122 FERC ¶ 61,263 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

18 CFR Part 358 

[Docket No. RM07-1-000] 

Standards of Conduct for Transmission Providers 

(March 21, 2008) 

AGENCY: Federal Energy Regulatory Commission. 

ACTION: Notice of Proposed Rulemaking. 

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

to revise its Standards of Conduct for transmission providers to make them clearer and to 

refocus the rules on the areas where there is the greatest potential for affiliate abuse. By 

doing so, we will make compliance less elusive and facilitate Commission enforcement. 

We also propose to conform the Standards to the decision of the U.S. Court of Appeals 

for the D.C. Circuit in National Fuel Gas Supply Corporation v. FERC, 468 F.3d 831 

(D.C. Cir. 2006). On January 18, 2007, the Commission issued a Notice of Proposed 

Rulemaking (initial NOPR), and received both initial and reply comments from interested 

persons. After giving consideration to these comments and to our own experience in 

enforcing the Standards, the Commission believes it to be necessary and appropriate to 

modify the approach proposed in the initial NOPR. The Commission is therefore issuing 

a new NOPR, and invites all interested persons to submit comments in response to the 

regulations proposed herein. 
Docket No. RM07-1-000 ii 

DATES: Comments are due [45 days after publication in the FEDERAL REGISTER] 

ADDRESSES: You may submit comments, identified by docket number by any of the 

following methods: 

• Agency Web Site: http://ferc.gov. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format 

and not in a scanned format. 

• Mail/Hand Delivery: Commenters unable to file comments electronically must 

mail or hand deliver an original and 14 copies of their comments to: Federal 

Energy Regulatory Commission, Secretary of the Commission, 888 First Street, 

N.E., Washington, D.C. 20426. 

FOR FURTHER INFORMATION CONTACT: 

Kathryn Kuhlen 

Office of Enforcement 

Federal Energy Regulatory Commission 

888 First Street, N.E. 

Washington, D.C. 20426 

Kathryn.Kuhlen@FERC.gov 

(202) 502-6855 
122 FERC ¶ 61,263 

UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Standards of Conduct for Transmission Providers Docket No. RM07-1-000 

NOTICE OF PROPOSED RULEMAKING 

(March 21, 2008) 

TABLE OF CONTENTS

Paragraph Numbers

I. Introduction ..................................................................................................................1

II. Background .................................................................................................................. 6

III. Discussion ..................................................................................................................11

A. The Need for Reform........................................................................................11

B. The Independent Functioning Rule...................................................................22

C. The No Conduit Rule........................................................................................ 46

D. The Transparency Rule..................................................................................... 50

E. Miscellaneous ...................................................................................................56

IV. Applicability of the Proposed Rule and Compliance Procedures..............................65

V. Information Collection Statement..............................................................................67

VI. Environmental Analysis.............................................................................................73

VII. Regulatory Flexibility Act.......................................................................................... 74

VIII.Comment Procedures.................................................................................................75
Docket No. RM07-1-000 ii 

IX. Document Availability...............................................................................................79

Appendix A: Table of Commenters and Abbreviations for Commenters

Appendix B: Comparison of Current and Proposed Regulatory Text
UNITED STATES OF AMERICA 

FEDERAL ENERGY REGULATORY COMMISSION 

Standards of Conduct for Transmission Providers Docket No. RM07-1-000 

NOTICE OF PROPOSED RULEMAKING 

(March 21, 2008) 

I. Introduction

1. The Federal Energy Regulatory Commission is proposing to reform its Standards 

of Conduct for Transmission Providers. The primary purpose of our proposed reforms is 

to strengthen the Standards by making them clearer and by refocusing the rules on the 

areas where there is the greatest potential for affiliate abuse. By doing so, we also will 

make compliance less elusive and subjective for regulated entities, and facilitate 

enforcement of the Standards by the Commission. We also propose to reform our 

regulations to comply with the U.S. Court of Appeals for the D.C. Circuit decision in 

National Fuel Gas Supply Corp. v. FERC, 468 F.3d 831 (D.C. Cir. 2006). 

2. On January 18, 2007, the Commission issued a Notice of Proposed Rulemaking 

(initial NOPR) to modify the Standards. The primary purpose of the initial NOPR was to 

remedy the defects identified by the D.C. Circuit in National Fuel, particularly the court's 

rejection of the Standards’ treatment of Energy Affiliates of natural gas pipelines. The 

Commission also sought to remedy other specific flaws in the Standards, such as by 

removing impediments to integrated resource planning. In proposing these reforms we 

did not, however, undertake a broader review of the Standards to determine whether they 
Docket No. RM07-1-000 - 2 - 

were continuing to prevent affiliate abuse in the manner most likely to foster compliance 

and enhance enforcement. Based on comments received on the NOPR, as well as the 

comments received at our recent enforcement conference,1

 we now believe that such a 

broader review is necessary. We therefore propose further reforms herein and seek 

comment on them from all interested persons. 

3. Our revised NOPR proposes to combine the best elements of the Standards 

adopted in Order Nos. 497 and 889 with those adopted by the Commission in Order No. 

2004.2

 Order Nos. 4973 and 8894 established a functional separation between 

 1

 Conference on Enforcement Policy, Docket No. AD07-13-000 (Nov. 16, 2007) 

(enforcement conference). 

2

 Standards of Conduct for Transmission Providers, Order No. 2004, FERC Stats. 

& Regs., Regulations Preambles 2001-2005 ¶ 31,155 (2003), order on reh’g, Order No. 

2004-A, FERC Stats. & Regs., Regulations Preambles 2001-2005 ¶ 31,161 (2004), order 

on reh’g, Order No. 2004-B, FERC Stats. & Regs., Regulations Preambles 2001-2005 

¶ 31,166 (2004), order on reh’g, Order No. 2004-C, FERC Stats. & Regs., Regulations 

Preambles 2001-2005 ¶ 31,172 (2004), order on reh’g, Order No. 2004-D, 110 FERC 

¶ 61,320 (2005), vacated and remanded as it applies to natural gas pipelines sub nom. 

Nat’l Fuel Gas Supply Corporation v. FERC, 468 F.3d 831 (D.C. Cir. 2006); Standards 

of Conduct for Transmission Providers, Order No. 690, 72 Fed. Reg. 2,427 (Jan 19, 

2007), FERC Stats. & Regs ¶ 31,237, order on reh’g, Order No. 690-A, 72 Fed. Reg. 

14235 (Mar. 27, 2007), FERC Stats. & Regs. ¶ 31,243 (2007); see also Standards of 

Conduct for Transmission Providers, Notice of Proposed Rulemaking, 72 Fed. Reg. 

3,958 (Jan. 29, 2007), FERC Stats. & Regs. ¶ 32,611 (2007) 

3

 Inquiry Into Alleged Anticompetitive Practices Related to Marketing Affiliates 

of Interstate Pipelines, Order No. 497, 53 FR 22139 (1988), FERC Stats. & Regs., 

Regulations Preambles 1986-1990 ¶ 30,820 (1988); Order No. 497-A, order on reh’g, 

54 FR 52781 (1989), FERC Stats & Regs., Regulations Preambles 1986-1990 ¶ 30,868 

(1989); Order No. 497-B, order extending sunset date, 55 FR 53291 (1990), FERC Stats. 

& Regs., Regulations Preambles 1986-1990 ¶ 30,908 (1990); Order No. 497-C, order 

extending sunset date, 57 FR 9 (1992), FERC Stats. & Regs., Regulations Preambles 

1991-1996 ¶ 30,934 (1991), reh’g denied, 57 FR 5815 (1992), 58 FERC ¶ 61,139 (1992); 

 (continued...) 
Docket No. RM07-1-000 - 3 - 

transmission and merchant personnel for natural gas and electric transmission providers 

that was relatively clear and that worked well for many years. Order No. 2004 altered 

this approach in three main ways: (i) first, to expand the scope of the Standards to 

include Energy Affiliates, (ii) second, to adopt a corporate separation approach to 

accommodate the addition of Energy Affiliates, and (iii) third, to adopt a single set of 

standards applicable to both natural gas and electric industries. The National Fuel court 

rejected the first reform as applied to the natural gas industry and, by doing so, undercut 

the need for the second reform. The court did not upset the third reason for reform and 

we continue to believe there is no reason why separate standards should apply to each 

industry, although our proposed regulations do take into account differences between the 

industries in discrete areas. 

4. Nevertheless, we believe this single set of standards should more closely resemble 

the functional approach that was adopted in Order Nos. 497 and 889. Our experience 

with implementing and enforcing the Standards, as well as the record of this proceeding, 

demonstrates that this approach is the one most likely to foster compliance and strengthen 

 

aff’d in part and remanded in part sub nom. Tenneco Gas v. FERC, 969 F.2d 1187 (D.C. 

Cir. 1992) (collectively, Order No. 497). 

4

 Open Access Same-Time Information System (Formerly Real-Time Information 

Network) and Standards of Conduct, Order No. 889, 61 FR 21737 (May 10, 1996), FERC 

Stats. & Regs., Regulations Preambles Jan. 1991- June 1996 ¶ 31,035 (Apr. 24, 1996); 

Order No. 889-A, order on reh'g, 62 FR 12484 (Mar. 14, 1997), FERC Stats. & Regs., 

Regulations Preambles July 1996-December 2000 ¶ 31,049 (Mar. 4, 1997); Order No. 

889-B, reh'g denied, 62 FR 64715 (Dec. 9, 1997), 81 FERC ¶ 61,253 (Nov. 25, 1997) 

(collectively, Order No. 889). 
Docket No. RM07-1-000 - 4 - 

enforcement of the Standards. The "corporate separation" adopted by Order No. 2004 

has not proven workable and was adopted to facilitate the regulation of Energy 

Affiliates,5

 a step that is no longer appropriate given the decision in National Fuel. 

5. In addition to combining the best elements of Orders 497, 889 and 2004, we also, 

as explained below, propose to simplify and streamline the Standards to facilitate 

compliance and enhance enforcement. With our new civil penalty authority, we are 

mindful of the fact that our regulations must be as clear as possible, as participants in the 

enforcement conference repeatedly noted. We also propose to strengthen enforcement of 

the Standards by proposing additional transparency to aid in the detection of affiliate 

abuse. Although we believe many of the existing elements of the Standards should be 

retained, the reforms we are proposing, together with the simplification and clarification 

we believe to be imperative, necessitate reissuing the entire part 358 of the Code of 

Federal Regulations as a stand-alone document. 

II. Background

6. The Commission first adopted Standards of Conduct in 1988, in Order No. 497. 

These initial Standards prohibited interstate natural gas pipelines from giving their 

marketing affiliates or wholesale merchant functions undue preference over non-affiliated 

customers. Citing demonstrated record abuses, the U.S. Court of Appeals for the D.C. 

Circuit upheld these Standards in 1992.6

 The Commission adopted similar Standards for 

 5

 Order No. 2004 at P 92. 

6

 Tenneco Gas v. FERC, 969 F.2d 1187 (D.C. Cir. 1992) (Tenneco). 
Docket No. RM07-1-000 - 5 - 

the electric industry in 1996, in Order No. 889, prohibiting public utilities from giving 

undue preference to their marketing affiliates or wholesale merchant functions. Both the 

electric and gas Standards sought to deter undue preference by: (i) separating a 

transmission provider’s employees engaged in transmission services from those engaged 

in its marketing services, and (ii) requiring that all transmission customers, affiliated and 

non-affiliated, be treated on a non-discriminatory basis. 

7. Changes in both the electric and gas industries, in particular the unbundling of 

sales from transportation in the gas industry and the increase in the number of power 

marketers in the electric industry, led the Commission in 2003 to issue Order No. 2004, 

which broadened the Standards to include a new category of affiliate, the Energy 

Affiliate.7

 The new Standards were made applicable to both the electric and gas 

industries, and provided that the transmission employees of a transmission provider8

 must 

function independently not only from the company’s marketing affiliates but from its 

 7

 The new Standards defined an Energy Affiliate as an affiliate of a Transmission 

Provider that (1) engages in or is involved in transmission transactions in U.S. energy or 

transmission markets; or (2) manages or controls transmission capacity of a Transmission 

Provider in U.S. energy or transmission markets; or (3) buys, sells, trades or administers 

natural gas or electric energy in U.S. energy or transmission markets; or (4) engages in 

financial transactions relating to the sale or transmission of natural gas or electric energy 

in U.S. energy or transmission markets. 18 CFR 358.3(d). Certain categories of entities 

were excluded from this definition in following subsections of the regulations. 

8

 A Transmission Provider was defined as (1) any public utility that owns, operates 

or controls facilities used for transmission of electric energy in interstate commerce; or 

(2) any interstate natural gas pipeline that transports gas for others pursuant to subpart A 

or part 157 or subparts B or G of part 284 of the same chapter of the regulations. 18 CFR 

358.3(a). 
Docket No. RM07-1-000 - 6 - 

Energy Affiliates as well, and that transmission providers may not treat either their 

Energy Affiliates or their marketing affiliates on a preferential basis. Order No. 2004 

also imposed requirements to publicly post information concerning a transmission 

provider’s Energy Affiliates. 

8. On appeal by members of the natural gas industry, the U.S. Court of Appeals for 

the D.C. Circuit overturned the Standards as applicable to gas transmission providers, on 

the grounds that the evidence of abuse by Energy Affiliates cited by the Commission was 

not in the record.9

 The court noted that the dissenting Commissioners in Order No. 2004 

had expressed the concern that the Order would diminish industry efficiencies without 

advancing the FERC policy of preventing unduly discriminatory behavior.10 

9. The Commission issued an Interim Rule on January 9, 2007,11 and set about 

developing new Standards that would cure the defects identified by the D.C. Circuit in 

National Fuel. On January 18, 2007, the Commission issued its initial NOPR,12

 9

 National Fuel at 841. 

10 Id. at 838. 

11 Standards of Conduct for Transmission Providers, Order No. 690, 72 FR 2427 

(Jan. 19, 2007); FERC Stats. & Regs. ¶ 31,237 (Jan. 9, 2007) (Interim Rule); clarified by, 

Standards of Conduct for Transmission Providers, Order No. 690-A, 72 FR 14235 

(Mar. 27, 2007); FERC Stats. & Regs. ¶ 31,243 (2007) (Order on Clarification and 

Rehearing). 

12 Standards of Conduct for Transmission Providers, 72 FR 3958 (Jan. 29, 2007), 

FERC Stats. & Regs. ¶ 32,611 (2007) (initial NOPR). 
Docket No. RM07-1-000 - 7 - 

requesting comment on whether the concept of Energy Affiliates should be retained for 

the electric industry, proposing the creation of two new categories of employees 

denominated as Competitive Solicitation Employees and Planning Employees, carrying 

over the Interim Rule’s new definition of marketing to cover asset managers, and making 

numerous other proposals. The Commission received thousands of pages of both initial 

and reply comments from some 95 individuals, companies, and organizations, which are 

listed in Appendix A. 

10. As noted above, consideration of these comments, coupled with our own 

experience in administering the Standards, has persuaded us to modify the approach 

advanced in the initial NOPR. For that reason, we now issue a new NOPR, and invite 

comment both on its general approach and on its specific provisions. 

III. Discussion

A. The Need for Reform

11. The purpose of this revised NOPR is to strengthen the Standards by making our 

rules clearer and refocusing them on the areas where there is the greatest potential for 

affiliate abuse. In so doing, we will facilitate compliance by regulated entities and 

enhance Commission enforcement. We propose to accomplish this objective by 

combining the best elements of Order Nos. 497 and 889, on the one hand, and Order No. 

