UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Parts 38 and 284 

(Docket Nos. RM96-1-027 and RM05-5-001; Order No. 698) 

Standards for Business Practices for Interstate Natural Gas Pipelines; Standards for 

Business Practices for Public Utilities 

(Issued June 25, 2007) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Final Rule. 

SUMMARY: The Federal Energy Regulatory Commission (Commission) is amending 

its open access regulations governing standards for business practices and electronic 

communications with interstate natural gas pipelines and public utilities. The 

Commission is incorporating 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). Through this rulemaking, the 

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

order to improve communications about scheduling of gas-fired generators. 

EFFECTIVE DATE: This rule will become effective [insert date 30 days after 

publication in the FEDERAL REGISTER]. Natural gas pipelines and public utilities 

are required to implement these standards and file a statement demonstrating compliance 

by November 1, 2007. 
Docket Nos. RM96-1-027 and RM05-5-001 - 2 - 

FOR FURTHER INFORMATION CONTACT: 

Michael Goldenberg 

Office of the General Counsel 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, DC 20426 

202-502-8685 

Kay Morice 

Office of Energy Markets and Reliability 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, DC 20426 

202-502-6507 

SUPPLEMENTARY INFORMATION: 
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

Standards for Business Practices for 

 Interstate Natural Gas Pipelines 

Standards for Business Practices for 

 Public Utilities 

Docket Nos. RM96-1-027 

RM05-5-001 

ORDER NO. 698 

FINAL RULE 

TABLE OF CONTENTS

 Paragraph Numbers

I. Background .................................................................................................................... 2.

II. Discussion................................................................................................................... 10.

A. Incorporation by Reference of NAESB Standards ................................................ 10.

1. Terminology ...................................................................................................... 17.

2. WEQ Standard 011-0.1/WGQ Standard 0.2.1.................................................... 22.

3. WEQ Standard 011-1.2/WGQ Standard 0.3.12.................................................. 24.

4. WEQ Standard 011-1.3/WGQ Standard 0.3.13.................................................. 28.

5. WEQ Standard 011-1.4 and WGQ Standard 0.3.14........................................... 35.

6. WEQ Standard 011-1.5....................................................................................... 37.

7. WEQ Standard 011-1.6/WGQ Standard 0.3.15.................................................. 42.

8. Additional Issue.................................................................................................. 48.

B. Additional Issues Raised by NAESB ..................................................................... 50.

1. Use of Gas Indices for Pricing Capacity Release Transactions ......................... 51.

2. Pipelines’ Ability to Permit Shippers to Choose Alternate Delivery Points...... 58.

3. Changes to the Intraday Nomination Gas Schedule ........................................... 64.

III. Implementation Dates and Procedures ...................................................................... 70.

IV. Notice of Use of Voluntary Consensus Standards .................................................... 71.

V. Information Collection Statement .............................................................................. 72.
Docket Nos. RM96-1-027 and RM05-5-001 ii 

VI. Environmental Analysis ............................................................................................ 78.

VII. Regulatory Flexibility Act ....................................................................................... 79.

VIII. Document Availability ........................................................................................... 80.

IX. Effective Date and Congressional Notification......................................................... 82.
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Before Commissioners: Joseph T. Kelliher, Chairman; 

 Suedeen G. Kelly, Marc Spitzer, 

 Philip D. Moeller, and Jon Wellinghoff. 

Standards for Business Practices for 

 Interstate Natural Gas Pipelines 

Standards for Business Practices for 

 Public Utilities 

Docket Nos. RM96-1-027 

RM05-5-001 

ORDER NO. 698 

FINAL RULE 

(Issued June 25, 2007) 

1. The Federal Energy Regulatory Commission (Commission) is amending 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 incorporating by reference certain standards promulgated by the North 

American Energy Standards Board (NAESB).1

 Incorporation by reference of these 

standards will establish communication protocols between interstate pipelines and power 

plant operators and transmission owners and operators. This will help improve 

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

 1

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

Coordination Standards WEQ-001-0.1 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 - 2 - 

about scheduling of gas-fired generators. Improved communications should enhance 

reliability in both industries. 

I. Background

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

January 2002 to develop 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. 

3. 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. 

4. NAESB’s Wholesale Gas Quadrant (WGQ) is composed of five industry 

segments: pipelines, producers, local distribution companies, end users, and services 
Docket Nos. RM96-1-027 and RM05-5-001 - 3 - 

(including marketers and computer service companies). NAESB’s Wholesale Electric 

Quadrant (WEQ) now includes six industry segments: transmission, generation, 

marketer/brokers, distribution/load serving entities, end users, and independent grid 

planners/operators. 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. 

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

notice-and-comment rulemaking process, adopted relevant gas standards by incorporating 

these standards by reference into its regulations.2

 On April 25, 2006, the Commission by 

a similar process incorporated by reference the first set of NAESB electric standards.3

6. 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 

 2

 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). 

3

 Standards for Business Practices and Communication Protocols for Public 

Utilities, Order No. 676, 71 FR 26199 (May 4, 2006), FERC Stats. & Regs. ¶ 31,216 

(Apr. 25, 2006). 
Docket Nos. RM96-1-027 and RM05-5-001 - 4 - 

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. 

7. 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,4

 the first such collaboration between the two 

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

pipelines, power plant operators, and transmission operators.5

8. Additionally, the report highlighted 13 issues involving gas and electric 

interdependency. On February 24, 2006, NAESB filed a final report (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 Commission guidance 

 4

 Seven of these ten standards apply to both the gas and electric industries. 

5

 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 - 5 - 

could assist NAESB in developing new or updated business practices to improve 

coordination between the gas and electric industries. 

9. On October 25, 2006, the Commission issued a Notice of Proposed Rulemaking 

(NOPR)6

 that proposed to incorporate by reference the WEQ’s standards, Gas/Electric 

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

WEQ-011.1.6 and the WGQ’s standards, Additional Standards, Definitions 0.2.1 through 

0.2.3 and Standards 0.3.11 through 0.3.15. The Commission also provided guidance on 

the six areas of potential standards development addressed by NAESB. Fifteen 

comments7

 and one reply comment were filed.8

 6

 Standards for Business Practices for Interstate Natural Gas Pipelines; Standards 

for Business Practices for Public Utilities, 71 Fed. Reg. 64,655 (Nov. 3, 2006). 

