requirement that pipelines enter into 

operation balancing agreements (OBAs) with interconnecting pipelines), rather than 

requiring pipelines to file their OBAs, the Commission required the pipelines to file a 

statement with the Commission certifying that they have complied with the requirement 

to enter into OBAs. 
Docket Nos. RM96-1-027 and RM05-5-001 - 10 - 

1. Clarifications Regarding Gas Standards

a. Use of Gas Indices for Pricing Capacity Release Transactions

17. NAESB has requested clarification of Commission policy with respect to capacity 

release transactions using gas price indices. Some in NAESB expressed concern that the 

current NAESB standards on capacity release are more restrictive on pricing beneath the 

maximum tariff rate than current Commission policy requires. They suggest that revision 

of these standards would be more consistent with Commission policy and would create 

an economic incentive for releasing shippers to provide more short-term capacity to the 

gas-fired generation market. This is because, with the prospect of a higher release value, 

releasing shippers can explore replacement capacity alternatives that otherwise would not 

be cost-effective. In this regard, NAESB requests clarification of the Commission’s 

February 27, 2004 Order in Panhandle8

 regarding the ability of releasing shippers to 

employ gas prices indices in pricing capacity release transactions. 

18. The Commission clarifies that, as it stated in Panhandle, releasing shippers should 

be free to offer the same type of pricing arrangements that the pipeline offers and, 

therefore, releasing shippers are free to use gas price indices in pricing released capacity 

so long as the rate paid by the replacement shipper does not exceed the maximum rate in 

the pipeline’s tariff. As the Commission stated in Northern, “rate formulas that produce 

varying rates during the term of an agreement are permissible as discounted rates, so long 

 8

 Panhandle Eastern Pipe Line Co., 106 FERC ¶ 61,194 at P 6 (2004). 
Docket Nos. RM96-1-027 and RM05-5-001 - 11 - 

as the rate remains within the range established by the maximum and minimum rates set 

forth in the pipeline's tariff.”9

 

b. Pipelines’ Ability to Permit Shippers to Choose Alternate Delivery 

Points

19. NAESB requests clarification regarding the ability of pipelines to permit shippers 

to shift gas deliveries from a primary to a secondary delivery point when a pipeline 

constraint occurs upstream of both points. Such changes would make it easier for 

shippers to redirect gas supplies to generators during periods when capacity is scarce. 

NAESB provides, as an example, that a customer has 100 dekatherms scheduled to flow 

from a primary receipt point through the posted point of restriction to a primary delivery 

point. Under the same contract, the customer then requests a nomination change to move 

50 of the 100 dekatherms to a secondary delivery point that is outside its transportation 

path but still through the posted point of restriction. 

20. In Order No. 637-B, the Commission provided that pipelines must implement 

within-the-path scheduling under which a shipper seeking to use a secondary delivery 

point within its scheduling path has priority over another shipper seeking to use the same 

delivery point but that point is outside of its transportation path.10 The Commission 

posited an example in which Shipper 1 (with a primary delivery point at A) and Shipper 2 

 9

 Northern Natural Gas Co., 105 FERC ¶ 61,299 at P 17 (2003). 

10 Regulation of Short-Term Natural Gas Transportation Services, 92 FERC 

¶ 61,062 at 61,168-70 (2000). 
Docket Nos. RM96-1-027 and RM05-5-001 - 12 - 

(with a primary delivery point downstream at C) pay the same rate in the zone, and both 

shippers are seeking to change delivery points to point B. The Commission found that 

Shipper 2 should receive a higher priority over mainline capacity to point B than Shipper 

1, because point B is within Shipper 2's path. 

21. The scenario posed by NAESB is a slight variation of the within-the-path 

scheduling as described in Order No. 637-B. Although the shipper has scheduled 

capacity through a posted point of constraint, the secondary delivery point it seeks to use 

is outside of its transportation path. In most cases, it would be reasonable to permit the 

reassignment as posited by NAESB, since the shipper seeking to redesignate delivery 

points already has a transportation contract with primary points through the posted 

constraint point and has scheduled gas through that point so that reallocating gas to a 

different delivery point would not pose an operational problem. The only possible caveat 

would be if the shipper (Shipper 1) seeks to redesignate a secondary delivery point 

(outside its path) that is also being requested by another shipper, and the delivery point is 

within the path of the Shipper 2. If both secondary nominations to that point cannot be 
Docket Nos. RM96-1-027 and RM05-5-001 - 13 - 

accepted, as in the case of the example above, Shipper 2, with a contract path through the 

secondary point, would have priority. 

c. Changes to the Intraday Nomination Gas Schedule

22. NAESB suggests a review of the possibility of adding an additional intraday 

nomination cycle with bumping rights to provide more flexibility to shippers, including 

power generators, with firm transportation rights such that they can nominate for natural 

gas supporting their market clearing times. 