2004, on the other. In particular, we propose to return to the approach of separating, by 

function, the transmission personnel from the marketing personnel that was adopted in 

Order Nos. 497 and 889 and worked well for many years, while also retaining a single set 

of standards for both natural gas and electric industries, as envisioned by Order No. 2004. 
Docket No. RM07-1-000 - 8 - 

We also propose to further clarify and streamline the Standards to enhance compliance 

and enforcement of our rules, and to increase transparency in the area of 

transmission/affiliate interactions to aid in the detection of any undue discrimination. 

12. We believe these broader reforms are superior to the incremental reforms 

proposed in our initial NOPR for two principal reasons. First, we propose to return to the 

functional separation of transmission and merchant personnel adopted in Order Nos. 497 

and 889, because it worked well for many years. Although Order No. 2004 abandoned 

this approach in favor of a "corporate separation," it did so because of jurisdictional 

concerns created by the addition of Energy Affiliates to our regulations, not because the 

functional approach had proven inadequate in preventing affiliate abuse.13 

13. Now that the D.C. Circuit has rejected the addition of Energy Affiliates for lack of 

evidence (and no commenter has provided sufficient evidence to reinstate it), it is no 

longer appropriate to retain the corporate separation approach adopted in Order No. 2004. 

Furthermore, there is good reason to rescind it. The corporate separation approach has 

proven so difficult to implement that it has generated scores of "waiver" requests (most of 

which were granted) and has otherwise frustrated compliance by diverting the industry’s 

focus from the very reason why the Standards were necessary in the first place – the 

conflict of interest between the functions of transmission and merchant activities. 

 13 The Commission stated: “While it may be less costly for some companies to 

implement the [functional] approach...the Commission is concerned that it does not have 

the jurisdiction to direct unregulated Energy Affiliates on how to structure their 

functions, operations and communications.” Order No. 2004 at P 93. 
Docket No. RM07-1-000 - 9 - 

14. The initial NOPR was itself evidence of the problem we now seek to remedy. 

Since the adoption of Order No. 2004, the corporate separation approach had, as we 

found in the initial NOPR, impeded legitimate integrated resource planning and 

competitive solicitations.14 To address this problem, we proposed there to create two 

new exemptions for these activities. Yet, by failing to address the underlying cause of 

that problem – the corporate separation approach – we, again, created additional 

exemptions and complexity to a rule already burdened with so many waivers, exemptions 

and complexity that both compliance and enforcement have been frustrated. By 

proposing to return to the functional approach that had proven effective prior to Order 

No. 2004, we can accommodate such legitimate activities without creating yet another set 

of exemptions. 

15. Second, we believe this broader reform of our existing Standards is necessary to 

make them clearer in an era where the Commission possesses substantial civil penalty 

authority. Soon after the adoption of the Energy Policy Act of 2005 (EPAct 2005),15 the 

 14 Southern Company Services, Inc., among other commenters in the Order No. 

2004 docket, described the difficulties that arise when all the employees of a marketing 

affiliate, including its planning employees, are prohibited from receiving transmission 

information: “Planning new generation and transmission capacity requires selecting the 

right combination and location of both generation and transmission. Coordinated and 

integrated planning is required because the siting of new generation is integrally related 

to transmission considerations and vice versa . . . Accordingly, the costs, characteristics 

and locations of generation and transmission must be considered together in order to 

ensure the provision of service to customers on a reliable and least cost basis.” Comments 

of Southern Company Services, Inc., Docket No. RM01-10-000 at p. 16 (Dec. 20, 2001). 

15 Pub. L. No. 109-58, 119 Stat. 594 (2005). 
Docket No. RM07-1-000 - 10 - 

Commission heard significant concerns from the regulated community that the existing 

Standards contained so many ambiguities that they impeded compliance and left 

companies – including those with the best cultures of compliance – exposed to significant 

civil penalties. We responded to those concerns by holding a public technical conference 

in Phoenix, Arizona, attended by all of the Commissioners serving at the time. The 

consistent message from regulated entities at this conference was best captured by an 

energy attorney who stated that "there is no area [besides the Standards] where I practice 

law where there is a greater number of times I am asked the question and I don't have the 

answer, and that is a real problem when you are talking about corporate governance."16 

16. Nearly two years later, we heard the same concerns at our enforcement conference 

in Washington, D.C. Several panelists expressed concern about the ambiguities in our 

Standards. These concerns were also supported in comments submitted on behalf of six 

industry trade groups, who placed the Standards at the top of their list of ambiguous rules 

that hinder compliance.17 As these six groups and another trade association emphasized, 

a "[l]ack of clarity sows confusion, creates unnecessary risk and chills legitimate market 

 16 Standards of Conduct Conference and Workshop (April 7, 2006), transcript at p. 

61. 

17 Comments at 20, submitted by The American Gas Association, Edison Electric 

Institute, Electric Power Supply Association, Independent Petroleum Association of 

America, Interstate Natural Gas Association of America, and Natural Gas Supply 

Association, Docket No. AD07-13-000 (Dec. 17, 2007). 
Docket No. RM07-1-000 - 11 - 

behavior because market participants are reticent to engage in certain types of 

transactions where the rules are unclear."18

17. We agree, and we have more than an adequate record to support the conclusion 

that the existing Standards are too complex to facilitate compliance or support our 

enforcement efforts. Since issuance of the NOPR in Order No. 2004, the Commission 

has held no less than four conferences devoted to explication and discussion of the 

Standards.19 Of the ten requests for No Action Letters submitted to the Commission 

since 2005, seven have involved the Standards.20 And Commission staff has received so 

many calls regarding the interpretation and application of the Standards, that the 

Commission has posted on its public website a 30-page document entitled “Frequently 

Asked Questions about Order No. 2004.” 

18. The complexity and unworkability of the current Standards is also evident in the 

fact that since issuance of Order No. 2004, the Commission has received 107 requests for 

waiver from various aspects of the Standards, the vast majority of which have been 

granted. Interpretation of the Standards has thus consumed thousands of hours of staff 

 18 White Paper at 6, submitted by The American Gas Association, Edison Electric 

Institute, Electric Power Supply Association, Independent Petroleum Association of 

America, Interstate Natural Gas Association of America, Natural Gas Supply Association 

and Process Gas Consumers Group, Docket No. AD07-13-000 (Nov. 14, 2007). 

19 May 21, 2002 in Washington, DC; May 10, 2004 in Houston, Texas; May 6, 

2005 in Chicago, Illinois; and April 7, 2006 in Scottsdale, Arizona. 

20 No Action Letters can be sought for matters involving the Standards of Conduct, 

Codes of Conduct (now Affiliate Restrictions), Market Behavior Rules, and the AntiManipulation Rules. 
Docket No. RM07-1-000 - 12 - 

time. It has also proven so elusive to the industry that it has engendered numerous 

conferences by law firms and trade associations, greatly outstripping comparable areas of 

Commission compliance in resources and money. 

19. The complexity and over breadth of the current Standards has also made it more 

difficult for transmission providers to reasonably manage their business, an effect which 

the Commission never intended. As the court in Tenneco noted, vertical integration can 

produce efficiencies of operation, and advantages given to an affiliate are not improper if 

they do not amount to exercises of market power.21 Unnecessarily balkanizing 

employees one from another and erecting barriers to the free flow of information can 

thwart perfectly legitimate efficiencies, a consequence which disadvantages not only the 

companies involved but ultimately consumers as well, in the form of higher rates. 

Executives of transmission providers can also be impeded in making necessary business 

decisions for fear they may transgress the Standards by assembling needed data or by 

meeting to discuss the merits of potential investments. This fear has been exacerbated by 

the Commission’s civil penalty authority, granted by Congress in EPAct 2005. As we 

explained above, the regulated community has consistently argued that the Standards are 

too ambiguous to facilitate compliance, particularly in an era where significant civil 

penalties may attach to violations. 

20. Therefore, in this NOPR we take the approach of structuring the Standards to 

establish per se rules that address the greatest prospect for undue preference. However, 

 21 Tenneco at 1201. 
Docket No. RM07-1-000 - 13 - 

this streamlined approach does not diminish our ability to rectify and sanction, where 

necessary, instances of undue discrimination and preference.22 The core prohibitions 

against undue preference are rooted in sections 205 and 206 of the FPA and sections 4 

and 5 of the NGA,23 and the Commission possesses the full panoply of statutory remedies 

to address violations of these statutes, whether or not they are specifically addressed in 

the per se regulations of the Standards. Since enforcement of both the Standards and the 

statutory prohibitions against undue discrimination and preference will be greatly assisted 

by transparency, we also include in the proposed Standards provisions to make apparent 

any instances of communication and undue preference between transmission function 

employees and marketing function employees. These provisions require either the public 

posting of information regarding such communications or the maintenance of 

contemporaneous records for review by the Commission. 

 22 Whereas failure to comply with a per se rule of the Standards automatically 

establishes a sanctionable violation, an alleged violation of the Federal Power Act (FPA), 

16 U.S.C. 824d-824e (2000) or the Natural Gas Act (NGA), 15 U.S.C. 717c-717d (2000) 

would require an investigation into both the facts and the surrounding circumstances to 

determine if, in fact, an undue discrimination occurred. 

23 Sections 205 and 206 of the FPA state that no public utility shall make or grant 

an undue preference with respect to any transmission or sale of electric energy subject to 

the Commission’s jurisdiction. Similarly, sections 4 and 5 of the NGA state that no 

natural gas company shall make or grant an undue preference or advantage with respect 

to any transportation or sale of natural gas subject to the Commission’s jurisdiction. 
Docket No. RM07-1-000 - 14 - 

21. We propose regulations that adopt the three core elements which we believe to be 

appropriate for per se rules: the independent functioning rule, the no conduit rule, and 

the transparency rule. We address these below. 

B. The Independent Functioning Rule

22. Order No. 2004 continued the policy, established in Order Nos. 497 and 889, of 

requiring transmission providers to function independently from their marketing 

employees or marketing affiliates. This practice has been well-established for close to 

twenty years, and it is our sense that both pipelines and public utilities understand the 

general concept of independent functioning. We continue to believe this policy is the 

most effective manner of preventing undue preference by a transmission provider, and we 

will carry forward the requirement of independent functioning in these proposed 

Standards.24 

23. Nevertheless, we believe a basic alteration in its methodology is warranted. The 

Standards’ existing method for separating transmission function employees from 

marketing function employees relies on the corporate functional approach,25 under which 

a transmission provider must function independently from an affiliate which engages in 

marketing.26 This is a departure from the method adopted in Order Nos. 497 and 889. 

 24 See proposed 18 CFR 358.5(a). 

25 Order No. 2004 designates this approach as the Energy Affiliate approach. 

Order No. 2004 at P 92-94. 

26 Id. P 92-94. 
Docket No. RM07-1-000 - 15 - 

Order No. 497 required that interstate natural gas pipelines, to the maximum extent 

practicable, ensure that their operating employees and the operating employees of their 

marketing affiliates function independently of each other.27 Order No. 889 required that, 

except in emergency circumstances, the employees of the transmission provider engaged 

in transmission system operations must function independently of its employees, or the 

employees of any of its affiliates, who engage in wholesale merchant functions (i.e., 

wholesale sales and purchases of electric energy).28 Thus, the prohibition keyed off the 

job function of the employee, rather than by whom he or she was employed. 

24. This approach was altered in Order No. 2004, which required transmission 

function employees to function independently of personnel employed by the transmission 

provider’s marketing affiliates or Energy Affiliates.29 Because there are many 

individuals employed by transmission providers’ marketing affiliates who are not 

involved in the core activities that give rise to the potential for undue preference, we have 

 27 Order No. 497, formerly codified at 18 CFR 161.3(g). 

28 Order No. 889, formerly codified at 18 CFR 37.4(a). 

29 Order No. 2004, formerly codified at 18 CFR 358.4(a)(1). In its comments, 

Edison Electric Institute describes the difficulty with this approach: “The corporate 

functional approach...uses the evaluation of individual employees to determine what a 

whole corporation (or division, etc.) does. If an employee performs Energy or Marketing 

Affiliate Activities, the whole corporation (or division) is deemed an Energy or 

Marketing Affiliate, and every other employee within the corporation is then subject to 

the rules by association, regardless of what they do and the function they perform, unless 

they fit into an exempt category. Because these exempt categories are vague and difficult 

to implement the corporate-functional approach ends up with restrictions that apply to 

more employees than necessary to meet the objectives of the rules.” Comments of the 

Edison Electric Institute, Docket No. RM07-1-000 at pp. 20-21 (Mar. 30, 2007). 
Docket No. RM07-1-000 - 16 - 

over the years exempted whole categories of employees from this restriction and allowed 

them to be shared between the transmission provider and its marketing affiliate. These 

include officers and members of the board of directors, support employees, field and 

maintenance employees, and risk management employees.30 We observed that these 

employees are not generally in a position to give a marketing affiliate an undue 

preference, and that the sharing of these employees has allowed the transmission provider 

to realize efficiencies not otherwise available to it.31 Carrying forward this approach in 

the initial NOPR, we suggested the creation of two new categories of exempted 

employees, the Planning Employee and the Competitive Solicitation Employee.32

25. This proliferation of exemptions has had the unfortunate side effect of removing 

the certainty that might otherwise be enjoyed as to which persons an employee may 

properly interact with and which persons he or she may not. Furthermore, it undermines 

the legitimacy of the Standards, as employees may find nonsensical the prohibition 

against interacting with personnel who have nothing to do with sensitive marketing or 

transmission information. 

26. The crux of the problem is that currently the prohibited category of marketing 

affiliate includes all employees of the affiliate, whether engaged in sales or not. To avoid 

 30 Much debate has also been engendered as to whether employees such as 

lawyers, accountants, and rate design personnel should be exempted. See initial NOPR at 

P 278-98. 

31 See, e.g., Order No. 2004 at P 97. 

32 Initial NOPR at P 42 and 54. 
Docket No. RM07-1-000 - 17 - 

such broad inclusion, many commenters have proposed that the Commission adopt an 

“employee functional approach” rather than a corporate functional approach, whereby the 

Standards would apply to each individual employee based on that employee’s job 

function, not on the company or division where the employee is employed.33 

27. This proposal was also advanced by commenters in Order No. 2004. It was 

rejected at that time because the Standards were being expanded to cover Energy 

Affiliates, and it was felt that the employee functional approach might require a shared 

responsibility on the part of potentially non-jurisdictional entities.34 That reason no 

longer exists. We believe the D.C. Circuit’s reason for overturning the prohibitions 

relating to natural gas Energy Affiliates applies equally to electric Energy Affiliates, and 

we propose abandoning the concept of Energy Affiliate, as discussed more fully below. 

Therefore, the concerns of Order No. 2004 regarding jurisdictional access to Energy 

Affiliates are rendered moot. 

28. The employee functional approach accomplishes directly the goal of identifying 

which employees ought not to interact with one another, whereas the corporate functional 

approach attempts to accomplish that objective indirectly, by focusing on the nature of 

 33 See EEI at 19 for a discussion of this approach. EEI was supported by Tucson 

Electric at 4, APS at 3, PSC of New Mexico at 1-2, Entergy at 1-2, E.ON at 7, Portland 

General at 1, Northwestern at 1. Other commenters support a similar functional 

approach: Idaho Power at 3, Southern Co. Services at 4-8, Keyspan at 3-4, SCE at 3-5, 

Western Utilities Compliance Group at 2-3. TAPS is in accord, providing the meaning of 

marketing is expanded. TAPS Reply at 7-8. 