7

 Those filing comments are: the ISO/RTO Council (IRC), the Interstate Natural 

Gas Association of America (INGAA), ISO New England (ISO-NE), NiSource Gas 

Transmission and Storage (NiSource), FPL Energy, LLC (FPL Energy), Electric Power 

Supply Association (EPSA), Tennessee Valley Authority (TVA), Florida Cities, El Paso 

Corporation Pipeline Group (El Paso), Salt River Project Agricultural Improvement and 

Power District (Salt River), Natural Gas Supply Association (NGSA), Duke Energy Gas 

Transmission, LLC (Duke), American Gas Association (AGA), the Carolina Gas 

Transmission Corporation (Carolina Gas), and Dominion Resources, Inc. (Dominion). 

8

 AGA filed reply comments. 
Docket Nos. RM96-1-027 and RM05-5-001 - 6 - 

II. Discussion

A. Incorporation by Reference of NAESB Standards

10. The Commission is amending parts 38 and 284 of its regulations to incorporate by 

reference the NAESB WEQ and WGQ definitions and business practice standards 

providing for coordination and communication between natural gas pipelines and the 

various electric industry operators, including Regional Transmission Organizations 

(RTOs), Independent System Operators (ISOs) and gas-fired generators. The 

Commission also is amending section 38.1 so that it applies to public utilities that own, 

operate or control facilities used to effectuate wholesale power sales. 

11. Pipelines and public utilities are required to implement these standards by 

November 1, 2007. However, pipelines and public utilities are not required to make tariff 

filings to include these standards in their tariffs at this time. These standards will be 

included in tariffs when the pipelines and utilities file to incorporate into their tariffs the 

next revised version of the NAESB standards. However, for the two standards requiring 

communication procedures to be established,9

 the Commission is requiring pipelines and 

public utilities to demonstrate compliance by filing a statement by November 1, 2007, as 

to whether they have established the required procedures. 

 9

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

Standard 011-1.6/WGQ Standard 0.3.15. 
Docket Nos. RM96-1-027 and RM05-5-001 - 7 - 

12. The coordination and communication required by these standards will help 

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

have information necessary for the scheduling and dispatch of natural gas-fired 

generation, and for the scheduling of the natural gas transportation necessary to supply 

fuel to these generators. 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 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. 

13. The standards further improve communication by requiring electric transmission 

operators and power plant operators to sign up to receive from connecting pipelines 

operational flow orders and other critical notices. These standards 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 independent 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. 
Docket Nos. RM96-1-027 and RM05-5-001 - 8 - 

14. A consensus of the industry considered this language in NAESB’s balanced 

process beginning in 2004 and leading up to NAESB’s filing on June 27, 2005. All 

parties were welcome to participate in this process and participation was broad. No party 

expresses concern or otherwise indicates that NAESB’s process was flawed. 

15. As the Commission found in Order Nos. 587 and 676, adoption of consensus 

standards is appropriate because the consensus process helps ensure the reasonableness of 

the standards by requiring that the standards draw support from a broad spectrum of all 

segments of the industry. Moreover, since the industry itself has to conduct business 

under these standards, the Commission's regulations should reflect those standards that 

have the widest possible support. In section 12(d) of the National Technology Transfer 

and Advancement Act of 1995 (NTT&AA), Congress affirmatively requires federal 

agencies to use technical standards developed by voluntary consensus standards 

organizations, like NAESB, as means to carry out policy objectives or activities.10

16. A majority of commenters support the Commission’s goal of increased 

communication between the gas and electric industries, and therefore do not object to 

incorporation of the standards into the Commission’s regulations.11 Dominion states that 

the communication requirements are important, and asks that the Commission continue to 

 10 Pub L. No. 104-113, §12(d), 110 Stat. 775 (1996), 15 U.S.C. §272 note (1997). 

11 E.g., AGA, Carolina Gas, Dominion, Duke, El Paso, EPSA, Florida Cities, FPL 

Energy, INGAA, IRC, NiSource, Salt River, and TVA. 
Docket Nos. RM96-1-027 and RM05-5-001 - 9 - 

develop policies that provide for even greater levels of gas-electric coordination. Some 

participants, while not objecting to the standards, raise concerns and suggest changes to 

the language. These issues are addressed below. 

1. Terminology 

Comments

17. IRC comments that NAESB’s standards use a number of terms not commonly 

used in the electric industry (such as “Power Plant Operator”) and suggests that the 

Commission direct NAESB to adopt the terminology in the North American Electric 

Reliability Council (NERC) Functional Model, which contains a detailed set of functional 

definitions, in order to eliminate any potential for confusion.12 

18. IRC also states that as currently drafted, the standards appear to apply terms 

inconsistently, noting that the standards appear to substitute the term “independent 

Balancing Authority” for ISOs/RTOs in some instances. IRC argues that the NAESB 

standards require ISOs/RTOs to bear significant responsibilities, but do not appear to 

require balancing authorities other than ISOs/RTOs or certain other independent entities 

to carry out responsibilities under the standards. IRC also notes that the standards 

include references to other NAESB standards that are not specifically identified, i.e.

 12 IRC Comments at 2. The “functional definitions” referred to by IRC are 

available on the website of the North American Electric Reliability Council at 

http://www.nerc.com/~filez/functionalmodel.html. 
Docket Nos. RM96-1-027 and RM05-5-001 - 10 - 

references to other “related” WGQ standards without providing any indication of which 

standards are “related.”13

19. ISO-NE suggests additional definitions be added to the WEQ and WGQ standards. 

It proposes a new Definition D4, which would define “Directly Connected TSP”, and a 

new Definition D5, which would identify “Communication Standards.” Definition D5 

would be used to supplement WEQ Standard 011-1.1/ WGQ Standard 0.3.11, and, in 

ISO-NE’s view, these definitions would create greater consistency and clarity among the 

standards.

