Document ID: FERC-2006-2106-0002
Agency: ferc
Document Type: Rule
Title: Standards for Business Practices for Interstate Natural Gas Pipelines; Standards for Business Practices for Public Utilities
Posted Date: 2007-07-16T04:00Z

[Federal Register: July 16, 2007 (Volume 72, Number 135)]
[Rules and Regulations]               
[Page 38757-38767]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16jy07-5]                         

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 38 and 284

[Docket Nos. RM96-1-027 and RM05-5-001; Order No. 698]

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

Issued June 25, 2007.
AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
amending its open access regulations governing standards for business 
practices and electronic communications with interstate natural gas 
pipelines and public utilities. The Commission is incorporating by 
reference certain standards promulgated by the Wholesale Gas Quadrant 
(WGQ) and the Wholesale Electric Quadrant (WEQ) of the North American 
Energy Standards Board (NAESB). Through this rulemaking, the Commission 
is seeking to improve coordination between the gas and electric 
industries in order to improve communications about scheduling of gas-
fired generators.

DATES: Effective Dates: This rule will become effective August 15, 
2007. Natural gas pipelines and public utilities are required to 
implement these standards and file a statement demonstrating compliance 
by November 1, 2007.

FOR FURTHER INFORMATION CONTACT:
    Michael Goldenberg, Office of the General Counsel, Federal Energy 
Regulatory Commission, 888 First Street, NE., Washington, DC 20426, 
202-502-8685.
    Kay Morice, Office of Energy Markets and Reliability, Federal 
Energy Regulatory Commission, 888 First Street, NE., Washington, DC 
20426, 202-502-6507.

SUPPLEMENTARY INFORMATION:

Table of Contents

                                                               Paragraph
                                                                 Nos.

I. Background...............................................           2
II. Discussion..............................................          10
  A. Incorporation by Reference of NAESB Standards..........          10
    1. Terminology..........................................          17
    2. WEQ Standard 011-0.1/WGQ Standard 0.2.1..............          22
    3. WEQ Standard 011-1.2/WGQ Standard 0.3.12.............          24
    4. WEQ Standard 011-1.3/WGQ Standard 0.3.13.............          28

[[Page 38758]]

    5. WEQ Standard 011-1.4 and WGQ Standard 0.3.14.........          35
    6. WEQ Standard 011-1.5.................................          37
    7. WEQ Standard 011-1.6/WGQ Standard 0.3.15.............          42
    8. Additional Issue.....................................          48
  B. Additional Issues Raised by NAESB......................          50
    1. Use of Gas Indices for Pricing Capacity Release                51
     Transactions...........................................
    2. Pipelines' Ability to Permit Shippers to Choose                58
     Alternate Delivery Points..............................
    3. Changes to the Intraday Nomination Gas Schedule......          64
III. Implementation Dates and Procedures....................          70
IV. Notice of Use of Voluntary Consensus Standards..........          71
V. Information Collection Statement.........................          72
VI. Environmental Analysis..................................          78
VII. Regulatory Flexibility Act.............................          79
VIII. Document Availability.................................          80
IX. Effective Date and Congressional Notification...........          82

    1. The Federal Energy Regulatory Commission (Commission) is 
amending parts 38 and 284 of its open access regulations governing 
standards for business practices and electronic communications with 
interstate natural gas pipelines and public utilities. The Commission 
is incorporating by reference certain standards promulgated by the 
North American Energy Standards Board (NAESB).\1\ Incorporation by 
reference of these standards will establish communication protocols 
between interstate pipelines and power plant operators and transmission 
owners and operators. This will help improve coordination between the 
gas and electric industries in order to improve communications about 
scheduling of gas-fired generators. Improved communications should 
enhance reliability in both industries.
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    \1\ The standards for the Wholesale Electric Quadrant are: Gas/
Electric Coordination Standards WEQ-001-0.1 through WEQ-011-0.3 and 
WEQ-011-1.1 through WEQ-011-1.6. The standards for the Wholesale Gas 
Quadrant are: Additional Standards, Definitions 0.2.1 through 0.2.3 
and Standards 0.3.11 through 0.3.15.
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I. Background