34 Order No. 2004 at P 92. 
Docket No. RM07-1-000 - 18 - 

the employing entity. This casts too wide a net and ensnares employees who do not 

perform sensitive functions. Commission staff has expended much effort in attempting to 

clarify for companies which employees may interact with one another and which may 

not. In one case, for example, coordination of generation dispatch and transmission 

service reservations were both conducted out of the same system operating center, in 

order to realize cost and communication efficiencies. This necessitated a series of orders 

by the Commission to deal with employee classification problems under the Standards.35 

In another instance, marketing affiliate employees who ran a generating plant needed 

access to a transmission substation but were barred from doing so under the Standards, 

even though they performed no marketing functions. A waiver was needed in this case,36

and questions as to precisely which employees were covered by the waiver consumed a 

good deal of staff’s attention.37 Personnel in the nuclear power industry were so 

confused about permitted communications that the Commission, in order for companies 

to comply with the requirements of the U.S. Nuclear Regulatory Commission, had to 

issue an order granting permission for transmission providers to communicate with 

 35 See Audit of Standards of Conduct, Code of Conduct, OASIS & Transmission 

Practices, Duke Energy Corporation, Docket No. PA03-15-000 at pp. 6-8 (Jan. 21, 2005). 

36 Algonquin Gas Transmission, L.L.C., 111 FERC ¶ 61,099, at P 21-32 (2005). 

37 See Audit of Standards of Conduct, Code of Conduct, and Open Access 

Transmission Tariff Requirements at Florida Power and Light Company, Docket No. 

PA05-7-000 at pp. 6-10 (May 12, 2006). 
Docket No. RM07-1-000 - 19 - 

affiliated nuclear power plants.38 The Commission has also expended considerable 

effort in clarifying for companies whether given entities qualify as Energy Affiliates, a 

status that barred their employees from interacting with transmission function 

employees.39 

29. The employee functional approach, by pinpointing precisely which employees 

need to function independently one from another, has the added benefit of making the 

purpose of the prohibition more readily apparent. It should also make it easier for 

employees to comply with the Standards, since they will likely know an individual’s job 

function, whereas they may not know by which subsidiary of an umbrella organization a 

given individual is employed. 

30. Therefore, we propose adopting the employee functional approach, and define the 

two groups of employees who must function independently of each other as 

“transmission function employees”40 and “marketing function employees”41 (whether 

employed within the corporate structure of the transmission provider or by an affiliate of 

the transmission provider). The definitions of these terms are discussed in the 

 38 Interpretive Order Relating to the Standards of Conduct, 114 FERC ¶ 61,155 

(2006) (Interpretive Order), clarified in 115 FERC ¶ 61,202 (2006). 

39 See, e.g., Alcoa Power Generating Inc., 108 FERC ¶ 61,243, at P 29-35, 42-56, 

136-46 (2004), reh’g granted in part as to unrelated issue, Nat’l Fuel Gas Supply Corp., 

116 FERC ¶ 61,048 (2006); High Island Offshore System, L.L.C., 116 FERC ¶ 61,047, at 

P 59-68 (2006). 

40 See proposed section 358.3(i). 

41 See proposed section 358.3(d). 
Docket No. RM07-1-000 - 20 - 

following sections. We also propose to continue the general prohibition against 

marketing function employees conducting transmission functions, or having 

discriminatory access to the transmission provider’s system control center.42 

Furthermore, we add the converse prohibition, that a transmission function employee 

may not conduct marketing functions.43 

1. Transmission Function Employee 

31. We propose defining a transmission function employee as an employee, 

contractor, consultant or agent of a transmission provider who engages in transmission 

functions.44 “Transmission functions” are defined as the conduct of transmission system 

operations and the planning, directing, organizing or carrying out of transmission 

operations, including the granting and denying of transmission service requests.45 

32. We believe this definition, when coupled with the definition of “marketing 

functions” discussed below, addresses the concerns raised by the industry regarding the 

obstacles the Standards place in the way of system planning. We stressed in Order Nos. 

890 and 890-A not only the critical importance of long-range planning, but also the 

 42 See proposed 18 CFR 358.5(c)(1). 

43 See proposed 18 CFR 358.5(c)(2). 

44 See proposed 18 CFR 358.3(i). 

45 See proposed 18 CFR 358.3(h). 
Docket No. RM07-1-000 - 21 - 

desirability of a coordinated and open planning process.46 Unnecessary restrictions on 

employee interactions militate against that objective. However, because we are returning 

to the functional separation approach adopted in Order No. 889, and because a marketing 

function employee is one who is actively and personally engaged in marketing activities, 

an employee who performs merely a planning function and is not “engaged in” making 

wholesale offers, bids or sales does not fall within the prohibited category. He or she is 

therefore free to discuss system planning, including state-mandated Integrated Resource 

Planning, with transmission function employees. 

33. With respect to employee interactions regarding reliability functions, we deem it 

the first order of business on the part of a transmission provider to ensure reliability of 

operations. Indeed, pursuant to Congressional mandate in EPAct 2005, Reliability 

Standards have been promulgated by the Commission-certified Electric Reliability 

Organization47 and approved by the Commission, violation of which can subject a 

transmission provider to substantial civil penalties of up to $1 million a day.48 Several 

 46 Preventing Undue Discrimination and Preference in Transmission Service,

Order No. 890, FERC Stats. & Regs. ¶ 31,241, at P 425 (2007), order on reh’g and 

clarification, Order No. 890-A, FERC Statutes and Regulations ¶ 31,261, at P 171 (2007). 

47 The North American Electric Reliability Corporation was certified as the 

Electric Reliability Organization, pursuant to section 215 of the FPA, in North American 

Electric Reliability Corp., 116 FERC ¶ 61,062, order on reh’g and compliance, 

117 FERC ¶ 61,126 (2006). 

48 Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, 

FERC Statutes and Regulations ¶ 31,242 (2007), order on reh’g, Order No. 693-A, 

120 FERC ¶ 61,053 (2007), codified at 18 CFR part 40. 
Docket No. RM07-1-000 - 22 - 

Reliability Standards require an electric transmission provider to coordinate operations 

with entities that may include marketing affiliates and, thus, marketing function 

employees.49 We therefore provide an exception to the independent functioning rule for 

the exchange of information necessary to maintain or restore operation of the 

transmission system. Exchanges of information pursuant to this exception should be 

made only to the same extent that a transmission provider would exchange information 

with similarly situated marketing function employees of a non-affilated entity. We also 

propose requiring that a contemporaneous record be made of exchanges pursuant to this 

exception, except in emergency situations, when a record may be prepared after the 

fact.50 Furthermore, transmission function employees will still be subject to the no 

conduit rule discussed below, and thus will be required to distinguish between 

information concerning reliability activities and other transmission function information. 

34. If an employee spends any but a de minimis amount of time engaged in 

transmission functions, he or she will be considered a transmission function employee. 

However, a supervisor, officer or director who is not actively and personally engaged in 

transmission functions will not be considered a transmission function employee.51 Such 

 49 See, e.g., Reliability Standard TOP-003-0 (balancing authorities, transmission 

operators and generator operators shall plan and coordinate scheduled outages of system 

voltage regulating equipment and telemetering and control equipment); Reliability 

Standard TOP-002-2 (generator operator shall coordinate current-day, next-day and 

seasonal operations with its host balancing authority and transmission service provider). 

50 See proposed section 358.7(h). 

51 See proposed 18 CFR 358.3(i). 
Docket No. RM07-1-000 - 23 - 

an individual will, of course, have access to transmission function information, and will 

be barred from sharing it with marketing function employees under the no conduit rule 

discussed below. Inasmuch as different organizations use different titles for the same job 

function, we decline to propose a cutoff for supervisory personnel based on job title, and 

instead propose a functional approach based on actual involvement in the activities 

themselves. For instance, if a transmission department supervisor is charged with the 

general responsibility of overseeing system control center personnel, but does not himself 

engage in system operations or grant or deny transmission service requests, he would not 

be a transmission function employee. But if he is involved in system operations or the 

processing of transmission service requests, or engages in decision-making regarding 

system operations or the processing of transmission service requests, he would be a 

transmission function employee even if he also has supervisory responsibilities. 

2. Marketing Function Employee

35. The current Standards do not contain a definition of marketing function employee, 

although they do define “marketing affiliate,” “marketing, sales or brokering,” and 

“marketing or brokering.” We propose to simplify these concepts and, in accordance 

with our employee functional approach, eliminate the definition of marketing affiliate. 

We propose to define a marketing function employee as an employee, contractor, 

consultant or agent of a transmission provider or of an affiliate of a transmission provider 

who engages in marketing functions.52 “Marketing functions” are defined as the sale for 

 52 See proposed 18 CFR 358.3(d). 
Docket No. RM07-1-000 - 24 - 

resale in interstate commerce, or the submission of offers or bids to buy or sell natural 

gas or electric energy or capacity, demand response, virtual electric or gas supply or 

demand, or financial transmission rights in interstate commerce, all as subject to certain 

exemptions.53 We also propose to revise the existing definition of “affiliate” to conform 

to the current definition set forth in 18 CFR 35.43(a)(1).54 

36. In the past, the following categories have been exempted from the definition of 

marketing: (i) bundled retail sales, (ii) incidental purchases or sales of natural gas to 

operate interstate natural gas pipeline transmission facilities, (iii) sales of natural gas 

solely from the transmission provider’s own production, (iv) sales of natural gas solely 

from the transmission provider’s own gathering or processing facilities, or (v) sales by an 

intrastate natural gas pipeline or local distribution company making an on-system sale. 

The comments did not suggest deleting these exemptions, and we propose to carry them 

forward in this reissued NOPR.55 

 53 See proposed 18 CFR 358.3(c). This definition is a variant of a suggestion by 

TAPS. We note that it is unnecessary to include in the list of products another item 

mentioned by TAPS, that of ancillary services, as these are included in the definition of 

sales of electric energy. TAPS Reply at 8. We decline to include the suggested category 

of sites for generating capacity, as this category is far afield from the concept of 

marketing energy. 

54 See proposed 18 CFR 358.3(a). This definition was promulgated in CrossSubsidization Restrictions on Affiliate Transactions, Order No. 707, 73 Fed. Reg. 11,013 

(Feb. 29, 2008), FERC Stats. & Regs. ¶ 31,263 (2008). 

55 See proposed 18 CFR 358.3(c)(1)-(5). 
Docket No. RM07-1-000 - 25 - 

37. We also note that a question has arisen whether providers of last resort (POLR), 

which are transmission providers that are charged with serving retail customers when the 

customers choose not to purchase from other suppliers, should likewise be exempted. 

We declined to accord POLRs a generic exemption in Order No. 2004-C, instead stating 

we would consider their status on a case-by-case basis. Commenters supporting the 

exemption pointed out that POLR service constitutes bundled retail sales, and thus should 

fall within the exemption for that category.56 Commenters opposing the exemption 

presented theoretical instances of abuse, but not actual instances.57 In the absence of 

actual evidence of abuse, we believe the general exemption for bundled retail sales 

should also apply to transmission providers acting as POLRs, and therefore propose to 

include POLRs in the list of exempt marketing functions.58 

38. Similarly as with respect to transmission function employees, if an employee 

spends any but a de minimis amount of time engaged in marketing functions, he or she 

will be considered a marketing function employee. However, a supervisor, officer or 

director who is not actively and personally engaged in marketing functions will not be 

considered a marketing function employee.59 For instance, if a manager has supervisory 

 56 Northwestern at 5-6, Ameren at 25-28. 

57 Illinois Commerce Commission Reply at 6-7, Retail Energy Supply Association 

at 5-7. 

58 See proposed 18 CFR 358.3(c)(1). 

59 See proposed 18 CFR 358.3(d). 
Docket No. RM07-1-000 - 26 - 

responsibility over employees engaged in making offers or sales of electric energy or 

natural gas, but does not engage in making offers or sales himself, he would not be a 

marketing function employee. However, if he both supervises others and engages in 

making offers or sales himself, or engages in decision-making regarding offers or sales, 

he would be a marketing function employee. 

39. We note that our revised approach to the independent functioning rule resolves the 

question of whether asset managers should be subject to the Standards. In the initial 

NOPR, the Commission proposed expanding the definition of “marketing, sales or 

brokering” to include entities that manage or control transmission capacity, such as asset 

managers or agents. A number of comments were received on this subject, and several 

commenters noted that no evidence of abuse by asset managers had been presented in the 

initial NOPR record. These commenters point out that in the absence of such evidence, 

inclusion of asset managers in the category of proscribed affiliates would run afoul of the 

infirmity noted in National Fuel regarding Energy Affiliates.60

40. It is not necessary to reach this issue under our proposal, as our definition of 

marketing function employee reaches only those employees of an asset manager, whether 

that asset manager is a contractor, consultant, agent or affiliate, who may be directly 

engaged in wholesale marketing. Therefore, it is only those specific employees of an 

asset manager who must function independently of a transmission provider’s 

 60 Nevada Companies at 13, citing P 21 of the NOPR. See also National Fuel 

Companies at 5-6, Spectra at 10-13, Williston at 9-10, Sequent at 4-5. 
Docket No. RM07-1-000 - 27 - 

transmission function employees. This simplification regarding asset managers illustrates 

another advantage to our proposed employee functional approach. If a company finds it 

more efficient to have fewer subsidiaries and combine multiple functions in a given 

affiliate, it need not avoid doing so simply to shield the affiliate’s non-marketing 

employees from the restrictions imposed by the Standards. 

3. Shared Employees

41. Employees such as attorneys, accountants, risk management personnel and rate 

design employees do not fall within the scope of the independent functioning rule, so 

long as they are acting in their roles as attorneys, accountants, risk management 

personnel or rate design employees, rather than as transmission function employees or 

marketing function employees. Thus, there is no longer a need for the concept of “shared 

employees.” Of course, as discussed below, such employees remain subject to the no 

conduit rule and may not pass non-public transmission function information to marketing 

function employees. 

42. Furthermore, field employees will no longer need to be exempt from the 

independent functioning rule, as such employees, while qualifying as transmission 

function employees by virtue of being engaged in transmission system operations, will 

not be in a position to interact with marketing function employees. In those rare cases 

where marketing function employees may also operate generation and need to confer 

with transmission function employees, we propose a specific exception to the no conduit 

rule, as discussed below. 
Docket No. RM07-1-000 - 28 - 

4. Permitted Interactions

43. We recognize, based on lengthy experience of our Audits and Investigations staff 

in the Office of Enforcement, that there may be instances where transmission function 

employees must communicate with marketing function employees.61 For instance, it is 

not infrequently the case that the merchant function of a public utility not only engages in 

marketing the company’s electric power, but also operates its generating plants. Under 

our proposal, the number of operational employees who would qualify as marketing 

function employees will be greatly reduced. However, it is possible, as noted above, that 

there may be some overlap between sales and operations. In such cases, it is essential 

that the employees who supervise the operation of the generating plants be able to discuss 

the plants’ operational status with transmission function employees, as such information 

will affect flows and availability on the company’s transmission system. Therefore, for 

these occasions as well as for the reliability situations discussed above, we include an 

exception to the independent functioning requirement for communications between 

transmission function employees and marketing function employees.62 Exchanges of 

information pursuant to this exception, as in the case of exchanges regarding reliability, 

should be made only to the same extent that a transmission provider would exchange 

information with similarly situated marketing function employees of a non-affiliated 

 61 As noted, we have already provided for necessary communications between 

employees of a transmission provider and its affiliated nuclear power plant in the 

Interpretive Order. 