Commission Determination

20. We do not find a need to revise the terminology used in the standards. Those 

protesting the terminology do not object to the substance of the standards. All of the 

relevant parties were, or could have been, involved in the drafting of the standards, and 

the definitions and terminology used in the standards reflect a consensus of the industry. 

The language used in the standards is clear, and those parties that think the language 

could be made even more precise can seek such clarifications and revisions through the 

NAESB process so that the implications of such changes can be considered by all 

segments.14

 13 Id. at 3. 

14 Order No. 676, 71 FR 26199, FERC Stats. & Regs. ¶ 31,216, at P 17. 
Docket Nos. RM96-1-027 and RM05-5-001 - 11 - 

21. Indeed, since NAESB filed its report, it has added a segment to its WEQ for 

Independent Grid Operators/Planners, and as of April 5, ten parties have joined this 

segment, including the California ISO, the Electric Reliability Council of Texas, the 

Independent Electricity System Operator, ISO-NE, the Midwest Independent 

Transmission System Operator, the New York Independent System Operator, PJM 

Interconnection, the Southwest Power Pool, Transerv International, and the Alberta 

Electric System Operator. We encourage parties with concerns about the standards to 

bring their suggestions to the WEQ and the WGQ. 

2. WEQ Standard 011-0.1/WGQ Standard 0.2.1

22. WEQ Standard 011-0.1/WGQ Standard 0.2.1 defines the term “Power Plant 

Operator” as the entity(ies) having responsibility for natural gas requirements and 

coordinating deliveries to meet those requirements at natural gas-fired electric generating 

facility(ies). ISO-NE comments that the standard presumes that the entity that has direct 

control over the gas requirements for a gas-fired electric generating facility is always the 

same entity that is responsible for coordinating natural gas deliveries with the appropriate 

transportation service provider. ISO-NE notes that, in fact, these two requirements may 

be handled by different parties and requests that this definition be modified to 

accommodate such possibilities. 

23. We find the standard to be sufficiently clear. Contrary to ISO-NE’s assertion that 

the standard presumes that the same entity that has direct control over the gas 
Docket Nos. RM96-1-027 and RM05-5-001 - 12 - 

requirements for a gas-fired electric generating facility is always the same entity that is 

responsible for coordinating with the appropriate transportation service provider, the 

standard clearly uses the plural “entity(ies)” when defining “PPO.” The standard also 

states that “Because each [power plant operator] is structured differently, specific 

responsibilities within each [power plant operator] should be determined by the [power 

plant operator] and the point of contact for the [power plant operator] should be 

communicated to the [transportation service provider(s)].” 

3. WEQ Standard 011-1.2/WGQ Standard 0.3.12

24. WEQ Standard 011-1.2/WGQ Standard 0.3.12 directs the power plant operator 

and the transportation service provider directly connected to the power plant operator’s 

facility(ies) to establish procedures to communicate material changes in circumstances 

that may impact hourly flow rates, and the power plant operator to provide projected 

hourly flow rates accordingly. 

Comments

25. ISO-NE states that the standard requires power plant operators to provide hourly 

flow rates but does not specify to whom. ISO-NE suggests that the standard be modified 

to specify that the directly-connected transportation service provider is the party intended 

to receive hourly flow rates from the power plant operator. NiSource expresses concern 

over the requirement that pipelines convey “material changes in circumstance that may 

impact hourly flow rates.” It asserts that there are many variables that “may” impact 
Docket Nos. RM96-1-027 and RM05-5-001 - 13 - 

hourly flow rates. In addition, NiSource notes that the standard requires the pipeline and 

the power plant operator to establish communication procedures regarding this 

information, yet does not provide any guidance as to the type of procedures that should 

be created. NiSource asks that the Commission clarify that pipelines will be able to raise 

objections with respect to this language in any future dispute proceedings.15

Commission Determination

26. We disagree that with ISO-NE that the standard needs further clarification to 

specify that the directly-connected transportation service provider is the party intended to 

receive hourly flow rates from the power plant operator. The standard specifically refers 

to communications procedures between the power plant operator and the directlyconnected transportation service provider, so that it is clear that the hourly flow rates 

need to be communicated to the directly-connected transportation service provider. 

27. With respect to NiSource’s comment, the pipeline will need to determine which 

events materially affect hourly flow rates and communicate those events to the power 

plant operators. Pipelines are already required by NAESB standards to use judgment in 

issuing system-wide notices that impact pipeline operations, and this requirement is not 

different.16 Similarly, the communications procedures should be established between the 

 15 NiSource Comments at 6-7. 

16 18 CFR 284.12 (a)(vi) Capacity Release Related Standards, Standard 5.4.16 

(system wide notices). 
Docket Nos. RM96-1-027 and RM05-5-001 - 14 - 

pipeline and the power plant operator. Pipelines and power plant operators should have 

the flexibility to establish the procedures they deem most efficient. NiSource will be able 

to negotiate the details when it works with relevant power plant operators to establish the 

communication procedures required by this standard. 

4. WEQ Standard 011-1.3/WGQ Standard 0.3.13

28. WEQ Standard 011-1.3/WGQ Standard 0.3.13 states that power plant operators 

should not operate without an approved scheduled quantity pursuant to the NAESB WGQ 

standard nomination timeline and scheduling processes or as permitted by the 

transportation service provider’s tariff, general terms and conditions, and/or contract 

provisions. The standard further states that if the power plant operator reasonably 

determines it has circumstances requiring the need to request gas scheduling changes 

outside the WGQ nomination and scheduling processes, and the transportation service 

provider supports the processing of such changes, the power plant operator may request 

daily flow rates as established by either the communication procedures established in the 

standards or as specified in the transportation service provider’s tariff or general terms 

and conditions. The standard states that the power plant operator and all affected 

transportation service providers should work to resolve the power plant operator’s request 

if it can be accommodated 1) in accordance with the appropriate application of the 

affected transportation service provider’s tariff requirement, contract provisions, 

business practices, or other similar provisions, and 2) without adversely impacting other 
Docket Nos. RM96-1-027 and RM05-5-001 - 15 - 

scheduled services, anticipated flows, no-notice services, firm contract requirements 

and/or general system operations. 