23. Any standards that would allow better coordination between scheduling of gas and 

electric markets would be of benefit to both industries, and we encourage NAESB to 

continue its efforts to develop such standards. With respect to intra-day nominations, the 

Commission’s regulations provide that firm transportation capacity must be accorded 

scheduling priority over interruptible transportation capacity.11 At the same time, 

however, the Commission has recognized the interest of interruptible shippers in 

achieving business certainty by making the last intra-day nomination opportunity one in 

which firm nominations do not bump interruptible nominations: 

making the third intra-day nomination non-bumping creates a fair 

balance between firm shippers, who will have had two opportunities 

to reschedule their gas, and interruptible shippers and will provide 

some necessary stability in the nomination system, so that shippers 

 11 18 CFR 284.12(b)(1)(i)(A)(2006). 
Docket Nos. RM96-1-027 and RM05-5-001 - 14 - 

can be confident by mid-afternoon that they will receive their 

scheduled flows.”12

However, within the confines of these policies, NAESB may consider whether changes to 

existing intra-day schedules can better provide for coordination between gas and electric 

scheduling. For instance, the current NAESB standards require intra-day nominations to 

be submitted by 10 a.m. (bumping) and 5 p.m. (non-bumping). There is no reason why 

another bumping intra-day nomination opportunity could not be introduced between these 

two or that the timing of these intra-day nomination opportunities could not be adjusted 

to better coordinate with electric scheduling. 

2. Clarifications Regarding Electric Standards

a. Standards Relating to RTO/ISO Scheduling

24. NAESB has considered, but has been unable to agree upon, modifications to the 

routine scheduling of ISO and RTO markets (not in an emergency) so that the markets 

clear in sufficient time to nominate within the existing gas nomination timelines. It also 

considered whether standards should be developed to require generators that offer into 

the day-ahead market to have the appropriate gas commercial arrangements to fulfill the 

needed obligations. As NAESB states, the disconnect between gas and electric schedules 

leaves some generators two options: either a) purchase and nominate gas transportation 

on a timely basis and risk not having their bid subsequently clear the power market or, b) 

 12 Standards for Business Practices of Interstate Natural Gas Pipelines, Order No. 

587-G, 63 FR 20072 (Apr. 23, 1998), FERC Stats. & Regs. Regulations Preambles 

¶ 31,062 at 30,672 (Apr. 16, 1998). 
Docket Nos. RM96-1-027 and RM05-5-001 - 15 - 

wait to see if their bid clears the power market and risk relying upon the intraday gas 

transportation nominations. 

25. The Commission agrees that these are serious issues, particularly during periods of 

coincident peak use in the electric and gas industries. RTOs and ISOs frequently 

consider gas-fired generation to be necessary to maintain reliability. Yet, especially 

during periods when both electricity and gas are in short supply, gas-fired generators may 

have difficulty buying gas and transportation, because the RTOs’ and ISOs’ scheduling 

process does not match the gas process. Moreover, if the gas-fired generator does submit 

bids into the RTO/ISO market based on current gas prices, those prices may change 

significantly during periods with volatile gas prices by the time the RTO or ISO calls 

upon the generator to run.13 

26. Because of the serious repercussions on the electric market of these problems, the 

Commission is concurrently opening section 206 proceedings to examine the RTO and 

ISO scheduling processes during emergency conditions. These proceedings are intended 

to ensure that the RTOs and ISOs have procedures in place during emergencies to permit 

better synchronization of their markets with the gas market and to ensure that generators 

making appropriate bids into the RTO and ISO markets are able to recover their 

prudently incurred costs. 