62 See proposed 18 CFR 358.5(b). 
Docket No. RM07-1-000 - 29 - 

entity. In order to prevent and monitor for potential abuse, we also include a requirement 

that contemporaneous records of such dispatch or reliability communications between 

transmission function employees and marketing function employees be maintained by the 

company and made available to Commission staff on request, as described in our 

discussion below on the transparency rule.63 It will be the responsibility of the Chief 

Compliance Officer to ensure that such records are made and retained. 

 5. Energy Affiliates

44. The concept of Energy Affiliates was added to the Standards in Order No. 2004. 

In that Order, we required pipelines and public utilities to function independently from 

their Energy Affiliates as well as from their marketing affiliates, and restricted the 

sharing of information by transmission providers with their Energy Affiliates. It was this 

addition which led the court in National Fuel to vacate the order with respect to the gas 

industry, on the grounds there was no record evidence of abuse by Energy Affiliates. 

45. Our proposed adoption of the employee functional approach renders moot the 

question of whether the concept of Energy Affiliates should be retained for the electric 

industry. We no longer propose separating employees from transmission activities by 

virtue of their being employed by either a marketing affiliate or an Energy Affiliate, but 

rather by their job as a marketing function employee. Moreover, we note that 

commenters who supported retention of the concept of Energy Affiliates did not provide 

 63 See proposed 18 CFR 358.7(h). 
Docket No. RM07-1-000 - 30 - 

the Commission with evidence of actual abuse. That being the case, the same reasoning 

as was employed in National Fuel with respect to the natural gas industry would likely 

prevail on appeal of any order that restricted communications between public utilities and 

their Energy Affiliates. For that reason as well, we decline to apply the concept of 

Energy Affiliates to the electric industry. 

C. The No Conduit Rule

46. We propose strengthening the proscriptions against the exchange of prohibited 

information in several ways. In addition to the current prohibition against transmission 

function employees disclosing non-public transmission function information to marketing 

function employees,64 we propose prohibiting marketing function employees from 

receiving non-public transmission function information from any source.65 And in 

addition to the current prohibition against a transmission provider using anyone as a 

conduit for the improper disclosure of non-public transmission function information, we 

propose prohibiting both an employee of a transmission provider and also an employee of 

an affiliate engaged in marketing functions from disclosing non-public transmission 

function information to marketing function employees.66 The expansion of the no 

 64 The current Standards prohibit transmission provider’s employees from 

disclosing non-public information about the transmission system to marketing or Energy 

Affiliates. 18 CFR 358.5(b). 

65 See proposed § 358.6(a)(2). 

66 See proposed §358.6(a)(4). 
Docket No. RM07-1-000 - 31 - 

conduit rule67 is designed to reach all sources of a prohibited informational exchange. It 

also encompasses many employees who do not fall within the scope of the independent 

functioning rule. For instance, although under our proposal there is no requirement that 

lawyers employed by a transmission provider need to function independently of the 

company’s marketing function employees, such lawyers must avoid serving as a conduit 

for passing transmission function information to a marketing function employee. 

47. As a safety valve, we also include an exemption to the no conduit rule that 

parallels the exemption provided under the independent functioning rule. Thus, the 

exchange of transmission function information with marketing function employees is 

permitted where the information regards generation necessary to perform generation 

dispatch, or is necessary to maintain or restore operation of the transmission system.68 In 

such cases, a contemporaneous record is to be made of the exchange, except in 

emergency circumstances, when the record can be made after the fact.69 

48. Compliance with proscriptions on the exchange of information should be greatly 

facilitated by the existing requirement that transmission providers designate a Chief 

 67 In the current Standards, the no conduit prohibition refers only to the use of 

another person by the transmission provider or its employees to pass prohibited 

information to a marketing affiliate or Energy Affiliate. 18 CFR 358.5(b)(7). In the 

proposed Standards, the term “no conduit rule” refers to the entire set of prohibitions on 

informational exchanges, including transmission provider employees, marketing affiliate 

employees and employees of other entities. 

68 See proposed 18 CFR 358.6(b). 

69 See proposed 18 CFR 358.7(h). 
Docket No. RM07-1-000 - 32 - 

Compliance Officer. Such officers are responsible, in the first instance, for fielding any 

questions from employees regarding the nature of transmission function information or 

the persons to whom it may be passed, for preventing prohibited exchanges of 

information, and for curing any prohibited exchanges by public posting of the 

information. We proposed in the initial NOPR that a transmission provider post the name 

of its Chief Compliance Officer on its OASIS or Internet website, due to difficulties 

Commission staff had experienced in identifying the Chief Compliance Officers of 

several transmission providers. We carry forward that proposal here.70 

49. We also propose retaining from the existing regulations the requirement that 

transmission providers train their employees on compliance with the Standards, and 

propose carrying forward from the initial NOPR the requirement that completion of such 

training be certified. We also propose that such training be conducted annually.71 Most 

employees should received some training, as all employees are forbidden from passing 

designated information to prohibited employees, but the bulk of the training will need to 

be concentrated on transmission function employees, marketing function employees, and 

those employees who are privy to transmission function information. Such employees 

would include lawyers, accountants, risk management personnel, and members of the rate 

design department. Since the actual restrictions in the Standards will now match the 

 70 See proposed 18 CFR 358.8(c)(2). 

71 See proposed 18 CFR 358.8(c)(1). 
Docket No. RM07-1-000 - 33 - 

abuses sought to be avoided, such training should be relatively straightforward and easy 

for employees to comprehend. 

D. The Transparency Rule

50. The reason behind the no conduit rule’s prohibitions on receipt and disclosure of 

information is to prevent undue discrimination and undue preference by a transmission 

provider towards its marketing affiliate or division. But undue preferences can occur 

only if the prohibited information is not generally available to the competitors of such 

affiliates or divisions. Therefore, a transmission provider may comply with the 

prohibitions on passing transmission function information to marketing function 

employees by making such information publicly available. As EPSA remarks in its 

comments, the simultaneous disclosure of non-public transmission-related information to 

affiliates and to the public provides a “Gordian Knot” solution to undue discrimination in 

the provision of sensitive information.72 

51. As currently provided in the regulations, in the event prohibited information is 

inadvertently passed to a prohibited employee, the violation can be cured by immediately 

posting such information on the transmission provider’s Open Access Same-time 

Information System (OASIS) in the case of the electric industry, or on its Internet 

website, in the case of the natural gas industry.73 However, if the unauthorized disclosure 

includes non-public transmission customer information (a subset of transmission function 

 72 EPSA at 4-5. 

73 See proposed 18 CFR 358.7(a)(1). 
Docket No. RM07-1-000 - 34 - 

information), we propose that the posting consist only of a notice that such information 

has been disclosed, in order to preserve its confidentiality and prevent further potential 

harm to that customer.74 We also propose to carry forward from the existing regulations 

the exceptions for a marketing employee’s specific requests for transmission service and 

for situations where a transmission customer voluntarily consents to the release of its 

information.75 In those cases where, despite the independent functioning rule, 

transmission function employees must interact with marketing function employees, as 

where the latter are also responsible for the maintenance and dispatch of generating units 

or need to be involved in maintaining reliability, we have proposed requiring the 

contemporaneous recording of such conversations, so that the Commission may ascertain 

that no prohibited information was passed in the course of otherwise permissible 

discussions. Depending on the circumstances, such recordation could consist of handwritten or typed notes, electronic recording such as e-mails and text messages, telephone 

recordings, or the like. It is recommended that for all planned communications, the Chief 

Compliance Officer designate one of the attendees to such conversations as the person 

charged with the responsibility for recording the conversation or taking notes. The Chief 

Compliance Officer must be responsible for retaining these records in an accessible form, 

and the transmission provider must make them available to Commission staff upon 

 74 See proposed 18 CFR 358.7(a)(2). 

75 See proposed 18 CFR 358.7(b)-(c). 
Docket No. RM07-1-000 - 35 - 

request. The Commission proposes that the records be maintained for a period of five 

years.76 

52. In accordance with the general aim of preventing undue preference, we propose 

retaining the existing regulation that a log be kept of any exercises of discretion or acts of 

waiver on the part of transmission providers. These should also be made available to 

Commission staff upon request.77 Similarly, we proposed to retain the existing 

requirement that any offer of a discount must be posted on the transmission provider’s 

OASIS or Internet website.78 

53. We also propose certain modifications to the posting requirements for 

transmission providers. We propose the elimination of an organizational chart, which is 

no longer necessary in the absence of a requirement to bring Energy Affiliates within the 

scope of the Standards. However, affiliates that employ marketing function employees 

still need to be listed.79 Another proposed modification is to provide for a temporary 

suspension of posting requirements in the case of emergencies.80 Commission staff has 

received requests for waivers in the wake of Hurricane Katrina and other natural 

disasters, when transmission providers found it impossible to keep up with their normal 

 76 See proposed 18 CFR 358.7(h). 

77 See proposed 18 CFR 358.4(4). 

78 See proposed 18 CFR 358.4(b). 

79 See proposed 18 CFR 358.7(e)(l). 

80 See proposed 18 CFR 358.7(g)(2). 
Docket No. RM07-1-000 - 36 - 

posting requirements. At such times, they should not be further burdened with the 

necessity of seeking a waiver. 

54. We also propose to continue the existing requirements concerning the posting of 

written implementation procedures for the Standards, certain merger information 

(modifying the information to account for the deletion of the concept of Energy 

Affiliates), and employee transfer information.81 

55. The combination of public disclosure and contemporaneous recording required by 

the transparency rule should go a long way toward providing the Commission and market 

participants with the information needed to identify violations of the per se rules of the 

Standards, for which no further investigation would be needed. It also should enhance 

the ability of the Commission to monitor other behavior which may not be covered by the 

Standards themselves but which could be considered undue discrimination or preference 

under the FPA or NGA. 

E. Miscellaneous

 1. General Principles

56. We propose to modify the statement of general principles currently found in 

18 CFR 358.2 to reflect statutory language regarding the prohibition against undue 

discrimination and undue preference.82 We also propose to include statements of 

 81 See proposed 18 CFR 358.7(d)-(f). 

82 The statutory language is contained in sections 205 and 206 of the FPA and 

sections 4 and 5 of the NGA. 
Docket No. RM07-1-000 - 37 - 

principle that reflect the three core rules we propose here, those being the independent 

functioning rule, the no conduit rule, and the transparency rule.83 

2. Non-Discrimination Requirements

57. We propose to carry forward the existing regulations regarding the nondiscrimination and non-preference requirements imposed on transmission providers, with 

some minor wording changes and combining of sections for simplicity and clarity.84 

While these requirements are in large part self-evident, as they reiterate statutory 

provisions, we believe that reiteration is helpful to emphasize the relationship of the 

Standards to the statutory prohibition against undue discrimination.

3. Applicability

58. In the paragraphs concerning applicability of the standards, we propose modifying 

§ 358.1(a) to conform to the definitions proposed here, but otherwise to retain the 

restriction on applicability only to those pipelines that conduct transportation transactions 

with their marketing affiliates. We request comment as to whether this section and the 

following § 358.1(b), dealing with electric transmission providers, should be made 

parallel by deleting this provision (or in some other way). While a pipeline might 

conceivably have marketing affiliates with which it does not conduct transportation 

transactions, we note that pipelines need no longer be concerned with the inability to 

 83 See proposed 18 CFR 358.2. 

84 See proposed 18 CFR 358.4. 
Docket No. RM07-1-000 - 38 - 

share information with the officers of such marketing affiliates, under our proposed 

reform of the independent functioning rule.

59. We propose to continue the existing exemption from the Standards for regional 

transmission organizations (RTOs) and independent system operators (ISOs). We also 

propose to continue the present ability of transmission owners that are members of RTOs 

and ISOs to apply for a waiver from the Standards if they do not operate or control their 

transmission facilities and have no access to transmission function information.85 

60. The initial NOPR raised the question as to when a new natural gas transmission 

provider should become subject to the Standards. Under Order No. 497, a natural gas 

transmission provider became subject to the Standards when it commenced transportation 

transactions with its marketing or brokering affiliate.86 In Order No. 2004-B, the 

Commission stated that a new interstate pipeline should observe the Standards when the 

pipeline is granted and accepts a certificate of public convenience and necessity and 

becomes subject to the Commission’s jurisdiction under the NGA.87 This was one of the 

items appealed by the gas industry, and although it was not addressed in the National 

Fuel decision, it was vacated sub silencio. In the Interim Rule, the Commission did not 

 85 See proposed 18 CFR 358.1(c). 

86 Former 18 CFR 161.3. 

87 Order No. 2004-B at P 137. 
Docket No. RM07-1-000 - 39 - 

require natural gas transmission providers to observe the Standards until such time as 

they commenced transportation transactions with their marketing affiliates.88 

61. As we observed in the initial NOPR, we do not have any evidence that affiliate 

abuse has occurred in the time period before transportation commences. Therefore, we 

propose not to require new natural gas transmission providers to observe the Standards 

until the earlier of the date they have a rate on file with the Commission, or the date on 

which they commence transportation transactions. We propose to apply the same rule to 

electric transmission providers.89 

4. Updates and Ministerial Corrections

62. We carry forward proposals from the initial NOPR to delete outdated references, 

such as those referring to the date for submitting a plan and a schedule for implementing 

the Standards.90 We also revise language from the existing regulations where necessary 

to correct such ministerial matters as grammar and punctuation, and to account for the 

new definitions we propose here. Finally, we propose to reorganize sections where 

necessary to place related provisions in their logical sequence. For example, provisions 

regarding Energy Affiliates have been deleted, and provisions involving posting 

requirements have been gathered together in § 358.7, the transparency rule. 

 88 Interim Rule at P 26. 

89 See proposed 18 CFR 358.8(a). 

90 See proposed 18 CFR 358.8(b). 
Docket No. RM07-1-000 - 40 - 

63. We propose modifying the section on definitions by providing new definitions that 

conform with the reforms proposed in this NOPR, deleting existing definitions no longer 

needed in light of our new proposals, and placing the definitions in alphabetical order.91 

We propose to carry forward the current definitions of “transmission provider,” but 

request comment on whether the separate definitions for electric and gas should be made 

parallel by referring to the applicable sections of the Code of Federal Regulations in each 

definition.92 

64. Except as noted above, we propose retaining the bulk of the existing requirements 

for posting notices on the OASIS or Internet website, with minor wording revisions for 

clarity.93 We propose retaining the requirement regarding the maintenance of books and 

records.94 With minor wording changes to reflect our proposed new definitions, we also 

propose to retain the requirement that written procedures be posted on the OASIS or 

Internet website and be distributed to selected employees.95 However, we propose to 

delete the current requirement that such written procedures also be filed with the 

Commission. 