    2. NAESB is a non-profit, private standards development 
organization established in January 2002 to develop voluntary standards 
and model business practices designed to promote more competitive and 
efficient natural gas and electric service. Since 1995, NAESB and its 
predecessor, the Gas Industry Standards Board, have been accredited 
members of the American National Standards Institute (ANSI), complying 
with ANSI's requirements that its standards reflect a consensus of the 
affected industries.
    3. NAESB's standards include business practices that streamline the 
transactional processes of the natural gas and electric industries, as 
well as communication protocols and related standards designed to 
improve the efficiency of communication within each industry. NAESB 
supports all four quadrants of the gas and electric industries--
wholesale gas, wholesale electricity, retail gas, and retail 
electricity--and recognizes the ongoing convergence of the gas and 
electric businesses by ensuring that its standards receive the input of 
all industry quadrants when appropriate. All participants in the gas 
and electric industries are eligible to join NAESB, belong to one or 
more quadrant(s), and participate in standards development.
    4. NAESB's Wholesale Gas Quadrant (WGQ) is composed of five 
industry segments: Pipelines, producers, local distribution companies, 
end users, and services (including marketers and computer service 
companies). NAESB's Wholesale Electric Quadrant (WEQ) now includes six 
industry segments: Transmission, generation, marketer/brokers, 
distribution/load serving entities, end users, and independent grid 
planners/operators. NAESB's procedures ensure that all industry members 
can have input into the development of a standard, whether or not they 
are members of NAESB, and each standard NAESB adopts is supported by a 
consensus of the relevant industry segments.
    5. Since 1996, in Order No. 587 and subsequent orders, the 
Commission, through its notice-and-comment rulemaking process, adopted 
relevant gas standards by incorporating these standards by reference 
into its regulations.\2\ On April 25, 2006, the Commission by a similar 
process incorporated by reference the first set of NAESB electric 
standards.\3\
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    \2\ Standards For Business Practices Of Interstate Natural Gas 
Pipelines, Order No. 587, 61 FR 39053 (July 26, 1996), FERC Stats. & 
Regs., Regulations Preambles July 1996-December 2000 ] 31,038 (July 
17, 1996).
    \3\ Standards for Business Practices and Communication Protocols 
for Public Utilities, Order No. 676, 71 FR 26199 (May 4, 2006), FERC 
Stats. & Regs. ] 31,216 (Apr. 25, 2006).
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    6. In January 2004, a cold snap highlighted the need for better 
coordination and communication between the gas and electric industries 
as coincident peaks occurred in both industries making the acquisition 
of gas and transportation by power plant operators more difficult. In 
response to this need, in early 2004, NAESB established a Gas-Electric 
Coordination Task Force to examine issues related to the 
interrelationship of the gas and electric industries and identify 
potential areas for improved coordination through standardization. 
Because of the importance of such coordination, the NAESB Board of 
Directors established a Gas-Electric Interdependency Committee in 
September 2004 to review coordination issues and identify potential 
areas for standards development.
    7. As a result of these efforts, on June 27, 2005, NAESB filed a 
status report with the Commission. The report included ten business 
practice standards jointly developed by the wholesale gas and electric 
quadrants,\4\ the first such collaboration between the two quadrants. 
The standards, in general, address communication processes between 
pipelines, power plant operators, and transmission operators.\5\
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    \4\ Seven of these ten standards apply to both the gas and 
electric industries.
    \5\ On June 28, 2006, NAESB filed a report advising that the 
following permanent numbers have been assigned to these standards. 
The standards for the Wholesale Electric Quadrant are Gas/Electric 
Coordination Standards WEQ-011-0.1 through WEQ-011-0.3 and WEQ-011-
1.1 through WEQ-011-1.6. The standards for the Wholesale Gas 
Quadrant are: Additional Standards, Definitions 0.2.1 through 0.2.3 
and Standards 0.3.11 through 0.3.15.
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    8. Additionally, the report highlighted 13 issues involving gas and 
electric interdependency. On February 24, 2006, NAESB filed a final 
report (Final

[[Page 38759]]

Report) with the Commission on the efforts of the Gas-Electric 
Interdependency Committee. Based on the 13 issues, the Final Report 
identified six potential areas where Commission guidance could assist 
NAESB in developing new or updated business practices to improve 
coordination between the gas and electric industries.
    9. On October 25, 2006, the Commission issued a Notice of Proposed 
Rulemaking (NOPR) \6\ that proposed to incorporate by reference the 
WEQ's standards, Gas/Electric Coordination Standards WEQ-011-0.1 
through WEQ-011-0.3 and WEQ-011-1.1 through WEQ-011.1.6 and the WGQ's 
standards, Additional Standards, Definitions 0.2.1 through 0.2.3 and 
Standards 0.3.11 through 0.3.15. The Commission also provided guidance 
on the six areas of potential standards development addressed by NAESB. 
Fifteen comments \7\ and one reply comment were filed.\8\
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    \6\ Standards for Business Practices for Interstate Natural Gas 
Pipelines; Standards for Business Practices for Public Utilities, 71 
FR 64,655 (Nov. 3, 2006).
    \7\ Those filing comments are: The ISO/RTO Council (IRC), the 
Interstate Natural Gas Association of America (INGAA), ISO New 
England (ISO-NE), NiSource Gas Transmission and Storage (NiSource), 
FPL Energy, LLC (FPL Energy), Electric Power Supply Association 
(EPSA), Tennessee Valley Authority (TVA), Florida Cities, El Paso 
Corporation Pipeline Group (El Paso), Salt River Project 
Agricultural Improvement and Power District (Salt River), Natural 
Gas Supply Association (NGSA), Duke Energy Gas Transmission, LLC 
(Duke), American Gas Association (AGA), the Carolina Gas 
Transmission Corporation (Carolina Gas), and Dominion Resources, 
Inc. (Dominion).
    \8\ AGA filed reply comments.
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II. Discussion