 13 If the gas-fired generator seeks to hedge its gas prices, and is not dispatched, it 

may be unable to recover its gas costs. 
Docket Nos. RM96-1-027 and RM05-5-001 - 16 - 

27. The NAESB report raised the issue of whether to develop standards regarding the 

appropriate commercial relationships that generators must have in bidding into day ahead 

markets, so that they have the appropriate gas commercial arrangements to fulfill the 

needed obligations. Some of the objections to such an effort, NAESB notes, are that it 

would interfere with company’s risk management strategies, and that reliability issues 

should be addressed by NERC. We agree that business practice standards requiring, for 

instance, that gas-fired generators have firm gas supply or gas transportation contracts 

would go beyond the scope of business practices. Instead of mandating commercial 

relationships, the section 206 proceedings will focus on ensuring that generators in 

organized markets can synchronize their gas and electric scheduling and can receive 

appropriate compensation for prudently incurred costs if gas prices deviate significantly 

from those that could have been expected at the time they submitted their bid. 

b. Other Electric Standards Issues

28. NAESB also suggests that supporting definitions for new business practices could 

be developed for the electric industry, including but not limited to definitions for: 

alternate fuel capability, usable alternate fuel capability, firm transportation service, firm 

sales service, firm supply, and “must run” generator. The report is not clear as to what 

affect such definitions would have on the operation of the electric grid, or what business 

practices would be affected. Consequently, we will not at this time provide guidance on 

whether such definitions should be developed. 
Docket Nos. RM96-1-027 and RM05-5-001 - 17 - 

III. Notice of Use of Voluntary Consensus Standards

29. In section 12(d) of the National Technology Transfer and Advancement Act of 

1995, Congress affirmatively requires federal agencies to use technical standards 

developed by voluntary consensus standards organizations, like NAESB, as the means to 

carry out policy objectives or activities unless use of such standards would be 

inconsistent with applicable law or otherwise impractical.14 NAESB approved the 

standards under its consensus procedures. Office of Management and Budget Circular 

A-119 (§ 11) (February 10, 1998) provides that federal agencies should publish a request 

for comment in a NOPR when the agency is seeking to issue or revise a regulation 

proposing to adopt a voluntary consensus standard or a government-unique standard. In 

this NOPR, the Commission is proposing to incorporate by reference voluntary consensus 

standards developed by the WGQ and WEQ. 

IV. Information Collection Statement

30. The following collections of information contained in this proposed rule have been 

submitted to the Office of Management and Budget (OMB) for review under section 

3507(d) of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(d). The Commission 

solicits comments on the Commission's need for this information, whether the 

information will have practical utility, the accuracy of the provided burden estimates, 

ways to enhance the quality, utility, and clarity of the information to be collected, and any 

 14 Pub L. No. 104-113, §12(d), 110 Stat. 775 (1996), 15 U.S.C. §272 note (1997). 
Docket Nos. RM96-1-027 and RM05-5-001 - 18 - 

suggested methods for minimizing respondents' burden, including the use of automated 

information techniques. The following burden estimates include the costs to implement 

the WEQ's and WGQ’s definitions and business practice standards providing for 

coordination and which will establish communication protocols between interstate natural 

gas pipelines and power plant operators and transmission owners and the various electric 

industry operators. The burden estimates are primarily related to start-up to implement 

these standards and regulations and will not result in ongoing costs. 

Data Collection No. of 

Respondents 

No. of Responses 

Per Respondent 

Hours Per 

Response 

Total No. of 

Hours 

FERC-549C 93 1 20 1,860

FERC-717 220 1 33 7,260

Totals 9,120

Total Annual Hours for Collection 

(Reporting and Recordkeeping, (if appropriate)) = 9,120 

Information Collection Costs: The Commission seeks comments on the costs to 

comply with these requirements. It has projected the average annualized cost for all 

respondents to be the following:15

 15 The total annualized cost for the two information collections is $ 1,368,000. 

This number is reached by multiplying the total hours to prepare a response (hours) by an 

hourly wage estimate of $150 (a composite estimate that includes legal, technical and 

support staff rates). $1,368,000= $150 x 9,120.
Docket Nos. RM96-1-027 and RM05-5-001 - 19 - 

 FERC-549C FERC-717 

Annualized Capital/Startup Costs $279,000 $1,089,000 

Annualized Costs (Operations & Maintenance) N/A N/A

Total Annualized Costs $279,000 $ 1,089,000

31. OMB regulations16 require OMB to approve certain information collection 

requirements imposed by agency rule. The Commission is submitting notification of this 

proposed rule to OMB. These information collections are mandatory requirements. 