 91 See proposed 18 CFR 358.3. 

92 See proposed 18 CFR 358.3(k). 

93 See proposed 18 CFR 358.7(d)-(g). 

94 See proposed 18 CFR 358.8 (d). 

95 See proposed 18 CFR 358.7(d) and 358.8(b). 
Docket No. RM07-1-000 - 41 - 

IV. Applicability of the Proposed Rule and Compliance Procedures

65. The Commission has a responsibility under FPA sections 205 and 206 and NGA 

sections 4 and 5 to ensure that the rates, charges, classifications, and service of public 

utilities (and any rule, regulation, practice, or contract affecting any of these) are just and 

reasonable and not unduly discriminatory or preferential, and to remedy undue 

discrimination and undue preference in the provision of such services. In fulfilling its 

responsibilities under FPA sections 205 and 206 and NGA sections 4 and 5, the 

Commission is required to address, and has the authority to remedy, undue discrimination 

and undue preference. Our action in this NOPR proposes to fulfill those responsibilities 

by proposing reforms to the Standards, which are designed to provide per se rules 

preventing undue discrimination and undue preference by transmission providers in the 

sale for resale of natural gas and electric energy. 

66. The Commission proposes to apply the Final Rule in this proceeding to all 

transmission providers, who will be required to abide by its provisions, including the 

designation of a Chief Compliance Officer and the provision of training to its employees. 

Records of compliance are required to be maintained by the transmission provider for 

inspection by the Commission. 

V. Information Collection Statement

67. The Office of Management and Budget (OMB) regulations require approval of 

certain information collection requirements imposed by agency rules.96 

 96 5 CFR 1320.11. 
Docket No. RM07-1-000 - 42 - 

68. Previously, the Commission submitted to OMB the information collection 

requirements arising from the Standards of Compliance adopted in Order No. 2004. 

OMB approved those requirements.97 The revisions to the Standards proposed in this 

issuance are modifications of already approved information collection procedures, and do 

not impose any significant additional information collection burden on industry 

participants. Many of the changes consist merely of the rewording of definitions and the 

reordering of the various information collection requirements. Some information 

collection requirements have been deleted, such as the posting of organizational charts. 

A requirement has been added concerning the maintenance of records regarding certain 

informational exchanges between transmission function employees and marketing 

function employees, as well as a requirement regarding the posting of contact information 

regarding the identification of the Chief Compliance Officer. Neither of these should 

impose a significant burden on the transmission providers. In fact, by proposing that the 

Standards will no longer govern the relationship between transmission providers and their 

Energy Affiliates, the overall information collection burden will likely decrease. 

69. The Commission is submitting notification of the information collection 

requirements imposed in the NOPR to OMB for its review and approval under section 

3507(d) of the Paperwork Reduction Act of 1995.98 Comments are solicited on the 

 97 Letter from OMB to the Commission (Jan. 20, 2004) (OMB Control Number 

1902-0157); “Notice of Action” letter from OMB to the Commission (Jan. 20, 2004) 

(OMB Control Number 1902-0173). 

98 44 U.S.C. 3507(d) (2000 and Supp. V 2005). 
Docket No. RM07-1-000 - 43 - 

Commission’s need for this information, whether the information will have practical 

utility, the accuracy of provided burden estimates, ways to enhance the quality, utility, 

and clarity of the information to be collected, and any suggested methods of minimizing 

respondent’s burden, including the use of automated information techniques. 

70. OMB regulations require OMB to approve certain information collection 

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

proposed rule to OMB. 

Title: FERC-592 and 717. 

Action: Proposed Collection 

OMB Control No.: 1902-0157-1902-173 

Respondents: Business or other for profit. 

Frequency of Responses: On occasion. 

Necessity of the Information: The information is necessary to ensure that all regulated 

transmission providers treat all transmission customers on a non-discriminatory basis. 

Internal review: The Commission has reviewed the requirements pertaining to natural 

gas pipelines and transmitting electric utilities and determined the proposed revisions are 

necessary to clarify the Standards, enhance compliance, increase efficiencies, and 

conform with a recent court decision. 

71. These requirements conform to the Commission’s plan for efficient information 

collection, communication, and management with the natural gas and electric utility 

industries. The Commission has assured itself, by means of internal review, that there is 
Docket No. RM07-1-000 - 44 - 

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

requirements. 

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

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

D.C. 20426 [Attention: Michael Miller, Office of the Chief Information Officer, phone: 

(202) 502-8415, fax: (202) 208-2425, e-mail: Michael.Miller@FERC.gov.] Comments 

on the requirements of the proposed rule also may be sent to the Office of Information 

and Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503 

[Attention Desk Officer for the Federal Energy Regulatory Commission]. 

VI. Environmental Analysis

73. 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.99 The Commission concludes that neither an Environmental 

Assessment nor an Environmental Impact Statement is required for this NOPR under § 

380.4 of the Commission’s regulations for certain actions. The actions proposed here fall 

within the categorical exclusions because this rule is clarifying and corrective, does not 

substantially change the effect of the regulations being amended and calls for information 

 99 Order No. 486, Regulations Implementing the National Environmental Policy 

Act of 1969, FERC Stats. & Regs. ¶ 30,783 (1987). 
Docket No. RM07-1-000 - 45 - 

gathering and dissemination.100 Therefore, an environmental assessment is unnecessary 

and has not been prepared for this rulemaking. 

VII. Regulatory Flexibility Act 

74. The Regulatory Flexibility Act of 1980 (RFA)101 generally requires a description 

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

number of small entities. Because most transmission providers do not fall within the 

definition of “small entity,”102 the Commission certifies that this rule will not have a 

significant economic impact on a substantial number of small entities. Furthermore, 

small entities may seek a waiver of these requirements, and those small entities that have 

already received a waiver of the Standards would be unaffected by the requirements of 

this proposed rulemaking. 

VIII. Comment Procedures

75. 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 No. 

RM07-1-000, and must include the commenter's name, the organization he or she 

represents, if applicable, and his or her address. 

 100 18 CFR 380.4(a)(2)(ii) and 380.4(a)(5) (2007). 

101 5 U.S.C. 601-612 (2000 and Supp. V 2005). 

102 See 5 U.S.C. 601(3) and (6) (2000 and Supp. V 2005). 
Docket No. RM07-1-000 - 46 - 

76. The Commission encourages comments to be filed electronically via the eFiling 

link on the Commission's website at http://www.ferc.gov. The Commission accepts most 

standard word processing formats. Documents created electronically using word 

processing software should be filed in native applications or print-to-PDF format and not 

in a scanned format. Commenters filing electronically do not need to make a paper 

filing. 

77. Commenters who are not able to file comments electronically must send an 

original and 14 copies of their comments to: Federal Energy Regulatory Commission, 

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

78. 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 reissued NOPR are not required to serve copies of their 

comments on other commenters. 

IX. Document Availability

79. 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. 

80. 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 
Docket No. RM07-1-000 - 47 - 

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. 

81. 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.referenceroom@ferc.gov. 

List of subjects in 18 CFR part 358 

 Electric power plants, Electric utilities, Natural gas, Reporting and recordkeeping 

requirements. 

By direction of the Commission. 

Nathaniel J. Davis, Sr., 

Deputy Secretary. 

 
Docket No. RM07-1-000 - 48 - 

In consideration of the foregoing, the Commission proposes to revise part 358, Chapter I, 

Title 18, Code of Federal Regulations, to read as follows: 

PART 358—STANDARDS OF CONDUCT 

Sec. 

§ 358.1 Applicability.

§ 358.2 General principles.

§ 358.3 Definitions.

§ 358.4 Non-discrimination requirements.

§ 358.5 Independent functioning rule. 

§ 358.6 No conduit rule. 

§ 358.7 Transparency rule. 

§ 358.8 Implementation requirements.

Authority: 15 U.S.C. 717–717w, 3301–3432; 16 U.S.C. 791–825r, 2601–2645; 31 

U.S.C. 9701; 42 U.S.C. 7101–7352. 

§ 358.1 Applicability. 

(a) This part applies to any interstate natural gas pipeline that transports gas for 

others pursuant to subpart A of part 157 or subparts B or G of part 284 of this chapter and 

conducts transmission transactions with an affiliate that engages in marketing functions. 

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

used for the transmission of electric energy in interstate commerce. 
Docket No. RM07-1-000 - 49 - 

(c) This part does not apply to a public utility transmission provider that is a 

Commission-approved Independent System Operator (ISO) or Regional Transmission 

Organization (RTO). If a public utility transmission owner participates in a Commissionapproved ISO or RTO and does not operate or control its transmission system and has no 

access to transmission function information, it may request an exemption from this part. 

(d) A transmission provider may file a request for an exemption from all or some 

of the requirements of this part for good cause. 

§ 358.2 General principles. 

(a) A transmission provider must treat all transmission customers, affiliated and 

non-affiliated, on a not unduly discriminatory basis, and must not make or grant any 

undue preference or advantage to any person or subject any person to any undue 

prejudice or disadvantage with respect to any transportation of natural gas or transmission 

of electric energy in interstate commerce, or with respect to the wholesale sale of natural 

gas or of electric energy in interstate commerce. 

(b) A transmission provider's transmission function employees must function 

independently from its marketing function employees, except as permitted in this part or 

otherwise permitted by Commission order. 

(c) Transmission function information may not be passed to or received by a 

transmission provider’s marketing function employees, unless such information has been 

made public, except as permitted in this part or otherwise permitted by Commission 

order. 
Docket No. RM07-1-000 - 50 - 

(d) A transmission provider must create, and maintain for a period of five years, 

records of permitted communications between transmission function employees and 

marketing function employees. 

§ 358.3 Definitions. 

(a) Affiliate of a specified company means: 

(1) A division that operates as a functional unit of the specified company or, for 

any person other than an exempt wholesale generator: 

(i) Any person that directly or indirectly owns, controls, or holds with power to 

vote, 10 percent or more of the outstanding voting securities of the specified company; 

(ii) Any company 10 percent or more of whose outstanding voting securities are 

owned, controlled, or held with power to vote, directly or indirectly, by the specified 

company; 

(iii) Any person or class of persons that the Commission determines, after 

appropriate notice and opportunity for hearing, to stand in such relation to the specified 

company that there is liable to be an absence of arm’s-length bargaining in transactions 

between them as to make it necessary or appropriate in the public interest or for the 

protection of investors or consumers that the person be treated as an affiliate; and 

(iv) Any person that is under common control with the specified company. 

(v) For purposes of paragraph (a)(1)(iv), owning, controlling or holding with 

power to vote, less than 10 percent of the outstanding voting securities of a specified 

company creates a rebuttable presumption of lack of control. 
Docket No. RM07-1-000 - 51 - 

(2) For any exempt wholesale generator (as defined under § 366.1 of this chapter), 

consistent with section 214 of the Federal Power Act (16 U.S.C. 824m), which provides 

that “affiliate” shall have the same meaning as provided in section 2(a) of the Public 

Utility Holding Company Act of 1935 (15 U.S.C. 79b(a)(11)): 

(i) Any person that directly or indirectly owns, controls, or holds with power to 

vote, 5 percent or more of the outstanding voting securities of the specified company; 

(ii) Any company 5 percent or more of whose outstanding voting securities are 

owned, controlled, or held with power to vote, directly or indirectly, by the specified 

company; 

(iii) Any individual who is an officer or director of the specified company, or of 

any company which is an affiliate thereof under paragraph (a)(2)(i); and 

(iv) any person or class of persons that the Commission determines, after 

appropriate notice and opportunity for hearing, to stand in such relation to the specified 

company that there is liable to be an absence of arm’s-length bargaining in transactions 

between them as to make it necessary or appropriate in the public interest or for the 

protection of investors or consumers that the person be treated as an affiliate. 

(b) Internet website refers to the Internet location where an interstate natural gas 

pipeline posts the information, by electronic means, required by §§ 284.12 and 284.13 of 

this chapter. 

(c) Marketing functions means the sale for resale in interstate commerce, or the 

submission of offers or bids to buy or sell natural gas or electric energy or capacity, 
Docket No. RM07-1-000 - 52 - 

demand response, virtual electric or gas supply or demand, or financial transmission 

rights in interstate commerce, subject to the following exemptions: 

(1) Bundled retail sales, including sales of electric energy made by providers of 

last resort (POLRs), 

(2) Incidental purchases or sales of natural gas to operate interstate natural gas 

pipeline transmission facilities, 

(3) Sales of natural gas solely from the transmission provider’s own production, 

(4) Sales of natural gas solely from the transmission provider’s own gathering or 

processing facilities, and 

(5) Sales by an intrastate natural gas pipeline or local distribution company 

making an on-system sale. 

(d) Marketing function employee means an employee, contractor, consultant or 

agent of a transmission provider or of an affiliate of a transmission provider who actively 

and personally engages in marketing functions. An officer, director or other supervisory 

employee is not considered to be a marketing function employee if he or she does not 

actively and personally engage in marketing functions. 

(e) Open Access Same-time Information System or OASIS refers to the Internet 

location where a public utility posts the information, by electronic means, required by 

part 37 of this chapter. 

(f) Transmission means electric transmission, network or point-to-point service, 

ancillary services or other methods of electric transmission, or the interconnection with 

jurisdictional transmission facilities, under part 35 of this chapter; and natural gas 
Docket No. RM07-1-000 - 53 - 

transportation, storage, exchange, backhaul, or displacement service provided pursuant to 

subpart A of part 157 or subparts B or G of part 284 of this chapter. 

(g) Transmission customer means any eligible customer, shipper or designated 

agent that can or does execute a transmission service agreement or can or does receive 

transmission service, including all persons who have pending requests for transmission 

service or for information regarding transmission. 

(h) Transmission functions means transmission system operations and the 

planning, directing, organizing or carrying out of transmission operations, including the 

granting and denying of transmission service requests. 

(i) Transmission function employee means an employee, contractor, consultant or 

agent of a transmission provider who actively and personally engages in transmission 

functions. An officer, director or other supervisory employee is not considered to be a 

transmission function employee if he or she does not actively and personally engage in 

transmission functions. 

(j) Transmission function information means information relating to transmission 

functions. 

(k) Transmission provider means: 

(1) Any public utility that owns, operates or controls facilities used for the 

transmission of electric energy in interstate commerce; or 

(2) Any interstate natural gas pipeline that transports gas for others pursuant to 

subpart A of part 157 or subparts B or G of part 284 of this chapter. 
Docket No. RM07-1-000 - 54 - 

(3) A transmission provider does not include a natural gas storage provider 

authorized to charge market-based rates that is not interconnected with the jurisdictional 

facilities of any affiliated interstate natural gas pipeline, has no exclusive franchise area, 

no captive ratepayers and no market power. 

(l) Transmission service means the provision of any transmission as defined in § 

358.3(f). 

§ 358.4 Non-discrimination requirements. 

(a) Implementing tariffs. 

(1) A transmission provider must strictly enforce all tariff provisions relating to 

the sale or purchase of open access transmission service, if the tariff provisions do not 

permit the use of discretion. 

(2) A transmission provider must apply all tariff provisions relating to the sale or 

purchase of open access transmission service in a fair and impartial manner that treats all 

transmission customers in a not unduly discriminatory manner, if the tariff provisions 

permit the use of discretion. 

(3) A transmission provider may not, through its tariffs or otherwise, give undue 

preference to any person in matters relating to the sale or purchase of transmission 

service (including, but not limited to, issues of price, curtailments, scheduling, priority, 

ancillary services, or balancing). 

(4) A transmission provider must process all similar requests for transmission in 

the same manner and within the same period of time. 
Docket No. RM07-1-000 - 55 - 

(5) A transmission provider must post on the OASIS or Internet website, as 

applicable, notice of each waiver of a tariff provision that it grants, and notice of each 

exercise of discretion that it exercises, detailing the circumstances and manner under 

which the waiver or exercise of discretion occurred. The posting must be made within 

one business day of the act of a waiver or exercise of discretion. The transmission 

provider must also maintain a log of the acts of waiver and exercises of discretion, and 

must make it available to the Commission upon request. The records must be kept for a 

period of five years from the date of each act of waiver or exercise of discretion. 