Comments

29. IRC comments that the standard suggests that transportation service providers may 

be granting service to power plant operators outside of normal Open Access Same-Time 

Information Systems (OASIS) posting requirements. IRC submits that, in order to ensure 

transparency and compliance with the Commission’s rules, any communications between 

the transportation service provider and power plant operator must also adhere to the 

Commission’s OASIS posting requirements and its Standards of Conduct regulations. 

30. ISO-NE asserts that the standard states in part that a power plant operator should 

not operate without an approved schedule, and suggests that, in order to avoid confusion 

with the electric scheduling process, this standard be modified to specify that it is 

referring to the “approved gas schedule” and “gas scheduling processes”. ISO-NE also 

recommends that the directly-connected transportation service provider is the party 

intended to receive hourly flow rates from the power plant operator. 

31. NiSource comments that the type of procedure to be established between a 

pipeline and a power plant operator to communicate hourly flow rate information is not 

clear, and that it wishes to preserve its ability to object to any power plant operator 
Docket Nos. RM96-1-027 and RM05-5-001 - 16 - 

requests for unreasonable communications procedures.17 NiSource also states that the 

standard does not unambiguously state that a pipeline that does not provide for a special 

nomination cycle in its tariff does not have to accommodate such a request.

Commission Determination

32. The purpose of this standard is to provide for greater flexibility in scheduling 

pipeline transportation in circumstances in which the pipeline is able to accommodate 

such flexibility. Regarding IRC’s concern about compliance with Commission 

regulations, nothing in this standard grants a waiver from the Commission’s standards of 

conduct or other regulations. The IRC’s reference to the OASIS is not clear, since these 

are gas transactions between the power plant operator and the pipeline, not OASIS 

scheduling requests. 

33. We disagree with ISO-NE’s argument that the standard is ambiguous or confusing. 

The standard’s language regarding scheduling clearly concerns scheduled quantities of 

gas pursuant to the NAESB WGQ standard nomination timeline. 

34. With respect to NiSource’s concern about communication details, as we explained 

above, we find it more appropriate for the pipeline and the power plant operator to work 

out the most efficient method for communicating any such scheduling requests. With 

respect to NiSource’s concern about its obligations, the standard clearly states that, if the 

pipeline supports the processing of such special requests, it must work to resolve such 

 17 NiSource Comments at 9. 
Docket Nos. RM96-1-027 and RM05-5-001 - 17 - 

requests if they can be accommodated in accordance with the appropriate application of 

the affected pipeline’s tariff requirement, contract provisions, business practices, or other 

similar provisions, and without adversely impacting other scheduled services, anticipated 

flows, no-notice services, firm contract requirements and/or general system operations. 

We find that these conditions provide reasonable and appropriate protections for the 

pipelines. 

5. WEQ Standard 011-1.4 and WGQ Standard 0.3.14

35. WEQ Standard 011-1.4 requires RTOs, ISOs, independent transmission operators 

and/or power plant operators to sign up to receive operational flow orders and other 

critical notices from the appropriate transportation service provider(s), and WGQ 

Standard 0.3.14 requires transportation service providers to provide operational flow 

orders and other critical notices to RTOs, ISOs, independent transmission operators, and 

power plant operators. ISO-NE argues that the terms RTOs, ISOs and independent 

transmission operators in these standards should be replaced with “balancing authorities”. 

ISO-NE states that RTOs/ISOs should not bear a higher burden of responsibility than 

other balancing authorities in this context.

36. These standards require only that RTOs, ISOs and independent transmission 

operators need to sign up to receive information from pipelines about operational flow 

orders that may affect gas-fired generators on their systems. The genesis for the 

development of these standards was the coordination problems between the gas industry 
Docket Nos. RM96-1-027 and RM05-5-001 - 18 - 

and the scheduling practices of ISOs and RTOs, particularly the problems faced by gasfired generators in ISO-NE during the 2004 cold snap. These standards along with the 

other standards will help ensure that, in the event of a recurrence of such circumstances, 

the RTOs, ISOs, and independent transmission operators will be fully informed of 

conditions that may affect the reliable performance of generators on their systems. ISONE does not explain why RTOs, ISOs, and independent transmission operators should be 

exempt from the requirement to receive information that may have a crucial impact on 

the reliability of the operation of their systems.18 Nor does ISO-NE provide evidence that 

the same scheduling problems affected balancing authorities that are not RTOs, ISOs, 

independent transmission operators or power plant operators, such that they too should be 

required to sign up to receive operational flow orders and other critical notices from 

transportation service providers. If ISO-NE believes the standard should be expanded to 

include all balancing authorities, it should seek such changes from NAESB, so that all 

industry segments can participate in the determination. 

6. WEQ Standard 011-1.5

37. The standard requires that, upon request, a power plant operator must provide to 

the appropriate independent balancing authority and/or reliability coordinator pertinent 

 18 All RTOs and ISOs, for example, are not necessarily balancing authorities. 
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information concerning the level of gas transportation service (firm or interruptible) and 

its natural gas supply (firm, fixed or variable quantity, or interruptible). 

Comments

38. Florida Cities states that due to the commercially sensitive nature of this 

information operators should only be required to divulge the information needed to 

ensure the reliable operation of the transmission grid, and no more (i.e., an electric 

balancing authority asking for supply and transportation information for the immediate 

future rather than day-ahead). In addition, Florida Cities asks the Commission to clarify 

how it will be determined which entity or entities will be authorized to request this 

information, and with what frequency they may do so.19

39. FPL Energy does not support the standard, commenting that it would create a way 

for electric balancing authorities and reliability coordinators to rank power supplies based 

on perceived reliability. In FPL Energy’s view this would put merchant generators that 

are unable to contract for long-term firm gas pipeline capacity at a disadvantage in 

competing for power sales versus utility sales and sales from non-gas power suppliers.20 

FPL Energy requests that the Commission refrain from adopting such a protocol until a 

mechanism that would compensate merchant generators for holding long-term firm 

capacity on gas pipelines is established. 