Title: Standards for Business Practices of Interstate Natural Gas Pipelines 

 (FERC-549C) 

Standards for Business Practices and Communication Protocols for Public 

Utilities (FERC-717) (formerly Open Access Same Time Information 

System) 

Action: Proposed collections 

OMB Control No.: 1902-0174 and 1902-0173 

 

Respondents: Business or other for profit, (Public Utilities and Natural Gas 

Pipelines (Not applicable to small business.)) 

Frequency of Responses: One-time implementation (business procedures, 

capital/start-up) 

32. Necessity of Information: This proposed rule, if implemented, would upgrade the 

Commission's current business practice and communication standards to include 

standardized communication protocols between interstate pipelines and power plant 

operators and transmission owners and operators. The implementation of these standards 

 16 5 CFR 1320.11. 
Docket Nos. RM96-1-027 and RM05-5-001 - 20 - 

and regulations is necessary to improve coordination between the gas and electric 

industries, to limit miscommunications about scheduling of gas-fired generators and to 

improve the reliability in both industries. 

33. The implementation of these data requirements will help the Commission carry 

out its responsibilities under the Federal Power Act and Natural Gas Act of promoting the 

efficiency and reliability of the electric and gas industries' operations. The Commission's 

Office of Energy Markets and Reliability will use the data for general industry oversight. 

34. Internal Review: The Commission has reviewed the requirements pertaining to 

business practices and electronic communication of public utilities and natural gas 

pipelines and made a preliminary determination that the proposed revisions are necessary 

to establish more efficient coordination between the gas and electric industries. 

Requiring such information ensures both a common means of communication and 

common business practices to limit miscommunication for participants engaged in the 

sale of electric energy at wholesale and the transportation of natural gas. These 

requirements conform to the Commission's plan for efficient information collection, 

communication, and management within the electric power and natural gas pipeline 

industries. The Commission has assured itself, by means of its internal review, that there 

is specific, objective support for the burden estimates associated with the information 

requirements. 

35. Interested persons may obtain information on the reporting requirements by 

contacting the following: 
Docket Nos. RM96-1-027 and RM05-5-001 - 21 - 

Federal Energy Regulatory Commission, Attn: Michael Miller, Office of the Executive 

Director, 888 First Street, N.E., Washington, DC 20426 Tel: (202) 502-8415 / Fax: (202) 

273-0873, Email: michael.miller@ferc.gov. 

36. Comments concerning the collection of information(s) and the associated burden 

estimate(s), should be sent to the contact listed above and to the Office of Management 

and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503 

[Attention: Desk Officer for the Federal Energy Regulatory Commission, phone: 

(202) 395-7856, fax: (202) 395-7285]. 

V. Environmental Analysis

37. The Commission is required to prepare an Environmental Assessment or an 

Environmental Impact Statement for any action that may have a significant adverse effect 

on the human environment.17 The Commission has categorically excluded certain actions 

from these requirements as not having a significant effect on the human environment.18 

The actions proposed here fall within categorical exclusions in the Commission's 

regulations for rules that are clarifying, corrective, or procedural, for information 

gathering, analysis, and dissemination, and for sales, exchange, and transportation of 

 17Regulations Implementing the National Environmental Policy Act, Order No. 

486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 

(1987). 

1818 CFR 380.4(2005). 
Docket Nos. RM96-1-027 and RM05-5-001 - 22 - 

natural gas and electric power that requires no construction of facilities.19 Therefore, an 

environmental assessment is unnecessary and has not been prepared in this NOPR. 

VI. Regulatory Flexibility Act Certification

38. The Regulatory Flexibility Act of 1980 (RFA)20 generally requires a description 

and analysis of final rules that will have significant economic impact on a substantial 

number of small entities. The regulations proposed here impose requirements only on 

interstate pipelines and public utilities, the majority of which are not small businesses, 

and would not have a significant economic impact. These requirements are, in fact, 

designed to benefit all customers, including small businesses. Accordingly, pursuant to 

section 605(b) of the RFA, the Commission hereby certifies that the regulations proposed 

herein will not have a significant adverse impact on a substantial number of small 

entities. 

VII. Comment Procedures

39. The Commission invites interested persons to submit comments on the matters and 

issues proposed in this notice to be adopted, including any related matters or alternative 

proposals that commenters may wish to discuss. Comments are due [45 days from 

publication in the FEDERAL REGISTER]. Comments must refer to Docket Nos. 