(b) Discounts. A transmission provider must post any offer of a discount for any 

transmission service made on the OASIS or Internet website, as applicable, 

contemporaneous with the time that the offer is contractually binding. The posting must 

remain on the OASIS or Internet website for 60 days from the date of posting. The 

posting must include: 

(1) The name of the customer involved in the discount and whether it is an affiliate 

or whether an affiliate is involved in the transaction; 

(2) The rate offered; 

(3) The maximum rate; 

(4) The time period for which the discount would apply; 

(5) The quantity of power or gas upon which the discount is based; 

(6) The delivery points under the transaction; and 

(7) Any conditions or requirements applicable to the discount. 
Docket No. RM07-1-000 - 56 - 

§ 358.5 Independent functioning rule. 

(a) General rule. Except as permitted in this part or otherwise permitted by 

Commission order, a transmission provider’s transmission function employees must 

function independently of its marketing function employees. 

(b) Exemption for permitted information exchanges. Notwithstanding the 

requirements of paragraph (a) of this section, a transmission provider’s transmission 

function employees and marketing function employees may exchange certain 

information, in which case the transmission provider must make a contemporaneous 

record of the information exchange, subject to an exception for emergency 

circumstances, as provided in § 358.7(h). The permitted information is as follows: 

(1) Information regarding generation necessary to perform generation dispatch, or 

(2) Information necessary to maintain or restore operation of the transmission 

system. 

(c) Separation of functions. 

(1) A transmission provider is prohibited from permitting its marketing function 

employees to: 

(i) Conduct transmission functions; or 

(ii) Have access to the system control center or similar facilities used for 

transmission operations that differs in any way from the access available to other 

transmission customers. 
Docket No. RM07-1-000 - 57 - 

(2) A transmission provider is prohibited from permitting its transmission function 

employees to conduct marketing functions. 

§ 358.6 No conduit rule. 

(a) Prohibited disclosure and receipt. 

(1) A transmission provider’s transmission function employees are prohibited 

from disclosing non-public transmission function information to their transmission 

provider’s marketing function employees. 

(2) A transmission provider’s marketing function employees are prohibited from 

receiving non-public transmission function information from any source. 

(3) A transmission provider is prohibited from using anyone as a conduit for the 

disclosure of non-public transmission function information to its marketing function 

employees. 

(4) An employee of a transmission provider, and an employee of an affiliate of a 

transmission provider that is engaged in marketing functions, is prohibited from 

disclosing non-public transmission function information to any of the transmission 

provider’s marketing function employees. 

(b) Exemption for permitted information exchanges. Notwithstanding the 

requirements of paragraph (a) of this section, a transmission provider’s transmission 

function employees and marketing function employees may exchange certain 

information, in which case the transmission provider must make a contemporaneous 
Docket No. RM07-1-000 - 58 - 

record of the information exchange, subject to an exception for emergency 

circumstances, as provided in § 358.7(h). The permitted information is as follows: 

(1) Information regarding generation necessary to perform generation dispatch, or 

(2) Information necessary to maintain or restore operation of the transmission 

system. 

§358.7 Transparency rule. 

(a) Contemporaneous disclosure. 

(1) If a transmission provider discloses non-public transmission function 

information, other than non-public transmission customer information, in a manner 

contrary to the requirements of § 358.6(a), the transmission provider must immediately 

post the information that was disclosed on the OASIS or Internet website, as applicable. 

(2) If a transmission provider discloses non-public transmission customer 

information in a manner contrary to the requirements of § 358.6(a), the transmission 

provider must immediately post notice on the OASIS or Internet website, as applicable, 

that non-public transmission customer information was disclosed. 

(b) Exception for specific transaction information. A transmission provider is not 

required to contemporaneously disclose information covered by § 358.6(a) if the 

information relates solely to a marketing function employee’s specific request for 

transmission service. 

(c) Voluntary consent provision. A transmission customer may voluntarily 

consent, in writing, to allow the transmission provider to disclose the transmission 

customer's information to the transmission provider’s marketing function employees. If 
Docket No. RM07-1-000 - 59 - 

the transmission customer authorizes the transmission provider to disclose its information 

to marketing function employees, the transmission provider must post notice on the 

OASIS or Internet website of that consent along with a statement that it did not provide 

any preferences, either operational or rate-related, in exchange for that voluntary consent. 

(d) Posting written procedures on the public Internet. A transmission provider 

must post on the OASIS or Internet website, as applicable, current written procedures 

implementing the standards of conduct. 

(e) Identification of affiliate information on the public Internet. 

(1) A transmission provider must post on its OASIS or Internet website, as 

applicable, the names and addresses of all its affiliates that employ or retain marketing 

function employees. 

(2) A transmission provider must post on its OASIS or Internet website, as 

applicable, a complete list of the employee-staffed facilities shared by the transmission 

provider and any of its affiliates that employ or retain marketing function employees. 

The list must include the types of facilities shared and the addresses of the facilities. 

(3) The transmission provider must post information concerning potential merger 

partners as affiliates that may employ or retain marketing function employees, within 

seven days after the potential merger is announced. 

(f) Identification of employee information on the public Internet. 

(1) A transmission provider must post on its OASIS or Internet website, as 

applicable, the job titles and job descriptions of its transmission function employees, with 

the exception of clerical, maintenance, and field positions. 
Docket No. RM07-1-000 - 60 - 

(2) A transmission provider must post a notice on the OASIS or Internet website, 

as applicable, of any transfer of a transmission function employee to a position as a 

marketing function employee, or any transfer of a marketing function employee to a 

position as a transmission function employee. The information posted under this section 

must remain on the OASIS or Internet website, as applicable, for 90 days. No such job 

transfer may be used as a means to circumvent any provision of this part. The 

information to be posted must include: 

(i) The name of the transferring employee, 

(ii) The respective titles held while performing each function (i.e., as a 

transmission function employee and as a marketing function employee), and 

(iii) The effective date of the transfer. 

(g) Timing and general requirements of postings on the public Internet. 

(1) A transmission provider must update on its OASIS or Internet website, as 

applicable, the information required by § 358.7 within seven business days of any 

change, and post the date on which the information was updated. 

(2) In the event an emergency, such as a flood, fire or hurricane, severely disrupts 

a transmission provider’s normal business operations, the posting requirements in this 

part may be suspended by the transmission provider. If the disruption lasts longer than 

one month, the transmission provider must so notify the Commission and may seek a 

further exemption from the posting requirements. 
Docket No. RM07-1-000 - 61 - 

(3) All OASIS or Internet website postings required by this part must comply, as 

applicable, with the requirements of § 37.6 or § 284.12(a) and (b)(3)(v) of this chapter, 

and must be sufficiently prominent as to be readily accessible. 

(h) Recordation of permitted information exchanges. Notwithstanding the 

requirements of §§ 358.5(a) and 358.6(a), a transmission provider’s transmission function 

employees and marketing function employees may exchange certain information, in 

which case the transmission provider must make and retain a contemporaneous record of 

all such exchanges except in emergency circumstances, in which case a record must be 

made of the exchange as soon as practicable after the fact. The transmission provider 

shall make the record available to the Commission upon request. The record may consist 

of hand-written or typed notes, electronic records such as e-mails and text messages, 

recorded telephone exchanges, and the like, and must be retained for a period of five 

years. The permitted information is as follows: 

(1) Information regarding generation necessary to perform generation dispatch, or 

(2) Information necessary to maintain or restore operation of the transmission 

system. 

§ 358.8 Implementation Requirements. 

(a) Effective date. A transmission provider must be in full compliance with the 

standards of conduct by the earlier of: 

(1) The date it has a rate on file with the Commission, or 

(2) The date it commences transmission transactions. 
Docket No. RM07-1-000 - 62 - 

(b) Compliance measures and written procedures. 

(1) A transmission provider must implement measures to ensure that the 

requirements of §§ 358.5(a) and 358.6(a) are observed by its employees and by the 

employees of its affiliates. 

(2) A transmission provider must distribute the written procedures referred to in § 

358.7(d) to all its transmission function employees, marketing function employees, 

officers, directors, supervisory employees, and any other employees likely to become 

privy to transmission function information. 

(c) Training and compliance personnel.

(1) A transmission provider must provide annual training on the standards of 

conduct to all the employees listed in paragraph (b)(2) of this section. The transmission 

provider must provide training on the standards of conduct to new employees in the 

categories listed in paragraph (b)(2) of this section, within the first 30 days of their 

employment. The transmission provider must require each employee who has taken the 

training to certify electronically or in writing that s/he has completed the training. 

(2) A transmission provider must designate a Chief Compliance Officer who will 

be responsible for standards of conduct compliance. The transmission provider must post 

the name of the Chief Compliance Officer and provide his or her contact information on 

the OASIS or Internet website, as applicable. 

(d) Books and records. A transmission provider must maintain its books of 

account and records (as prescribed under parts 101, 125, 201 and 225 of this chapter) 
Docket No. RM07-1-000 - 63 - 

separately from those of its affiliates that employ or retain marketing function employees, 

and these must be available for Commission inspections. 
Docket No.RM07-1-000 - 64 - 

Note: The following appendices will not be published in the Code of Federal

Regulations. 

Appendix A: Table of Commenters and Abbreviations for Commenters.
Docket No. RM07-1-000 - 65 - 

An asterisk indicates that the commenter filed both initial and reply comments. 

1. Missouri Public Service Commission Missouri PSC 

2. Comments of the State of Alaska on Notice 

of Proposed Rulemaking 

Alaska 

3. Rulemaking Comments of New Mexico 

Attorney General Office 

New Mexico AG 

4. Rulemaking Comment of National 

Association of Regulatory Utility 

Commissioners* 

NARUC 

5. Notice of Intervention of California Public 

Utilities Commission* 

California PUC 

6. Initial Comments of ... the Public Utilities 

Commission of Ohio 

PUC of Ohio 

7. Joint Comments of the Washington Utilities 

and Transportation Commission, the Idaho 

Public Utilities Commission, and the PUC of 

Oregon * 

Washington, Idaho and Oregon state 

commissions 

8. Georgia Public Service Commissioner Stan 

Wise 

Commissioner Wise 

9. Rulemaking Comment of South Carolina 

Public Service Authority 

Santee Cooper 

10. Initial Comments of the Natural Gas Supply 

Association* 

NGSA 

11. Initial Comments of the American Gas 

Association * 

AGA 

12. Rulemaking Comment of Interstate Natural 

Gas Association of America* 

INGAA 

13. Comments of Texas Pipeline Association Texas Pipeline Ass’n. 
Docket No. RM07-1-000 - 66 - 

14. Comments of the American Public Gas 

Association * 

APGA 

15. Initial Comments of the National Fuel 

Companies* 

National Fuel Companies 

16. Rulemaking Comment of Spectra Energy 

Transmission, LLC 

Spectra 

17. Rulemaking Comments of Enbridge Energy 

Partners, L.P. and Enbridge, Inc. 

Enbridge 

18. Initial Comments of Williams Four Corners 

LLC 

Williams 

19. Rulemaking Comment of Questar Market 

Resources, INC 

Questar Market Resources 

20. Rulemaking Comment of Questar Gas 

Company 

Questar Gas Co. 

21. Comments of Boardwalk Pipeline Partners, 

LP 

Boardwalk 

22. Rulemaking Comments of Williston Basin 

Interstate Pipeline Company 

Williston 

23. Comments Of NiSource Inc. NiSource 

24. Rulemaking Comment of Alliance Pipeline 

L.P. 

Alliance 

25. Rulemaking Comment of USG Pipeline 

Company, et al. 

USG 

26. Initial Comments of Exxon Mobil 

Corporation 

ExxonMobil 

27. Rulemaking Comment of DCP Midstream, 

LP 

DCP Midstream 

28. Initial Comments of El Paso Corporation El Paso 
Docket No. RM07-1-000 - 67 - 

29. Rulemaking Comment of Northwest Natural 

Gas Company and KB Pipeline Company. 

Northwest Natural 

30. Initial Comments of Southwest Gas 

Corporation 

Southwest Gas 

31. Rulemaking Comment of New Jersey 

Resources Corporation 

NJ Resources 

32. Initial Comments of Sequent Energy 

Management, LP 

Sequent 

33. Comments of CenterPoint Energy Gas 

Transmission Company 

CenterPoint 

34. Comments of KO Transmission Company KO Transmission 

35. Rulemaking Comment of Dominion 

Resources Services, Inc. 

Dominion Resources 

36. Comments of Suez Energy North America, 

Inc. 

Suez 

37. Comments of Edison Electric Institute* EEI 

38. Rulemaking Comment of the Large Public 

Power Council* 

LPPC 

39. Comments of the Electric Power Supply 

Association* 

EPSA 

40. Rulemaking Comment of Transmission 

Dependent Utility Systems* 

TDU Systems 

41. Comments of the American Public Power 

Association* 

APPA 

42. Rulemaking Comments of National Rural 

Electric Cooperative Association 

NRECA 

43. Rulemaking Comment of Southwest Area 

Transmission Sub-Regional Planning 

SWAT 
Docket No. RM07-1-000 - 68 - 

Group* 

44. Rulemaking Comment of Retail Energy 

Supply Association* 

Retail Energy Supply Ass’n. 

45. Rulemaking Comment of Transmission 

Access Policy Study Group* 

TAPS 

46. Rulemaking Comment of the Western 

Utilities* 

Western Utilities Compliance Group

47. Rulemaking Comment of Idaho Power 

Company 

Idaho Power 

48. Rulemaking Comment of Tucson Electric 

Power Company 

Tucson Electric 

49. Initial Comments of Nevada Power 

Company and Sierra Pacific Power Company

Nevada Companies 

50. Rulemaking Comment of Arizona Public 

Service Company. 

Arizona PSC 

51. Comments of Public Service Co. of New 

Mexico 

PSC of New Mexico 

52. Joint Initial Comments of Community Power 

Alliance Members (i.e., Entergy Services, 

Inc.; Salt River Project Ag. Imp. and Power 

Dist.; Progress Energy; and, Southern Co.)* 

CPA 

53. Initial Comments of Southern Company 

Services, Inc. 

Southern Co. Services 

54. Comments of Entergy Services, Inc Entergy 

55. Rulemaking Comment of The AES 

Corporation 

AES 

56. Rulemaking Comment of E.ON U.S. LLC E.ON 

57. Comments of Reliant Energy, Inc. Reliant 
Docket No. RM07-1-000 - 69 - 

58. Comments of DTE Energy Company DTE 

59. Rulemaking Comments of PSEG Energy 

Resources & Trade LLC, et al. 

PSEG 

60. Rulemaking Comment of KeySpan 

Corporation 

KeySpan 

61. Rulemaking Comment of Bonneville Power 

Administration* 

Bonneville 

62. Comments of the Transmission Agency of 

Northern California* 

TANC 

63. Rulemaking Comment of Portland General 

Electric Company 

Portland General 

64. Rulemaking Comment of Florida Power & 

Light Company 

Florida Power & Light 

65. Rulemaking Comment of FPL Group, Inc. FPL Group 

66. Rulemaking Comment of Otter Tail Power 

Company 

Otter Tail 

67. Comments Of Wisconsin Electric Power 

Company 

Wisconsin Electric 

68. Rulemaking Comment of Puget Sound 

Energy, Inc. 