A. Incorporation by Reference of NAESB Standards

    10. The Commission is amending parts 38 and 284 of its regulations 
to incorporate by reference the NAESB WEQ and WGQ definitions and 
business practice standards providing for coordination and 
communication between natural gas pipelines and the various electric 
industry operators, including Regional Transmission Organizations 
(RTOs), Independent System Operators (ISOs) and gas-fired generators. 
The Commission also is amending section 38.1 so that it applies to 
public utilities that own, operate or control facilities used to 
effectuate wholesale power sales.
    11. Pipelines and public utilities are required to implement these 
standards by November 1, 2007. However, pipelines and public utilities 
are not required to make tariff filings to include these standards in 
their tariffs at this time. These standards will be included in tariffs 
when the pipelines and utilities file to incorporate into their tariffs 
the next revised version of the NAESB standards. However, for the two 
standards requiring communication procedures to be established,\9\ the 
Commission is requiring pipelines and public utilities to demonstrate 
compliance by filing a statement by November 1, 2007, as to whether 
they have established the required procedures.
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    \9\ These standards are WEQ Standard 011-1.2/WGQ Standard 
0.3.12; and WEQ Standard 011-1.6/WGQ Standard 0.3.15.
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    12. The coordination and communication required by these standards 
will help improve the reliability of both the gas and electric 
industries by ensuring that all parties have information necessary for 
the scheduling and dispatch of natural gas-fired generation, and for 
the scheduling of the natural gas transportation necessary to supply 
fuel to these generators. The standards, for example, would require 
gas-fired power plant operators and pipelines to establish procedures 
to communicate material changes in circumstances that may affect hourly 
flow rates. These standards ensure that pipelines have relevant 
planning information that will assist in maintaining the operational 
integrity and reliability of pipeline service, as well as providing 
gas-fired power plant operators with information as to whether hourly 
flow deviations can be honored.
    13. The standards further improve communication by requiring 
electric transmission operators and power plant operators to sign up to 
receive from connecting pipelines operational flow orders and other 
critical notices. These standards ensure that operators of the electric 
grid can stay abreast of developments on gas pipelines that can affect 
the reliability of electric service. The standards require that, upon 
request, a gas-fired power plant operator must provide to the 
appropriate independent electric balancing authority or electric 
reliability coordinator pertinent information regarding its service 
levels for gas transportation (firm or interruptible) and for gas 
supply (firm, fixed or variable quantity, or interruptible). This 
information should assist reliability coordinators in assessing the 
relative reliability of various gas-fired generators.
    14. A consensus of the industry considered this language in NAESB's 
balanced process beginning in 2004 and leading up to NAESB's filing on 
June 27, 2005. All parties were welcome to participate in this process 
and participation was broad. No party expresses concern or otherwise 
indicates that NAESB's process was flawed.
    15. As the Commission found in Order Nos. 587 and 676, adoption of 
consensus standards is appropriate because the consensus process helps 
ensure the reasonableness of the standards by requiring that the 
standards draw support from a broad spectrum of all segments of the 
industry. Moreover, since the industry itself has to conduct business 
under these standards, the Commission's regulations should reflect 
those standards that have the widest possible support. In section 12(d) 
of the National Technology Transfer and Advancement Act of 1995 
(NTT&AA), Congress affirmatively requires federal agencies to use 
technical standards developed by voluntary consensus standards 
organizations, like NAESB, as means to carry out policy objectives or 
activities.\10\
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    \10\ Pub L. No. 104-113, Sec.  12(d), 110 Stat. 775 (1996), 15 
U.S.C. 272 note (1997).
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    16. A majority of commenters support the Commission's goal of 
increased communication between the gas and electric industries, and 
therefore do not object to incorporation of the standards into the 
Commission's regulations.\11\ Dominion states that the communication 
requirements are important, and asks that the Commission continue to 
develop policies that provide for even greater levels of gas-electric 
coordination. Some participants, while not objecting to the standards, 
raise concerns and suggest changes to the language. These issues are 
addressed below.
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    \11\ E.g., AGA, Carolina Gas, Dominion, Duke, El Paso, EPSA, 
Florida Cities, FPL Energy, INGAA, IRC, NiSource, Salt River, and 
TVA.
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1. Terminology
Comments
    17. IRC comments that NAESB's standards use a number of terms not 
commonly used in the electric industry (such as ``Power Plant 
Operator'') and suggests that the Commission direct NAESB to adopt the 
terminology in the North American Electric Reliability Council (NERC) 
Functional Model, which contains a detailed set of functional 
definitions, in order to eliminate any potential for confusion.\12\
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    \12\ IRC Comments at 2. The ``functional definitions'' referred 
to by IRC are available on the Web site of the North American 
Electric Reliability Council at http://www.nerc.com/~filez/functionalmodel.html
.