RM05-28-000, RM96-1-027, and RM05-5-001 and must include the commenter’s name, 

 19See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5), 380.4(a)(27)(2005). 

20 5 U.S.C. 601-612(2006). 
Docket Nos. RM96-1-027 and RM05-5-001 - 23 - 

the organization they represent, if applicable, and their address in their comments. 

Comments may be filed either in electronic or paper format. 

40. Comments may be filed electronically via the eFiling link on the Commission's 

web site at http://www.ferc.gov. The Commission accepts most standard word 

processing formats and commenters may attach additional files with supporting 

information in certain other file formats. Commenters filing electronically do not need to 

make a paper filing. Commenters that are not able to file comments electronically must 

send an original and 14 copies of their comments to: Federal Energy Regulatory 

Commission, Office of the Secretary, 888 First Street, N.E., Washington, DC, 20426. 

41. All comments will be placed in the Commission's public files and may be viewed, 

printed, or downloaded remotely as described in the Document Availability section 

below. Commenters on this proposal are not required to serve copies of their comments 

on other commenters. 

VIII. Document Availability

42. In addition to publishing the full text of this document in the Federal Register, the 

Commission provides all interested persons an opportunity to view and/or print the 

contents of this document via the Internet through FERC's Home Page 

(http://www.ferc.gov) and in FERC's Public Reference Room during normal business 

hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, N.E., Room 2A, 

Washington D.C. 20426. 
Docket Nos. RM96-1-027 and RM05-5-001 - 24 - 

43. From FERC's Home Page on the Internet, this information is available in eLibrary. 

The full text of this document is available in eLibrary both in PDF and Microsoft Word 

format for viewing, printing, and/or downloading. To access this document in eLibrary, 

type the docket number excluding the last three digits of this document in the docket 

number field. 

44. User assistance is available for eLibrary and the FERC's website during our 

normal business hours. For assistance contact FERC Online Support at 

FERCOnlineSupport@ferc.gov or toll-free at (866) 208-3676, or for TTY, contact (202) 

502-8659. 

List of subjects

18 CFR Part 284

Incorporation by reference, Natural gas, Reporting and recordkeeping requirements. 

18 CFR Part 38

Conflict of interests, Electric power plants, Electric utilities, Incorporation by reference, 

Reporting and recordkeeping requirements 

 

By direction of the Commission. 

 Magalie R. Salas, 

 Secretary. 
Docket Nos. RM96-1-027 and RM05-5-001 - 25 - 

 In consideration of the foregoing, the Commission proposes to amend parts 38 and 

284, Chapter I, Title 18, Code of Federal Regulations, as follows: 

PART 38 – BUSINESS PRACTICE STANDARDS AND COMMUNICATION 

PROTOCOLS FOR PUBLIC UTILITIES 

1. The authority citation for part 38 continues to read as follows: 

Authority: 16 U.S.C. 791-825r, 2601-2645; 31 U.S.C. 9701; 42 U.S.C. 7101-

7352. 

2. Section 38.1 is revised to read as follows: 

§ 38.1 Applicability. 

This part applies to any public utility that owns, operates, or controls facilities 

used for the transmission of electric energy in interstate commerce or for the sale of 

electric energy at wholesale in interstate commerce and to any non-public utility that 

seeks voluntary compliance with jurisdictional transmission tariff reciprocity conditions. 

3. Section 38.2 is amended by adding new paragraph (a)(8) to read as follows: 

§ 38.2 Incorporation by reference of North American Energy Standards Board 

Wholesale Electric Quadrant standards. 

(a) * * * 

(8) Gas/Electric Coordination Standards including the WEQ standards contained in Final 

Action R04021 (August 15, 2005). 

 * * * * * 
Docket Nos. RM96-1-027 and RM05-5-001 - 26 - 

PART 284 -- CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS 

UNDER THE NATURAL GAS POLICY ACT OF 1978 AND RELATED 

AUTHORITIES 

4. The authority citation for part 284 continues to read as follows: 

Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352; 43 U.S.C. 

1331-1356. 

5. In section 284.12, paragraph (a)(1)(i) is revised to read as follows: 

§ 284.12 Standards for pipeline business operations and communications. 

 (a) * * * 

 (1) * * * 

 (i) Additional Standards (General Standards and Creditworthiness Standards) 

(Version 1.7, December 31, 2003) and the WGQ standards contained in Final Action 

R04021 (August 15, 2005). 

* * * * *