 19 Florida Cities Comments at 4. 

20 FPL Energy Comments at 8. 
Docket Nos. RM96-1-027 and RM05-5-001 - 20 - 

Commission Determination

40. We find that the standard is appropriate and does not require improper sharing of 

commercially sensitive information with competitors. The standard as written only 

requires power plant operators to provide information regarding its gas transportation and 

performance obligation to independent balancing authorities and/or reliability 

coordinators. 

41. Regarding FPL Energy’s concern that independent balancing authorities and/or 

reliability coordinators might choose to rank generators based on reliability of gas supply, 

it is not clear that the information will be used for that purpose. Increased 

communication and information about natural gas deliverability should help system 

operators understand potential operating problems on their system. Moreover, even if the 

information were used for ranking, as FPL Energy argues, FPL Energy has not shown 

why access to firm pipeline transportation should not be used as part of the analysis of the 

reliability of a gas fired generation. A generator with firm transportation and a firm gas 

supply generally would be more likely to be able to obtain gas when pipelines are 

constrained than generators relying solely on interruptible transportation. Moreover, as 

discussed above, the independence of the balancing authority and reliability coordinator 

will help ensure that the information is used appropriately. The benefits from enhanced 

communication about natural gas deliverability outweigh the potential that in a particular 

circumstance an independent balancing authority or reliability coordinator will use the 
Docket Nos. RM96-1-027 and RM05-5-001 - 21 - 

information inappropriately. If FPL Energy believes an independent balancing authority 

or reliability coordinator in a particular circumstance has used such information 

inappropriately, it can file a complaint. 

7. WEQ Standard 011-1.6/WGQ Standard 0.3.15

42. This standard requires RTOs, ISOs, independent transmission operators, 

independent balancing authorities and/or regional reliability coordinators to establish 

operational communication procedures with the appropriate transportation service 

provider and/or power plant operator. 

Comments

43. ISO-NE notes that it is unclear why this standard is applicable only to independent 

balancing authorities since it would seem that all balancing authorities would benefit 

from communications with all power plant operators. In addition, ISO-NE suggests that 

the language “and/or” be replaced with “and” to avoid any confusion.21

44. INGAA asks that the Commission clarify that it is the party responsible for 

managing the operations of each electric facility (i.e. RTO) to initiate the communication 

procedures required under this standard. INGAA states that allocation of responsibility is 

appropriate because the pipeline does not have firsthand information as to all the 

pertinent electric industry operators to which the power plants on the pipeline’s system 

belong. 

 21 ISO-NE Comments at 9. 
Docket Nos. RM96-1-027 and RM05-5-001 - 22 - 

45. NiSource comments that a pipeline could have power plant operator shippers that 

are located in the service territories of many different entities (i.e., RTOs, ISOs). In such 

a case, WEQ Standard 011-1.6/WGQ Standard 0.3.15 could require that the pipeline 

develop numerous sets of communications procedures depending on the wishes of the 

other entities. NiSource states that such a requirement would be overly burdensome and 

difficult to maintain, and requests that the Commission make clear that a pipeline 

preserves the ability to argue in a future dispute proceeding that it is not obligated to 

develop new communication procedures that are not currently supported by the pipeline’s 

existing communication infrastructure.22

Commission Determination

46. As we explained above, the consensus of NAESB members sought to limit the 

communications requirement to independent balancing authorities, which helps to protect 

against disclosure of confidential information. If ISO-NE believes that this rationale 

should not apply to WEQ Standard 011-1.6/WGQ Standard 0.3.15, it can seek a change 

through NAESB which will allow all industry segments to participate in the 

determination. 

47. We agree with INGAA that the RTOs, ISOs, independent transmission operators, 

independent balancing authorities and/or regional reliability coordinators are the parties 

responsible for initiating communication procedures, given that these parties should be 

 22 NiSource Comments at 10. 
Docket Nos. RM96-1-027 and RM05-5-001 - 23 - 

the most knowledgeable regarding the pipelines used by power plants on their system. 

With respect to NiSource’s comment we expect that the pipelines and RTOs, ISOs, and 

independent transmission operators will be able to work cooperatively to develop 

mutually agreeable, and efficient communication procedures. We are requiring in this 

rule that the parties file with us by November 1, 2007 to indicate that they have 

established the appropriate communication procedures. Should there be unresolved 

disputes at that time, the pipelines, RTOs, ISOs and independent transmission operators 

should advise the Commission what the unresolved issues are so the Commission can 

establish procedures to resolve those disputes, including the use of our dispute resolution 

and settlement judge procedures.23 

8. Additional Issue

48. AGA states that, while it supports the incorporation of the NAESB standards, the 

existing operational rights of natural gas pipeline customers should not be changed as a 

result of efforts to increase communication and coordination between the gas and electric 

 23 In a similar situation in the past (a requirement that pipelines enter into 

operational 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. Standards for Business Practices of Interstate Natural Gas Pipelines, 

85 FERC ¶ 61,371 (1998). The Commission stood ready with Alternative Dispute 

Resolution and ultimately Commission action to resolve any disputes. See Standards For 

Business Practices of Interstate Natural Gas Pipelines, Order No. 587-G, 63 Fed. Reg. 

20072 (Apr. 23, 1998), FERC Statutes and Regulations, Regulations Preambles July 

1996-December 2000 ¶ 31,062 (Apr. 16, 1998). 
Docket Nos. RM96-1-027 and RM05-5-001 - 24 - 

industries. To that end, AGA asks that the Commission ensure that NAESB standards 

WEQ-011-1.1/WGQ 0.3.11 and WEQ-011-1.3/WGQ 0.3.13 are enforced.24

49. We expect pipelines to comply with all the NAESB standards incorporated by 

reference in our regulations just as we expect them to comply with all of our other 

regulations that pertain to them. 

B. Additional Issues Raised by NAESB

50. NAESB identified six issues for which it requested clarification of existing 

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

industry participants believe might assist in resolving coordination problems between the 

gas and electric industries. The Commission provided clarification and guidance in the 

NOPR. Parties requested additional clarification on three issues, which we discuss 

below. 