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[[Page 38760]]

    18. IRC also states that as currently drafted, the standards appear 
to apply terms inconsistently, noting that the standards appear to 
substitute the term ``independent Balancing Authority'' for ISOs/RTOs 
in some instances. IRC argues that the NAESB standards require ISOs/
RTOs to bear significant responsibilities, but do not appear to require 
balancing authorities other than ISOs/RTOs or certain other independent 
entities to carry out responsibilities under the standards. IRC also 
notes that the standards include references to other NAESB standards 
that are not specifically identified, i.e. references to other 
``related'' WGQ standards without providing any indication of which 
standards are ``related.'' \13\
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    \13\ Id. at 3.
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    19. ISO-NE suggests additional definitions be added to the WEQ and 
WGQ standards. It proposes a new Definition D4, which would define 
``Directly Connected TSP'', and a new Definition D5, which would 
identify ``Communication Standards.'' Definition D5 would be used to 
supplement WEQ Standard 011-1.1/WGQ Standard 0.3.11, and, in ISO-NE's 
view, these definitions would create greater consistency and clarity 
among the standards.
Commission Determination
    20. We do not find a need to revise the terminology used in the 
standards. Those protesting the terminology do not object to the 
substance of the standards. All of the relevant parties were, or could 
have been, involved in the drafting of the standards, and the 
definitions and terminology used in the standards reflect a consensus 
of the industry. The language used in the standards is clear, and those 
parties that think the language could be made even more precise can 
seek such clarifications and revisions through the NAESB process so 
that the implications of such changes can be considered by all 
segments.\14\
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    \14\ Order No. 676, 71 FR 26199, FERC Stats. & Regs. ] 31,216, 
at P 17.
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    21. Indeed, since NAESB filed its report, it has added a segment to 
its WEQ for Independent Grid Operators/Planners, and as of April 5, ten 
parties have joined this segment, including the California ISO, the 
Electric Reliability Council of Texas, the Independent Electricity 
System Operator, ISO-NE, the Midwest Independent Transmission System 
Operator, the New York Independent System Operator, PJM 
Interconnection, the Southwest Power Pool, Transerv International, and 
the Alberta Electric System Operator. We encourage parties with 
concerns about the standards to bring their suggestions to the WEQ and 
the WGQ.
2. WEQ Standard 011-0.1/WGQ Standard 0.2.1
    22. WEQ Standard 011-0.1/WGQ Standard 0.2.1 defines the term 
``Power Plant Operator'' as the entity(ies) having responsibility for 
natural gas requirements and coordinating deliveries to meet those 
requirements at natural gas-fired electric generating facility(ies). 
ISO-NE comments that the standard presumes that the entity that has 
direct control over the gas requirements for a gas-fired electric 
generating facility is always the same entity that is responsible for 
coordinating natural gas deliveries with the appropriate transportation 
service provider. ISO-NE notes that, in fact, these two requirements 
may be handled by different parties and requests that this definition 
be modified to accommodate such possibilities.
    23. We find the standard to be sufficiently clear. Contrary to ISO-
NE's assertion that the standard presumes that the same entity that has 
direct control over the gas requirements for a gas-fired electric 
generating facility is always the same entity that is responsible for 
coordinating with the appropriate transportation service provider, the 
standard clearly uses the plural ``entity(ies)'' when defining ``PPO.'' 
The standard also states that ``Because each [power plant operator] is 
structured differently, specific responsibilities within each [power 
plant operator] should be determined by the [power plant operator] and 
the point of contact for the [power plant operator] should be 
communicated to the [transportation service provider(s)].''
3. WEQ Standard 011-1.2/WGQ Standard 0.3.12
    24. WEQ Standard 011-1.2/WGQ Standard 0.3.12 directs the power 
plant operator and the transportation service provider directly 
connected to the power plant operator's facility(ies) to establish 
procedures to communicate material changes in circumstances that may 
impact hourly flow rates, and the power plant operator to provide 
projected hourly flow rates accordingly.
Comments
    25. ISO-NE states that the standard requires power plant operators 
to provide hourly flow rates but does not specify to whom. ISO-NE 
suggests that the standard be modified to specify that the directly-
connected transportation service provider is the party intended to 
receive hourly flow rates from the power plant operator. NiSource 
expresses concern over the requirement that pipelines convey ``material 
changes in circumstance that may impact hourly flow rates.'' It asserts 
that there are many variables that ``may'' impact hourly flow rates. In 
addition, NiSource notes that the standard requires the pipeline and 
the power plant operator to establish communication procedures 
regarding this information, yet does not provide any guidance as to the 
type of procedures that should be created. NiSource asks that the 
Commission clarify that pipelines will be able to raise objections with 
respect to this language in any future dispute proceedings.\15\
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    \15\ NiSource Comments at 6-7.
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Commission Determination
    26. We disagree that with ISO-NE that the standard needs further 
clarification to specify that the directly-connected transportation 
service provider is the party intended to receive hourly flow rates 
from the power plant operator. The standard specifically refers to 
communications procedures between the power plant operator and the 
directly-connected transportation service provider, so that it is clear 
that the hourly flow rates need to be communicated to the directly-
connected transportation service provider.
    27. With respect to NiSource's comment, the pipeline will need to 
determine which events materially affect hourly flow rates and 
communicate those events to the power plant operators. Pipelines are 
already required by NAESB standards to use judgment in issuing system-
wide notices that impact pipeline operations, and this requirement is 
not different.\16\ Similarly, the communications procedures should be 
established between the pipeline and the power plant operator. 
Pipelines and power plant operators should have the flexibility to 
establish the procedures they deem most efficient. NiSource will be 
able to negotiate the details when it works with relevant power plant 
operators to establish the communication procedures required by this 
standard.
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    \16\ 18 CFR 284.12(a)(vi) Capacity Release Related Standards, 
Standard 5.4.16 (system wide notices).
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4. WEQ Standard 011-1.3/WGQ Standard 0.3.13
    28. WEQ Standard 011-1.3/WGQ Standard 0.3.13 states that power 
plant operators should not operate without an approved scheduled 
quantity pursuant to the NAESB WGQ standard nomination timeline and 
scheduling processes or as permitted by the