Puget Sound 

69. Rulemaking Comment of Exelon 

Corporation 

Exelon 

70. Rulemaking Comment of NSTAR Electric & 

Gas Corporation 

NSTAR 

71. Comments of NorthWestern Corporation NorthWestern 

72. Rulemaking Comment of the Indicated New 

York Transmission Owners 

Indicated NY TOs 

73. Comments of FirstEnergy Service Company FirstEnergy 
Docket No. RM07-1-000 - 70 - 

74. Rulemaking Comments of American 

Transmission Company LLC 

American Trans. Co. 

75. Joint Comments of Progress Energy, Inc., 

ElectriCities of North Carolina, Inc. and 

North Carolina Electric Membership 

Corporation 

Progress 

76. Motion To Intervene And Comments Of 

Pacific Gas & Electric Company 

PG&E 

77. Comments Of Ameren Services Company Ameren 

78. Initial Comments of Oklahoma Gas and 

Electric Company 

Oklahoma Gas & Electric 

79. Rulemaking Comment of Southern 

California Edison Company 

SCE 

80. Rulemaking Comment of Morgan Stanley 

Capital Group Inc.* 

MSCGI 

81. Comments of National Grid USA National Grid 

82. Rulemaking Comment of MidAmerican 

Energy Company, PacifiCorp, Kern River 

Gas Transmission Company, and Northern 

Natural Gas Company 

MidAmerican 

83. Initial Comments of SCANA Corp. SCANA 

84. Rulemaking Comment of Xcel Energy 

Services Inc. 

Xcel 

85. Comments of Sempra Sempra 

86. Florida Public Service Commission (Reply 

comments only) 

Florida PSC 

87. ITC – Mich. Electric Transmission (Reply 

comments only) 

ITC 

88. Federal Trade Commission (Reply 

comments only) 

FTC 
Docket No. RM07-1-000 - 71 - 

89. Alabama PSC (Reply comments only) Alabama PSC 

90. Chevron (Reply comments only) Chevron 

91. Aux Sable Liquids (Reply comments only) Aux Sable 

92. Calypso/Broadwater (Reply comments only) Calypso 

93. Anadarko* Anadarko 

94. BG E&P Alaska (Reply comments only) BG E&P Alaska 

95. Fayetteville (Reply comments only) Fayetteville 
Docket No. RM07-1-000 - 72 - 

Appendix B: Comparison of Current and Proposed Regulatory Text

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

§ 358.1 Applicability.

(a) This part applies to any interstate 

natural gas pipeline that transports gas for 

others pursuant to subpart A of part 157 or 

subparts B or G of part 284 of this chapter 

and is affiliated in any way with a 

marketing or brokering entity and conducts 

transportation transactions with its 

marketing or brokering affiliate. 

No substantive change proposed; minor 

wording changes proposed to reflect new 

definitions. 

(b) This part applies to any public utility 

that owns, operates, or controls facilities 

used for the transmission of electric energy 

in interstate commerce. 

No change proposed. 

(c) This part does not apply to a public 

utility Transmission Provider that is a 

Commission-approved Independent System 

Operator (ISO) or Regional Transmission 

Organization (RTO). If a public utility 

transmission owner participates in a 

Commission-approved ISO or RTO and 

does not operate or control its transmission 

facilities and has no access to transmission, 

customer or market information covered by 

§ 358.5(b), it may request an exemption 

from this part. 

No substantive change proposed; minor 

wording changes proposed to reflect new 

definitions. 

(d) A Transmission Provider may file a 

request for an exemption from all or some 

of the requirements of this part for good 

cause. 

No change proposed. 

(e) The Standards of Conduct in this part do 

not govern the relationship between a 

natural gas Transmission Provider as 

defined in § 358.3(a)(2) and its Energy 

Proposed to be eliminated, as the coverage of 

the rule would no longer extend to energy 

affiliates. 
Docket No. RM07-1-000 - 73 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

Affiliates. 

************************************************************************** 

§ 358.2 General principles.

(a) A Transmission Provider's employees 

engaged in transmission system operations 

must function independent from employees 

of its Marketing and Energy Affiliates. 

Proposed to be revised to include the 

overarching principle of the prohibition 

against undue discrimination and to reflect 

new definitions; grammatical revisions. 

(b) A Transmission Provider must treat all 

transmission customers, affiliated and nonaffiliated, on a non-discriminatory basis, 

and must not operate its transmission 

system to preferentially benefit its 

Marketing or Energy Affiliates. 

Proposed to be revised to reflect new 

definitions and provide greater precision in 

the prohibition. 

[New sections] Proposed to be revised to add two general 

principles with respect to disclosure of 

information and transparency. 

§ 358.3 Definitions. Proposed to be revised to list definitions in 

alphabetical order. 

(a) Transmission Provider means: 

(1) Any public utility that owns, operates or 

controls facilities used for the transmission 

of electric energy in interstate commerce; 

or 

No change proposed. 

(2) Any interstate natural gas pipeline that 

transports gas for others pursuant to subpart 

A of part 157 or subparts B or G of part 284 

of this chapter. 

No change proposed. 

(3) A Transmission Provider does not 

include a natural gas storage provider 

authorized to charge market-based rates 

that is not interconnected with the 

jurisdictional facilities of any affiliated 

interstate natural gas pipeline, has no 

exclusive franchise area, no captive 

No change proposed. 
Docket No. RM07-1-000 - 74 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

ratepayers and no market power. 

(b) Affiliate means: 

(1) Another person that controls, is 

controlled by or is under common control 

with, such person. An Affiliate includes a 

division that operates as a functional unit, 

Proposed to be revised to conform to the 

current definition of “affiliate” in 18 CFR 

part 35. 

(2) For any exempt wholesale generator, as 

defined under Section 32(a) of the Public 

Utility Holding Company Act of 1935, as 

amended, the same as provided in section 

214 of the Federal Power Act. 

Proposed to be revised to conform to the 

current definition of “affiliate” in 18 CFR 

part 35.

(c) Control (including the terms 

“controlling,” “controlled by,” and “under 

common control with”) as used in this part 

and §250.16 of this chapter, includes, but is 

not limited to, the possession, directly or 

indirectly and whether acting alone or in 

conjunction with others, of the authority to 

direct or cause the direction of the 

management or policies of a company. A 

voting interest of 10 percent or more 

creates a rebuttable presumption of control. 

Proposed to be revised to conform to the 

current definition of “affiliate” in 18 CFR 

part 35. 

(d) Energy Affiliate means an affiliate of a 

Transmission Provider that: 

(1) Engages in or is involved in 

transmission transactions in U.S. energy or 

transmission markets; or 

(2) Manages or controls transmission 

capacity of a Transmission Provider in U.S. 

energy or transmission markets; or 

(3) Buys, sells, trades or administers natural 

gas or electric energy in U.S. energy or 

transmission markets; or 

(4) Engages in financial transactions 

relating to the sale or transmission of 

natural gas or electric energy in U.S. energy 

or transmission markets. 

Proposed to be eliminated. 
Docket No. RM07-1-000 - 75 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

(5) A local distribution company division of 

an electric public utility Transmission 

Provider shall be considered the functional 

equivalent of an Energy Affiliate, unless it 

qualifies for the exemption in § 

358.3(d)(6)(v). 

(6) An Energy Affiliate does not include: 

(i) A foreign affiliate that does not 

participate in U.S. energy markets; 

(ii) An affiliated Transmission Provider or 

an interconnected foreign affiliated natural 

gas pipeline that is engaged in natural gas 

transmission activities that are regulated by 

the state, provincial or national regulatory 

boards of the foreign country in which such 

facilities are located. 

(iii) A holding, parent or service company 

that does not engage in energy or natural 

gas commodity markets or is not involved 

in transmission transactions in U.S. energy 

markets; 

(iv) An affiliate that purchases natural gas 

or energy solely for its own consumption. 

“Solely for its own consumption” does not 

include the purchase of natural gas or 

energy for the subsequent generation of 

electricity. 

(v) A State-regulated local distribution 

company that acquires interstate 

transmission capacity to purchase and resell 

gas only for on-system sales, and otherwise 

does not engage in the activities described 

in §§ 358.3(d)(1), (2), (3) or (4), except to 

the limited extent necessary to support onsystem sales and to engage in de minimis

sales necessary to remain in balance under 

applicable pipeline tariff requirements. 

(vi) A processor, gatherer, Hinshaw 
Docket No. RM07-1-000 - 76 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

pipeline or an intrastate pipeline that makes 

incidental purchases or sales of de minimis

volumes of natural gas to remain in balance 

under applicable pipeline tariff 

requirements and otherwise does not 

engage in the activities described in §§ 

358.3(d)(1), (2), (3) or (4). 

(e) Marketing, sales or brokering means a 

sale for resale of natural gas or electric 

energy in interstate commerce. Sales and 

marketing employee or unit includes: 

(1) An interstate natural gas pipeline's sales 

operating unit, to the extent provided in § 

284.286 of this chapter, and 

(2) A public utility Transmission Provider's 

energy sales unit, unless such unit engages 

solely in bundled retail sales. 

(3) Marketing or sales does not include 

incidental purchases or sales of natural gas 

to operate interstate natural gas pipeline 

transmission facilities. 

Proposed to be consolidated, revised, and 

reorganized under new definition of 

“marketing functions” at proposed 18 CFR 

358.3(c). 

(f) Transmission means natural gas 

transportation, storage, exchange, backhaul, 

or displacement service provided pursuant 

to subpart A of part 157 or subparts B or G 

of part 284 of this chapter; and electric 

transmission, network or point-to-point 

service, reliability service, ancillary 

services or other methods of transportation 

or the interconnection with jurisdictional 

transmission facilities. 

Proposed to be revised to conform 

description of electric transmission to 

description of gas transmission, i.e., by 

reference to the Commission’s regulations, 

and to delete the phrase “reliability service.” 

(g) Transmission Customer means any 

eligible customer, shipper or designated 

agent that can or does execute a 

transmission service agreement or can or 

does receive transmission service, including 

all persons who have pending requests for 

No change proposed. 
Docket No. RM07-1-000 - 77 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

transmission service or for information 

regarding transmission. 

(h) Open Access Same-time Information 

System or OASIS refers to the Internet 

location where a public utility posts the 

information, by electronic means, required 

by part 37 of this chapter. 

No change proposed. 

(i) Internet Web site refers to the Internet 

location where an interstate natural gas 

pipeline posts the information, by electronic 

means, required by §§ 284.12 and 284.13 of 

this chapter. 

No change proposed. 

(j) Transmission Function employee means 

an employee, contractor, consultant or 

agent of a Transmission Provider who 

conducts transmission system operations or 

reliability functions, including, but not 

limited to, those who are engaged in day-today duties and responsibilities for planning, 

directing, organizing or carrying out 

transmission-related operations. 

Proposed to be recast and renumbered at 

proposed 18 CFR 358.3(i), incorporating new 

definition of “transmission functions.” See

proposed 18 CFR 358.3(h). . 

(k) Marketing Affiliate means an Affiliate 

as that term is defined in § 358.3(b) or a 

unit that— 

(1) With respect to a natural gas pipeline 

Transmission Provider, engages in 

“marketing and brokering” activities as 

those terms are defined at § 358.3(l); and 

(2) With respect to an electric Transmission 

Provider, engages in marketing, sales or 

brokering activities as those terms are 

defined at § 358.3(e). 

Proposed to be eliminated; partially 

subsumed in new definition of “marketing 

functions” at proposed 18 CFR 358.3(c) and 

new definition of “affiliate” at proposed 18 

CFR 358.3(a). 

(l) Marketing or brokering under § 358.3(e) 

means a sale of natural gas to any person or 

entity by a seller that is not an interstate 

pipeline, except when: 

(1) The seller is selling gas solely from its 

Proposed to be eliminated, but exceptions 

captured in new definition, “marketing 

functions,” at proposed 18 CFR 358.3(c). 
Docket No. RM07-1-000 - 78 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

own production; 

(2) The seller is selling gas solely from its 

own gathering or processing facilities; or 

(3) The seller is an intrastate natural gas 

pipeline or a local distribution company 

making an on-system sale. 

New Definitions: Marketing Functions (proposed 18 CFR 

358.3(c)). 

Transmission Functions (proposed 18 CFR 

358.3(i)).

Marketing Function Employee (proposed 18 

CFR 358.3(d)). 

Transmission Function Employee (proposed 

18 CFR 358.3(i)). 

Transmission Function Information 

(proposed 18 CFR 358.3(j)). 

Transmission Service (proposed 18 CFR 

358.3(l)). 

************************************************************************** 

§ 358.4 Independent 

functioning.

Note: Provisions under the existing § 

358.4(a) are proposed to be relocated at new 

proposed 18 CFR 358.5, following the 

overarching rules on prohibition of undue 

discrimination. Provisions under the existing 

§ 358.4(b) are proposed to be relocated at 

new proposed 18 CFR 358.7. 

(a) Separation of functions. 

(1) Except in emergency circumstances 

affecting system reliability, the 

transmission function employees of the 

Paragraph (a)(1) is proposed to be recast and 

renumbered as “general rule” at proposed 18 

CFR 358.5(a). 
Docket No. RM07-1-000 - 79 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

Transmission Provider must function 

independently of the Transmission 

Provider's Marketing or Energy Affiliates' 

employees. 

(2) Notwithstanding any other provisions in 

this section, in emergency circumstances 

affecting system reliability, a Transmission 

Provider may take whatever steps are 

necessary to keep the system in operation. 

Transmission Providers must report to the 

Commission and post on the OASIS or 

Internet Web site, as applicable, each 

emergency that resulted in any deviation 

from the standards of conduct, within 24 

hours of such deviation. 

System reliability exempted under proposed 

18 CFR 358.5(b), subject to the recording of 

information exchanges. 

(3) The Transmission Provider is prohibited 

from permitting the employees of its 

Marketing or Energy Affiliates from: 

(i) Conducting transmission system 

operations or reliability functions; and 

(ii) Having access to the system control 

center or similar facilities used for 

transmission operations or reliability 

functions that differs in any way from the 

access available to other transmission 

customers. 

Paragraph (a)(3) is proposed to be recast and 

renumbered as “separation of functions” at 

proposed 18 CFR 358.5(c); also proposed to 

be revised to reflect new definitions. 

(4) Transmission Providers are permitted to 

share support employees and field and 

maintenance employees with their 

Marketing and Energy Affiliates. 

Proposed to be eliminated, but exceptions 

captured in new definition of “marketing 

function employee” at proposed 18 CFR 

358.3(d) and the exemption for “permitted 

information exchanges” at proposed 18 CFR 

358.5(b). 

(5) Transmission Providers are permitted to 

share with their Marketing or Energy 

Affiliates senior officers and directors who 

are not “Transmission Function 

Employees” as that term is defined in § 

Proposed to be revised to reflect new definitions 

and new scope of the rule; sharing employees 

eliminated as a concept. 
Docket No. RM07-1-000 - 80 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

358.3(j). A Transmission Provider may 

share transmission information covered by 

§ 385.5(a) and (b) with its shared senior 

officers and directors provided that they do 

not participate in directing, organizing or 

executing transmission system operations 

or marketing functions; or act as a conduit 

to share such information with a Marketing 

or Energy Affiliate. 

(6) Transmission Providers are permitted to 

share risk management employees that are 

not engaged in Transmission Functions or 

sales or commodity Functions with their 

Marketing and Energy Affiliates. This 

provision does not apply to natural gas 

transmission providers. 

Proposed to be revised to reflect new definitions 

and new scope of the rule; sharing employees 

eliminated as a concept. 