1. Use of Gas Indices for Pricing Capacity Release Transactions

51. In the Final Report filed with the Commission on February 24, 2006, NAESB 

requested clarification of Commission policy regarding the use of gas indices to price 

capacity release transactions, so that it could develop standards for such releases. In the 

NOPR, the Commission clarified that releasing shippers should be free to offer the same 

type of pricing arrangements that the pipeline offers and, therefore, releasing shippers are 

 24 AGA Comments at 2. 
Docket Nos. RM96-1-027 and RM05-5-001 - 25 - 

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. 

Comments

52. INGAA states that the Commission clarified that, where pipelines offer discounts 

based on gas price indices, the provisions of the pipeline’s tariff governing capacity 

releases should not prevent releasing shippers from offering the same type of pricing in 

such a transaction. INGAA contends, however, that not all pipelines have language 

within their tariffs regarding permissible discounts. Therefore, INGAA requests that the 

Commission clarify that a requirement to allow releasing shippers to release capacity 

using gas price indices only applies to pipelines with such language in their tariffs and 

that releases must be consistent with the pipeline tariff.25 INGAA also requests that the 

Commission clarify that releasing shippers must specify all aspects of the release, 

including how to determine the best bid and the amount to bill under the release. 

Similarly, Carolina Gas requests clarification that releasing shippers desiring to use gas 

price indices to price capacity releases should only use published index prices that are 

readily available and agreeable for use by the pipeline. 

53. Other commenters disagree. For example, NGSA argues the Commission should 

clarify releasing shippers should have the ability to release capacity using index-based 

pricing regardless of the pipeline’s decision to exercise that authority. It contends that as 

 25 INGAA Comments at 6. 
Docket Nos. RM96-1-027 and RM05-5-001 - 26 - 

long as the capacity release shipper is selling its capacity at, or below, the maximum 

tariff rate, it should be of no consequence how the pipeline prices its own primary 

capacity. NGSA asks the Commission to clarify the methodology pipelines should use to 

evaluate bids for primary and secondary market capacity made available at an indexbased rate. Finally, NGSA requests that the Commission direct NAESB to establish the 

necessary data sets to allow for shippers to release capacity at rates which are based on 

gas price indices. 

54. Several commenters, while in support of the Commission’s proposed clarification, 

believe the Commission has limited the flexibility in pricing capacity releases by stating 

that such prices may not exceed the pipeline’s maximum tariff rate.26 These commenters 

argue for the removal of the price cap on capacity release transactions. FPL Energy 

asserts that lifting the price cap in the secondary market will result in more liquidity and 

competition for pipeline capacity as more shippers decide to purchase and manage their 

own capacity because they will have more opportunity to defray capacity costs and 

achieve fair market value for the capacity when it is not needed to generate power.27

Commission Determination

55. The Commission’s regulations permit releasing shippers to use price indices or 

other formula rates on all pipelines, regardless of whether the pipeline has included a 

 26 E.g., Dominion, Florida Cities, and FPL Energy. 

27 FPL Energy Comments at 13. 
Docket Nos. RM96-1-027 and RM05-5-001 - 27 - 

provision allowing the use of indices as part of its discounting provisions, so long as the 

prices are less than maximum rate in the pipeline’s tariff. Section 284.8(b)28 of the 

Commission’s regulations states that “firm shippers must be permitted to release their 

capacity, in whole or in part, without restrictions on the terms or conditions for release,” 

and section 284.8(e)29 mandates that such a release may not be “over the maximum rate.” 

All pipelines are permitted to use price indices in discount transactions either through 

provisions in their tariffs or by means of filing a non-conforming service agreement.30 

Providing releasing shippers with this flexibility is consistent with the “original intent of 

the Commission's capacity release regulations by providing releasing shippers with the 

flexibility to structure capacity release transactions that best fit their business needs.”31

56. INGAA has expressed concern about possible problems in implementing this 

requirement on pipelines that do not provide for indexed releases in their tariffs. Under 

the Commission regulations, the releasing shipper is responsible for clearly setting out 

 28 18 CFR 284.8(b). 

29 18 CFR 284.8(e). 

30 Natural Gas Pipeline Co. of America, 82 FERC ¶ 61,298, 62,179-80 (1998) 

(non-conforming provisions relating to discounts “must be on file and approved by the 

Commission -- either in Natural's pro forma service agreement or as nonconforming 

contracts”). 

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

587-N, 67 FR 11906 (March 18, 2002), FERC Stats. & Regs., Regulations Preambles 

¶ 31,125 at P 21 (Mar. 11, 2002). 
Docket Nos. RM96-1-027 and RM05-5-001 - 28 - 

the terms and conditions of the release and that would include the means for 

implementing the formula rate. This is also an issue on which NAESB can develop 

standards to ensure that such releases can be processed quickly and efficiently. 

57. Some of the comments suggest that the price cap be lifted for capacity release 

transactions. This issue is already being addressed by the Commission in Docket Nos. 

RM06-21-000 and RM07-4-000, so it is not appropriate to address in this proceeding. 

2. Pipelines’ Ability to Permit Shippers to Choose Alternate 

Delivery Points

58. In its Final Report, NAESB requested 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 provided, 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. 

59. In the NOPR, the Commission discussed Order No. 637-B, which 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 
Docket Nos. RM96-1-027 and RM05-5-001 - 29 - 

transportation path.32 In addition, it stated that the scenario posed by NAESB was a 

slight variation of the within-the-path scheduling, and clarified that it would be 

reasonable to permit the reassignment as posited in most cases. 

Comments

60. Salt River supports the ability of a gas shipper to make changes to its delivery 

point (from primary to alternate) once it has been confirmed through a constraint point 

without having it be treated as a new nomination. It argues that this ability better enables 

the electric industry to ensure that gas can move to the facilities that require it on an intraday basis without having to be concerned about pro-rata curtailments or scheduled 

quantity cuts.33

61. Dominion agrees with the determination of shipper priority in the Commission’s 

example, it is concerned that there may be other caveats beyond the one posited in which 

the Commission’s specific “clarification” may not be appropriate. Florida Cities has no 

objection to the Commission’s proposed clarification, but states that the Commission 

should not require all pipelines to require this accommodation without exception. It 

states that any prior arrangements concerning delivery point nominations are preserved. 