[[Page 38761]]

transportation service provider's tariff, general terms and conditions, 
and/or contract provisions. The standard further states that if the 
power plant operator reasonably determines it has circumstances 
requiring the need to request gas scheduling changes outside the WGQ 
nomination and scheduling processes, and the transportation service 
provider supports the processing of such changes, the power plant 
operator may request daily flow rates as established by either the 
communication procedures established in the standards or as specified 
in the transportation service provider's tariff or general terms and 
conditions. The standard states that the power plant operator and all 
affected transportation service providers should work to resolve the 
power plant operator's request if it can be accommodated (1) in 
accordance with the appropriate application of the affected 
transportation service provider's tariff requirement, contract 
provisions, business practices, or other similar provisions, and (2) 
without adversely impacting other scheduled services, anticipated 
flows, no-notice services, firm contract requirements and/or general 
system operations.
Comments
    29. IRC comments that the standard suggests that transportation 
service providers may be granting service to power plant operators 
outside of normal Open Access Same-Time Information Systems (OASIS) 
posting requirements. IRC submits that, in order to ensure transparency 
and compliance with the Commission's rules, any communications between 
the transportation service provider and power plant operator must also 
adhere to the Commission's OASIS posting requirements and its Standards 
of Conduct regulations.
    30. ISO-NE asserts that the standard states in part that a power 
plant operator should not operate without an approved schedule, and 
suggests that, in order to avoid confusion with the electric scheduling 
process, this standard be modified to specify that it is referring to 
the ``approved gas schedule'' and ``gas scheduling processes''. ISO-NE 
also recommends that the directly-connected transportation service 
provider is the party intended to receive hourly flow rates from the 
power plant operator.
    31. NiSource comments that the type of procedure to be established 
between a pipeline and a power plant operator to communicate hourly 
flow rate information is not clear, and that it wishes to preserve its 
ability to object to any power plant operator requests for unreasonable 
communications procedures.\17\ NiSource also states that the standard 
does not unambiguously state that a pipeline that does not provide for 
a special nomination cycle in its tariff does not have to accommodate 
such a request.
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    \17\ NiSource Comments at 9.
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Commission Determination
    32. The purpose of this standard is to provide for greater 
flexibility in scheduling pipeline transportation in circumstances in 
which the pipeline is able to accommodate such flexibility. Regarding 
IRC's concern about compliance with Commission regulations, nothing in 
this standard grants a waiver from the Commission's standards of 
conduct or other regulations. The IRC's reference to the OASIS is not 
clear, since these are gas transactions between the power plant 
operator and the pipeline, not OASIS scheduling requests.
    33. We disagree with ISO-NE's argument that the standard is 
ambiguous or confusing. The standard's language regarding scheduling 
clearly concerns scheduled quantities of gas pursuant to the NAESB WGQ 
standard nomination timeline.
    34. With respect to NiSource's concern about communication details, 
as we explained above, we find it more appropriate for the pipeline and 
the power plant operator to work out the most efficient method for 
communicating any such scheduling requests. With respect to NiSource's 
concern about its obligations, the standard clearly states that, if the 
pipeline supports the processing of such special requests, it must work 
to resolve such requests if they can be accommodated in accordance with 
the appropriate application of the affected pipeline's tariff 
requirement, contract provisions, business practices, or other similar 
provisions, and without adversely impacting other scheduled services, 
anticipated flows, no-notice services, firm contract requirements and/
or general system operations. We find that these conditions provide 
reasonable and appropriate protections for the pipelines.
5. WEQ Standard 011-1.4 and WGQ Standard 0.3.14
    35. WEQ Standard 011-1.4 requires RTOs, ISOs, independent 
transmission operators and/or power plant operators to sign up to 
receive operational flow orders and other critical notices from the 
appropriate transportation service provider(s), and WGQ Standard 0.3.14 
requires transportation service providers to provide operational flow 
orders and other critical notices to RTOs, ISOs, independent 
transmission operators, and power plant operators. ISO-NE argues that 
the terms RTOs, ISOs and independent transmission operators in these 
standards should be replaced with ``balancing authorities''. ISO-NE 
states that RTOs/ISOs should not bear a higher burden of responsibility 
than other balancing authorities in this context.
    36. These standards require only that RTOs, ISOs and independent 
transmission operators need to sign up to receive information from 
pipelines about operational flow orders that may affect gas-fired 
generators on their systems. The genesis for the development of these 
standards was the coordination problems between the gas industry and 
the scheduling practices of ISOs and RTOs, particularly the problems 
faced by gas-fired generators in ISO-NE during the 2004 cold snap. 
These standards along with the other standards will help ensure that, 
in the event of a recurrence of such circumstances, the RTOs, ISOs, and 
independent transmission operators will be fully informed of conditions 
that may affect the reliable performance of generators on their 
systems. ISO-NE does not explain why RTOs, ISOs, and independent 
transmission operators should be exempt from the requirement to receive 
information that may have a crucial impact on the reliability of the 
operation of their systems.\18\ Nor does ISO-NE provide evidence that 
the same scheduling problems affected balancing authorities that are 
not RTOs, ISOs, independent transmission operators or power plant 
operators, such that they too should be required to sign up to receive 
operational flow orders and other critical notices from transportation 
service providers. If ISO-NE believes the standard should be expanded 
to include all balancing authorities, it should seek such changes from 
NAESB, so that all industry segments can participate in the 
determination.
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    \18\ All RTOs and ISOs, for example, are not necessarily 
balancing authorities.
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6. WEQ Standard 011-1.5
    37. The standard requires that, upon request, a power plant 
operator must provide to the appropriate independent balancing 
authority and/or reliability coordinator pertinent information 
concerning the level of gas transportation service (firm or 
interruptible) and its natural gas supply (firm, fixed or variable 
quantity, or interruptible).

[[Page 38762]]