(b) Identifying affiliates on the public 

Internet.

Proposed to be relocated in the transparency rule 

in proposed 18 CFR 358.7(e). 

(1) A Transmission Provider must post the 

names and addresses of Marketing and 

Energy Affiliates on its OASIS or Internet 

Web site. 

Proposed to be revised to reflect new definitions 

and coverage of the rule. 

See proposed 18 CFR 358.7(e)(1). 

(2) A Transmission Provider must post on 

its OASIS or Internet Web site, as 

applicable, a complete list of the facilities 

shared by the Transmission Provider and its 

Marketing and Energy Affiliates, including 

the types of facilities shared and their 

addresses. 

Proposed to be revised to reflect new 

definitions and coverage of the rule. See

proposed 18 CFR 358.7(e)(2). 
Docket No. RM07-1-000 - 81 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

(3) A Transmission Provider must post 

comprehensive organizational charts 

showing: 

(i) The organizational structure of the 

parent corporation with the relative position 

in the corporate structure of the 

Transmission Provider, Marketing and 

Energy Affiliates; 

(ii) For the Transmission Provider, the 

business units, job titles and descriptions, 

and chain of command for all positions, 

including officers and directors, with the 

exception of clerical, maintenance, and 

field positions. The job titles and 

descriptions must include the employee's 

title, the employee's duties, whether the 

employee is involved in transmission or 

sales, and the name of the supervisory 

employees who manage non-clerical 

employees involved in transmission or 

sales. 

(iii) For all employees who are engaged in 

transmission functions for the Transmission 

Provider and marketing or sales functions 

or who are engaged in transmission 

functions for the Transmission Provider and 

are employed by any of the Energy 

Affiliates, the Transmission Provider must 

post the name of the business unit within 

the marketing or sales unit or the Energy 

Affiliate, the organizational structure in 

which the employee is located, the 

employee's name, job title and job 

description in the marketing or sales unit or 

Energy Affiliate, and the employee's 

position within the chain of command of 

the Marketing or Energy Affiliate. 

(iv) The Transmission Provider must 

For existing § 358.4(b)(3)(i)-(iii), proposed to 

be revised to reflect new definitions in the 

rule. Proposed to be recast and simplified as 

“identification of employee information on 

the public internet” at proposed 18 CFR 

358.7(f). Requirement for organizational 

charts deleted; requirement to post marketing 

affiliates retained. See proposed 18 CFR 

358.7(e)(1). 
Docket No. RM07-1-000 - 82 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

update the information on its OASIS or 

Internet Web site, as applicable, required by 

§§ 358.4(b)(1), (2) and (3) within seven 

business days of any change, and post the 

date on which the information was updated. 

(v) The Transmission Provider must post 

information concerning potential merger 

partners as affiliates within seven days after 

the potential merger is announced. 

(vi) All OASIS or Internet Web site 

postings required by part 358 must comply, 

as applicable, with the requirements of § 

37.6 or §§ 284.12(a) and (c)(3)(v) of this 

chapter. 

[New Section] 

For existing § 358.4(b)(3)(iv), proposed to be 

revised and recast as “timing and general 

requirements of postings on the public 

internet” at proposed 18 CFR 358.7(g). No 

substantive changes. 

For existing § 358.4(b)(3)(v), proposed to be 

relocated and revised to reflect new 

definitions in the rule. See proposed 18 CFR 

358.7(e)(3). 

Proposed to be revised to add the requirement 

that postings be sufficiently prominent as to 

be readily accessible. See proposed 18 CFR 

358.7(g)(3). 

Proposed new section suspending posting 

requirements in the event of an emergency, 

such as a natural disaster. See proposed 18 

CFR 358.7(g)(2). 

(c) Transfers. Employees of the 

Transmission Provider, Marketing or 

Energy Affiliates are not precluded from 

transferring among such functions as long 

as such transfer is not used as a means to 

circumvent the Standards of Conduct. 

Notices of any employee transfers between 

the Transmission Provider, on the one hand, 

and the Marketing or Energy Affiliates on 

Proposed to be revised to reflect new 

definitions and coverage of the rule. See

proposed 18 CFR 358.7(f)(2). 
Docket No. RM07-1-000 - 83 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

the other, must be posted on the OASIS or 

Internet Web site, as applicable. The 

information to be posted must include: the 

name of the transferring employee, the 

respective titles held while performing each 

function ( i.e. , on behalf of the 

Transmission Provider, Marketing or 

Energy Affiliate), and the effective date of 

the transfer. The information posted under 

this section must remain on the OASIS or 

Internet Web site, as applicable, for 90 

days. 

(d) Books and records. A Transmission 

Provider must maintain its books of account 

and records (as prescribed under parts 101, 

125, 201 and 225 of this chapter) separately 

from those of its Energy Affiliates and 

these must be available for Commission 

inspections. 

Proposed to be relocated at proposed 18 CFR 

358.8(d). 

(e) Written procedures. (1) By February 9, 

2004, each Transmission Provider is 

required to file with the Commission and 

post on the OASIS or Internet Web site a 

plan and schedule for implementing the 

standards of conduct. 

Proposed to be eliminated. 

(2) Each Transmission Provider must be in 

full compliance with the standards of 

conduct by September 22, 2004. 

Proposed to be replaced with new 18 CFR 

358.8(a). 

(3) The Transmission Provider must post on 

the OASIS or Internet Web site, current 

written procedures implementing the 

standards of conduct in such detail as will 

enable customers and the Commission to 

determine that the Transmission Provider is 

in compliance with the requirements of this 

Proposed to be revised to reflect change in 

policy with respect to timing of applicability 

of the rule. See proposed 18 CFR 358.7(d). 
Docket No. RM07-1-000 - 84 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

section by September 22, 2004 or within 30 

days of becoming subject to the 

requirements of part 358. 

(4) Transmission Providers will distribute 

the written procedures to all Transmission 

Provider employees and employees of the 

Marketing and Energy Affiliates. 

Proposed to be revised to reflect new 

definitions and new scope of the rule. See 

proposed 18 CFR 358.8(b). 

(5) Transmission Providers shall train 

officers and directors as well as employees 

with access to transmission information or 

information concerning gas or electric 

purchases, sales or marketing functions. 

The Transmission Provider shall require 

each employee to sign a document or 

certify electronically signifying that s/he 

has participated in the training. 

Proposed to be revised to require annual 

training and certification of completion and 

to be relocated at proposed 18 CFR 358.8(c). 

(6) Transmission Providers are required to 

designate a Chief Compliance Officer who 

will be responsible for standards of conduct 

compliance. 

Proposed to be revised to require posting of 

names of Chief Compliance Officers and to 

be relocated at proposed 18 CFR 358.8(c)(2). 
Docket No. RM07-1-000 - 85 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

§ 358.5 Non-discrimination 

requirements.

This section is proposed to be placed before 

the Independent Functioning section. As 

most of the provisions in the existing § 358.5 

relate to a distinct concept of handling 

information, paragraphs (a) and (b), revised 

to reflect new definitions and simplified, are 

proposed to be relocated in new proposed 18 

CFR 358.6. 

(a) Information access. (1) The 

Transmission Provider must 

ensure that any employee of its 

Marketing or Energy Affiliate 

may only have access to that 

information available to the 

Transmission Provider's 

transmission customers ( i.e. , 

the information posted on the 

OASIS or Internet Web site, as 

applicable), and must not have 

access to any information 

about the Transmission 

Provider's transmission system 

that is not available to all users 

of an OASIS or Internet Web 

site, as applicable. 

Concept retained but revised to reflect new 

definitions and simplified in terms of “prohibited 

receipt and disclosure” of information in new 

proposed 18 CFR 358.6(a). 

(2) The Transmission Provider 

must ensure that any employee 

of its Marketing or Energy 

Affiliate is prohibited from 

obtaining information about 

the Transmission Provider's 

transmission system 

(including, but not limited to, 

information about available 

transmission capability, price, 

curtailments, storage, ancillary 

services, balancing, 

Concept retained but revised to reflect new 

definitions and simplified in new proposed 18 

CFR 358.6(a). 
Docket No. RM07-1-000 - 86 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

maintenance activity, capacity 

expansion plans or similar 

information) through access to 

information not posted on the 

OASIS or Internet Web site or 

that is not otherwise also 

available to the general public 

without restriction. 

(b) Prohibited disclosure. (1) 

An employee of the 

Transmission Provider may 

not disclose to its Marketing or 

Energy Affiliates any 

information concerning the 

transmission system of the 

Transmission Provider or the 

transmission system of another 

(including, but not limited to, 

information received from 

non-affiliates or information 

about available transmission 

capability, price, curtailments, 

storage, ancillary services, 

balancing, maintenance 

activity, capacity expansion 

plans, or similar information) 

through non-public 

communications conducted off 

the OASIS or Internet Web 

site, through access to 

information not posted on the 

OASIS or Internet Web site 

that is not contemporaneously 

available to the public, or 

through information on the 

OASIS or Internet Web site 

that is not at the same time 

Concept retained but revised to reflect new 

definitions and simplified in new proposed 18 

CFR 358.6(a). 
Docket No. RM07-1-000 - 87 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

publicly available.

(2) A Transmission Provider 

may not share any information, 

acquired from non-affiliated 

transmission customers or 

potential non-affiliated 

transmission customers, or 

developed in the course of 

responding to requests for 

transmission or ancillary 

service on the OASIS or 

Internet Web site, with 

employees of its Marketing or 

Energy Affiliates, except to the 

limited extent information is 

required to be posted on the 

OASIS or Internet website in 

response to a request for 

transmission service or 

ancillary services. 

Concept retained but revised to reflect new 

definitions and simplified in new proposed 18 

CFR 358.6(a). 

(3) If an employee of the Transmission 

Provider discloses information in a manner 

contrary to the requirements of § 

358.5(b)(1) and (2), the Transmission 

Provider must immediately post such 

information on the OASIS or Internet Web 

site. 

Proposed to be revised to reflect new 

definitions and to be located in new proposed 

18 CFR 358.7(a). 

(4) A non-affiliated transmission customer 

may voluntarily consent, in writing, to 

allow the Transmission Provider to share 

the non-affiliated customer's information 

with a Marketing or Energy Affiliate. If a 

non-affiliated customer authorizes the 

Transmission Provider to share its 

information with a Marketing or Energy 

Proposed to be revised to reflect new 

definitions and be located in new proposed 

18 CFR 358.7(c). 
Docket No. RM07-1-000 - 88 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

Affiliate, the Transmission Provider must 

post notice on the OASIS or Internet Web 

site of that consent along with a statement 

that it did not provide any preferences, 

either operational or rate-related, in 

exchange for that voluntary consent. 

(5) A Transmission Provider is not required 

to contemporaneously disclose to all 

transmission customers or potential 

transmission customers information 

covered by § 358.5(b)(1) if it relates solely 

to a Marketing or Energy Affiliate's specific 

request for transmission service. 

Proposed to be revised to reflect new 

definitions and be located in new proposed 

18 CFR 358.7(b). 

(6) A Transmission Provider may share 

generation information necessary to 

perform generation dispatch with its 

Marketing and Energy Affiliate that does 

not include specific information about 

individual third party transmission 

transactions or potential transmission 

arrangements. 

Proposed to be revised to reflect new 

definitions and to be located in new proposed 

18 CFR 358.6(b), which adds the requirement 

of a record of the information exchange, as 

provided in new proposed 18 CFR 358.7(h). 

(7) Neither a Transmission Provider nor an 

employee of a Transmission Provider is 

permitted to use anyone as a conduit for 

sharing information covered by the 

prohibitions of § 358.5(b)(1) and (2) with a 

Marketing or Energy Affiliate. A 

Transmission Provider may share 

information covered by § 358.5(b)(1) and 

(2) with employees permitted to be shared 

under § 358.4(a)(4), (5) and (6) provided 

that such employees do not act as a conduit 

to share such information with any 

Marketing or Energy Affiliates. 

Proposed to be revised to reflect new definitions, 

clarify coverage, and to be relocated in new 

proposed 18 CFR 358.6, and highlighted as the 

“no conduit rule.” See proposed 18 

CFR 358.6(a). 

(8) A Transmission Provider is permitted to 

share information necessary to maintain the 

operations of the transmission system with 

Proposed to be revised to reflect new 

definitions and to be located in new proposed 

18 CFR 358.6(b)(2), which adds the 
Docket No. RM07-1-000 - 89 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

its Energy Affiliates. requirement of a record of the information 

exchange, as provided in new proposed 18 

CFR 358.7(h). 

(c) Implementing tariffs. (1) A 

Transmission Provider must strictly enforce 

all tariff provisions relating to the sale or 

purchase of open access transmission 

service, if these tariff provisions do not 

permit the use of discretion. 

No changes but proposed to be relocated at 

proposed 18 CFR 358.4(a)(1). 

(2) A Transmission Provider must apply all 

tariff provisions relating to the sale or 

purchase of open access transmission 

service in a fair and impartial manner that 

treats all transmission customers in a nondiscriminatory manner, if these tariff 

provisions permit the use of discretion. 

No changes but proposed to be relocated at 

proposed 18 CFR 358.4(a)(2). 

(3) A Transmission Provider 

must process all similar 

requests for transmission in the 

same manner and within the 

same period of time. 

No changes but proposed to be relocated at 

proposed 18 CFR 358.4(a)(4). 

(4)(i) Electric Transmission Providers must 

maintain a written log, available for 

Commission audit, detailing the 

circumstances and manner in which they 

exercised their discretion under any terms 

of the tariff. The information contained in 

this log is to be posted on the OASIS or 

Internet website within 24 hours of when a 

Transmission Provider exercises its 

discretion under any terms of the tariff. 

(ii) Natural gas Transmission 

Providers must maintain a 

written log of waivers that the 

natural gas Transmission 

Provider grants with respect to 

Proposed to be revised to and consolidated to 

reflect new definitions and new coverage of 

the rule. Proposed to be revised to reflect 

change in policy with respect to timing of the 

applicability of the rule, including the new 

requirement of a five year record retention. 

See proposed 18 CFR 358.4(a)(5). 
Docket No. RM07-1-000 - 90 - 

EXISTING PART 358 REGULATIONS PROPOSED REVISIONS IN NEW NOPR 

tariff provisions that provide 

for such discretionary waivers 

and provide the log to any 

person requesting it within 24 

hours of the request. 

(5) The Transmission Provider may not, 

through its tariffs or otherwise, give 

preference to its Marketing or Energy 

Affiliate, over any other wholesale 

customer in matters relating to the sale or 

purchase of transmission service (including, 

but not limited to, issues of price, 

curtailments, scheduling, priority, ancillary 

services, or balancing). 

Proposed to be revised to reflect new 

definitions and to be relocated at proposed 18 

CFR 358.4(a)(3). 

(d) Discounts. Any offer of a discount for 

any transmission service made by the 

Transmission Provider must be posted on 

the OASIS or Internet Web site 

contemporaneous with the time that the 

offer is contractually binding. The posting 

must include: the name of the customer 

involved in the discount and whether it is 

an affiliate or whether an affiliate is 

involved in the transaction, the rate offered; 

the maximum rate; the time period for 

which the discount would apply; the 

quantity of power or gas upon which the 

discount is based; the delivery points under 

the transaction; and any conditions or 

requirements applicable to the discount. 

The posting must remain on the OASIS or 

Internet Web site for 60 days from the date 

of posting. 

No changes proposed but proposed to be 

relocated at proposed 18 CFR 358.4(b).