For example, Florida Cities contends that Florida Gas Transmission Company, LLC has a 

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

¶61,062 at 61,168-70 (2000). 

33 Salt River Comments at 3. 
Docket Nos. RM96-1-027 and RM05-5-001 - 30 - 

system in which secondary delivery point nominations are considered on a “jump ball 

basis”, meaning the ability of a shipper to move its nomination from the primary delivery 

point to the secondary delivery point will be contingent upon whether secondary point 

nominations for that flow day create a need for the allocation of capacity instead of by 

virtue of pathing rights.34

62. INGAA requests that the Commission clarify in the Final Rule that its proposed 

clarification is not intended to revise its policies concerning capacity allocation or to 

broaden shippers’ flexible point rights beyond those set out in Order Nos. 637.35 El Paso 

further requests that the Commission state that the normal processes for new standards 

development apply to any new standards proposed relating to this issue.36 

Commission Determination

63. The Commission is not modifying its requirement for within-the-path scheduling 

as adopted in Order No. 637. The example posited by NAESB appears consistent with 

the within-the-path scheduling concept and with pipeline proposals that have been 

accepted.37 It would not be appropriate for the Commission here to try to provide generic 

 34 Florida Cities Comments at 8. 

35 INGAA Comments at 8. 

36 El Paso Comments at 4. 

37 Algonquin Gas Transmission Co., Director Letter Order, Docket No. RP06-69-

000 (November 22, 2005); Texas Eastern Transmission, LP, Director Letter Order, 

Docket No. RP06-70-000 (November 22, 2005). 
Docket Nos. RM96-1-027 and RM05-5-001 - 31 - 

clarification to cover all possible proposals by pipelines for according flexibility to 

shippers. These proposals will have to be judged on an individual basis. In addition, 

NAESB can consider through its consensus process possible standards for according 

increased receipt and delivery point flexibility. 

3. Changes to the Intraday Nomination Gas Schedule

64. In its Final Report, NAESB raised the possibility of developing standards that 

would offer an additional intraday nomination cycle with rights for firm shippers to bump 

interruptible nominations. NAESB suggested that such a standard would provide more 

flexibility to shippers, including power generators, with firm transportation rights so that 

they can nominate for natural gas supporting their market clearing times. In the NOPR, 

the Commission explained that its bumping policy requires that the last intra-day 

nomination opportunity would be one in which firm nominations do not bump 

interruptible nominations, but that NAESB could consider whether to add another intraday nomination opportunity with bumping rights prior to the final non-bumping 

opportunity, or to develop additional changes to its nomination timeline to better 

coordinate with electric scheduling. 
Docket Nos. RM96-1-027 and RM05-5-001 - 32 - 

Comments

65. Various commenters support the development of a standard to modify the timing 

of the existing nomination schedule or add an additional nomination period.38 Dominion 

states that having an additional cycle(s) is desirable, as it would allow firm shippers to 

ensure their gas flows and thereby help repair the disconnect between the gas and electric 

scheduling timelines. Duke agrees, and requests that the NAESB WEQ be allowed to 

determine whether any additional nomination cycle will produce the desired effects of 

greater shipper flexibility and security. 

66. FPL Energy and Florida Cities do not object to the addition of a new intraday 

nomination cycle so long as any new nomination opportunity does not carry bumping 

rights in the event that it becomes the next to last nomination opportunity. Florida Cities 

states that if such rights were afforded, interruptible shippers may be forced into the 

market late with little chance of finding a replacement market. In addition, FPL Energy 

is concerned that having more opportunities to bump interruptible service could cause 

supply sources that cannot shut down quickly to limit their sales to firm shippers, thus 

harming those shippers wishing to utilize interruptible service. On the other hand, while 

TVA agrees with the addition of a new intraday nomination cycle, it requests that the 

Commission eliminate the “no-bump” rule entirely, as it puts interruptible transportation 

on equal footing with the highest priority firm transportation, i.e., a shipper paying the 

 38 E.g., Dominion, Duke, Florida Cities, FPL Energy, Salt River, TVA. 
Docket Nos. RM96-1-027 and RM05-5-001 - 33 - 

lowest rate on the system can displace those shippers that pay one of the highest rates on 

the system. 

67. Other participants oppose the introduction of an additional nomination cycle.39 

Carolina Gas states that having another intra-day nomination opportunity would create 

unnecessary administrative complexities and would require significant modifications to 

Carolina Gas’ Internet website. El Paso states that transportation service providers must 

already complete complex allocation and confirmation processes within a limited 

timeframe. Among other objectives, these processes are designed to ensure that the 

nominated gas supply is available and the nominated market is ready to receive the gas. 

68. INGAA asserts that neither altering the existing scheduling timeline nor adding an 

additional intra-day nomination cycle with bumping rights guarantees that a power 

generator will be able to nominate primary firm transportation capacity when the 

generator most needs that capacity, and states that any reliability issue concerning gas 

supply to electric generators should be addressed through individual pipeline 

proceedings. EPSA states that it is unclear whether the addition of another nomination 

opportunity with or without bumping rights would produce any significant improvement 

in the reliable performance of the system. 

 39 E.g., Carolina Gas, El Paso, EPSA, INGAA. 
Docket Nos. RM96-1-027 and RM05-5-001 - 34 - 

Commission Determination

69. As we stated in the NOPR, 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.40 However, within the confines of current Commission policy, NAESB 

should actively consider whether changes to existing intra-day schedules would benefit 

all shippers, and provide better provide for coordination between gas and electric 

scheduling. In addition, the NAESB nomination timeline establishes only the minimum 

requirement to which pipelines must adhere. We fully expect that individual pipelines 

supporting gas-fired generators will be considering the addition of other intra-day 

nomination opportunities that would be of benefit to their shippers. 