Comments
    38. Florida Cities states that due to the commercially sensitive 
nature of this information operators should only be required to divulge 
the information needed to ensure the reliable operation of the 
transmission grid, and no more (i.e., an electric balancing authority 
asking for supply and transportation information for the immediate 
future rather than day-ahead). In addition, Florida Cities asks the 
Commission to clarify how it will be determined which entity or 
entities will be authorized to request this information, and with what 
frequency they may do so.\19\
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    \19\ Florida Cities Comments at 4.
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    39. FPL Energy does not support the standard, commenting that it 
would create a way for electric balancing authorities and reliability 
coordinators to rank power supplies based on perceived reliability. In 
FPL Energy's view this would put merchant generators that are unable to 
contract for long-term firm gas pipeline capacity at a disadvantage in 
competing for power sales versus utility sales and sales from non-gas 
power suppliers.\20\ FPL Energy requests that the Commission refrain 
from adopting such a protocol until a mechanism that would compensate 
merchant generators for holding long-term firm capacity on gas 
pipelines is established.
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    \20\ FPL Energy Comments at 8.
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Commission Determination
    40. We find that the standard is appropriate and does not require 
improper sharing of commercially sensitive information with 
competitors. The standard as written only requires power plant 
operators to provide information regarding its gas transportation and 
performance obligation to independent balancing authorities and/or 
reliability coordinators.
    41. Regarding FPL Energy's concern that independent balancing 
authorities and/or reliability coordinators might choose to rank 
generators based on reliability of gas supply, it is not clear that the 
information will be used for that purpose. Increased communication and 
information about natural gas deliverability should help system 
operators understand potential operating problems on their system. 
Moreover, even if the information were used for ranking, as FPL Energy 
argues, FPL Energy has not shown why access to firm pipeline 
transportation should not be used as part of the analysis of the 
reliability of a gas fired generation. A generator with firm 
transportation and a firm gas supply generally would be more likely to 
be able to obtain gas when pipelines are constrained than generators 
relying solely on interruptible transportation. Moreover, as discussed 
above, the independence of the balancing authority and reliability 
coordinator will help ensure that the information is used 
appropriately. The benefits from enhanced communication about natural 
gas deliverability outweigh the potential that in a particular 
circumstance an independent balancing authority or reliability 
coordinator will use the information inappropriately. If FPL Energy 
believes an independent balancing authority or reliability coordinator 
in a particular circumstance has used such information inappropriately, 
it can file a complaint.
7. WEQ Standard 011-1.6/WGQ Standard 0.3.15
    42. This standard requires RTOs, ISOs, independent transmission 
operators, independent balancing authorities and/or regional 
reliability coordinators to establish operational communication 
procedures with the appropriate transportation service provider and/or 
power plant operator.
Comments
    43. ISO-NE notes that it is unclear why this standard is applicable 
only to independent balancing authorities since it would seem that all 
balancing authorities would benefit from communications with all power 
plant operators. In addition, ISO-NE suggests that the language ``and/
or'' be replaced with ``and'' to avoid any confusion.\21\
---------------------------------------------------------------------------

    \21\ ISO-NE Comments at 9.
---------------------------------------------------------------------------

    44. INGAA asks that the Commission clarify that it is the party 
responsible for managing the operations of each electric facility (i.e. 
RTO) to initiate the communication procedures required under this 
standard. INGAA states that allocation of responsibility is appropriate 
because the pipeline does not have firsthand information as to all the 
pertinent electric industry operators to which the power plants on the 
pipeline's system belong.
    45. NiSource comments that a pipeline could have power plant 
operator shippers that are located in the service territories of many 
different entities (i.e., RTOs, ISOs). In such a case, WEQ Standard 
011-1.6/WGQ Standard 0.3.15 could require that the pipeline develop 
numerous sets of communications procedures depending on the wishes of 
the other entities. NiSource states that such a requirement would be 
overly burdensome and difficult to maintain, and requests that the 
Commission make clear that a pipeline preserves the ability to argue in 
a future dispute proceeding that it is not obligated to develop new 
communication procedures that are not currently supported by the 
pipeline's existing communication infrastructure.\22\
---------------------------------------------------------------------------

    \22\ NiSource Comments at 10.
---------------------------------------------------------------------------

Commission Determination
    46. As we explained above, the consensus of NAESB members sought to 
limit the communications requirement to independent balancing 
authorities, which helps to protect against disclosure of confidential 
information. If ISO-NE believes that this rationale should not apply to 
WEQ Standard 011-1.6/WGQ Standard 0.3.15, it can seek a change through 
NAESB which will allow all industry segments to participate in the 
determination.
    47. We agree with INGAA that the RTOs, ISOs, independent 
transmission operators, independent balancing authorities and/or 
regional reliability coordinators are the parties responsible for 
initiating communication procedures, given that these parties should be 
the most knowledgeable regarding the pipelines used by power plants on 
their system. With respect to NiSource's comment we expect that the 
pipelines and RTOs, ISOs, and independent transmission operators will 
be able to work cooperatively to develop mutually agreeable, and 
efficient communication procedures. We are requiring in this rule that 
the parties file with us by November 1, 2007 to indicate that they have 
established the appropriate communication procedures. Should there be 
unresolved disputes at that time, the pipelines, RTOs, ISOs and 
independent transmission operators should advise the Commission what 
the unresolved issues are so the Commission can establish procedures to 
resolve those disputes, including the use of our dispute resolution and 
settlement judge procedures.\23\
---------------------------------------------------------------------------

    \23\ In a similar situation in the past (a requirement that 
pipelines enter into operational balancing agreements (OBAs) with 
interconnecting pipelines), rather than requiring pipelines to file 
their OBAs, the Commission required the pipelines to file a 
statement with the Commission certifying that they have complied 
with the requirement to enter into OBAs. Standards for Business 
Practices of Interstate Natural Gas Pipelines, 85 FERC ] 61,371 
(1998). The Commission stood ready with Alternative Dispute 
Resolution and ultimately Commission action to resolve any disputes. 
See Standards For Business Practices of Interstate Natural Gas 
Pipelines, Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), FERC 
Statutes and Regulations, Regulations Preambles July 1996- December 
2000 ] 31,062 (Apr. 16, 1998).