III. Implementation Dates and Procedures

70. Pipelines and public utilities are required to implement the standards we are 

incorporating by reference in this Final Rule by November 1, 2007. In addition, pipelines 

and public utilities are required to file a statement by November 1, 2007 as to whether 

they have established the required procedures in WEQ Standard 011-1.2/WGQ Standard 

0.3.12 and WEQ Standard 011-1.6/WGQ Standard 0.3.15. To reduce the burden on 

filers, we are not requiring pipelines and public utilities to make filings to include these 

 40 NOPR at P 23. 
Docket Nos. RM96-1-027 and RM05-5-001 - 35 - 

standards in their tariffs at this time. These standards will be included in tariffs when the 

pipelines and public utilities file to incorporate in their tariffs the next revised version of 

the NAESB standards. 

IV. Notice of Use of Voluntary Consensus Standards

71. 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.41 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. On 

October 25, 2006, the Commission issued a NOPR that proposed to incorporate by 

reference NAESB’s Gas/Electric Coordination Standards. The Commission took 

comments on the NOPR into account in fashioning this Final Rule. 

V. Information Collection Statement

72. The Office of Management and Budget’s (OMB) regulations in 5 CFR 1320.11 

(2005) require that it approve certain reporting and recordkeeping requirements 

 41 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 - 36 - 

(collections of information) imposed by an agency. Upon approval of a collection of 

information, OMB will assign an OMB control number and an expiration date. 

Respondents subject to the filing requirements of this Rule will not be penalized for 

failing to respond to these collections of information unless the collections of information 

display a valid OMB control number. 

73. The final rule upgrades 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 and regulations is necessary to improve 

coordination between the gas and electric industries, to improve communications about 

scheduling of gas-fired generators and to improve the reliability in both industries. 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 

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. 
Docket Nos. RM96-1-027 and RM05-5-001 - 37 - 

74. The Commission sought comments to comply with these requirements. 

Comments were received from sixteen entities. No comments addressed the reporting 

burden imposed by these requirements and therefore the Commission will use the same 

estimates in the final rule. The substantive issues raised by the commenters are addressed 

in this preamble. 

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 sought comments on the costs to comply 

with these requirements but no comments were received addressing these cost estimates. 

The Commission will therefore use the same estimates in the final rule. It has projected 

the average annualized cost for all respondents to be the following:42

 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

 42 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 - 38 - 

75. OMB regulations43 require OMB to approve certain information collection 

requirements imposed by agency rule. The Commission is submitting this Final Rule to 

OMB for review and approval of the information collections. 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/startup) 

76. Necessity of Information: The Commission’s regulations adopted in this rule are 

necessary to further the process begun in Order No. 587 of creating a more efficient and 

integrated pipeline grid by standardizing the business practices and electronic 

communication of interstate pipelines and expanded in Order No. 676 to create a more 

efficient and integrated electric transmission grid by standardizing the business practices 

 43 5 CFR 1320.11. 
Docket Nos. RM96-1-027 and RM05-5-001 - 39 - 

and electronic communication of public utilities. 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 improve communications for 

participants engaged in the sale of electric energy at wholesale and the transportation of 

natural gas. 

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

contacting the following: Federal Energy Regulatory Commission, 888 First Street, N.E., 

Washington, DC 20426 [Attention: Michael Miller, Office of the Deputy Chief 

Information Officer, ED-30, (202) 502-8415, or michael.miller@ferc.gov] or the Office 

of Management and Budget, Office of Information and Regulatory Affairs, Attention: 

Desk Officer for the Federal Energy Regulatory Commission, 725 17th Street, NW, 

Washington, DC 20503. The Desk Officer can also be reached at (202) 395-4650, or fax: 

(202) 395-7285. 

VI. Environmental Analysis

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

Environmental Impact Statement for any action that may have a significant adverse effect 
Docket Nos. RM96-1-027 and RM05-5-001 - 40 - 

on the human environment.44 The Commission has categorically excluded certain actions 

from these requirements as not having a significant effect on the human environment.45 

The actions adopted 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 

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

environmental assessment is unnecessary and has not be prepared in this Final Rule. 

VII. Regulatory Flexibility Act

79. The Regulatory Flexibility Act of 1980 (RFA)46 generally requires a description 

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

number of small entities. The regulations adopted 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 adopted 

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

486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs., Regulations Preambles 1986-

1990 ¶ 30,783 (1987). 

45 18 C.F.R. 380.4 (2006). 

46 5 U.S.C. 601-612. 
Docket Nos. RM96-1-027 and RM05-5-001 - 41 - 

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

entities. 

VIII. Document Availability

80. 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. 

81. From FERC's Home Page on the Internet, this information is available on 

eLibrary. The full text of this document is available on eLibrary 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. User assistance is available for eLibrary and the FERC’s website 

during normal business hours from FERC Online Support at (202) 502-6652 (toll-free at 

1-866-208-3676) or email at ferconlinesupport@ferc.gov , or the Public Reference Room 

at (202) 502-8371, TTY (202) 502-8659. E-Mail the Public Reference Room at 

public.refererenceroom@ferc.gov. 
Docket Nos. RM96-1-027 and RM05-5-001 - 42 - 

IX. Effective Date and Congressional Notification

82. These regulations are effective [insert date 30 days from publication in Federal 

Register]. The Commission has determined, with the concurrence of the Administrator of 

the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major 

rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness 

Act of 1996. 

List of subjects in 18 CFR Parts 38 and 284 

By the Commission. 

( S E A L ) 

 Kimberly D. Bose, 

 Secretary. 
Docket Nos. RM96-1-027 and RM05-5-001 - 43 - 

 In consideration of the foregoing, the Commission amends Parts 38 and 284 of 

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 (July 8, 2005). 

* * * * * 
Docket Nos. RM96-1-027 and RM05-5-001 - 44 - 

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 Additional Standards (Gas/Electric Operational 

Communications) (Version 1.8, September 30, 2006, with minor corrections applied 

December 31, 2006). 

* * * * *