---------------------------------------------------------------------------

[[Page 38763]]

8. Additional Issue
    48. AGA states that, while it supports the incorporation of the 
NAESB standards, the existing operational rights of natural gas 
pipeline customers should not be changed as a result of efforts to 
increase communication and coordination between the gas and electric 
industries. To that end, AGA asks that the Commission ensure that NAESB 
standards WEQ-011-1.1/WGQ 0.3.11 and WEQ-011-1.3/WGQ 0.3.13 are 
enforced.\24\
---------------------------------------------------------------------------

    \24\ AGA Comments at 2.
---------------------------------------------------------------------------

    49. We expect pipelines to comply with all the NAESB standards 
incorporated by reference in our regulations just as we expect them to 
comply with all of our other regulations that pertain to them.

B. Additional Issues Raised by NAESB

    50. NAESB identified six issues for which it requested 
clarification of existing Commission policy or put forward potential 
areas for standards development that some industry participants believe 
might assist in resolving coordination problems between the gas and 
electric industries. The Commission provided clarification and guidance 
in the NOPR. Parties requested additional clarification on three 
issues, which we discuss below.
1. Use of Gas Indices for Pricing Capacity Release Transactions
    51. In the Final Report filed with the Commission on February 24, 
2006, NAESB requested clarification of Commission policy regarding the 
use of gas indices to price capacity release transactions, so that it 
could develop standards for such releases. In the NOPR, the Commission 
clarified that releasing shippers should be free to offer the same type 
of pricing arrangements that the pipeline offers and, therefore, 
releasing shippers are free to use gas price indices in pricing 
released capacity so long as the rate paid by the replacement shipper 
does not exceed the maximum rate in the pipeline's tariff.
Comments
    52. INGAA states that the Commission clarified that, where 
pipelines offer discounts based on gas price indices, the provisions of 
the pipeline's tariff governing capacity releases should not prevent 
releasing shippers from offering the same type of pricing in such a 
transaction. INGAA contends, however, that not all pipelines have 
language within their tariffs regarding permissible discounts. 
Therefore, INGAA requests that the Commission clarify that a 
requirement to allow releasing shippers to release capacity using gas 
price indices only applies to pipelines with such language in their 
tariffs and that releases must be consistent with the pipeline 
tariff.\25\ INGAA also requests that the Commission clarify that 
releasing shippers must specify all aspects of the release, including 
how to determine the best bid and the amount to bill under the release. 
Similarly, Carolina Gas requests clarification that releasing shippers 
desiring to use gas price indices to price capacity releases should 
only use published index prices that are readily available and 
agreeable for use by the pipeline.
---------------------------------------------------------------------------

    \25\ INGAA Comments at 6.
---------------------------------------------------------------------------

    53. Other commenters disagree. For example, NGSA argues the 
Commission should clarify releasing shippers should have the ability to 
release capacity using index-based pricing regardless of the pipeline's 
decision to exercise that authority. It contends that as long as the 
capacity release shipper is selling its capacity at, or below, the 
maximum tariff rate, it should be of no consequence how the pipeline 
prices its own primary capacity. NGSA asks the Commission to clarify 
the methodology pipelines should use to evaluate bids for primary and 
secondary market capacity made available at an index-based rate. 
Finally, NGSA requests that the Commission direct NAESB to establish 
the necessary data sets to allow for shippers to release capacity at 
rates which are based on gas price indices.
    54. Several commenters, while in support of the Commission's 
proposed clarification, believe the Commission has limited the 
flexibility in pricing capacity releases by stating that such prices 
may not exceed the pipeline's maximum tariff rate.\26\ These commenters 
argue for the removal of the price cap on capacity release 
transactions. FPL Energy asserts that lifting the price cap in the 
secondary market will result in more liquidity and competition for 
pipeline capacity as more shippers decide to purchase and manage their 
own capacity because they will have more opportunity to defray capacity 
costs and achieve fair market value for the capacity when it is not 
needed to generate power.\27\
---------------------------------------------------------------------------

    \26\ E.g., Dominion, Florida Cities, and FPL Energy.
    \27\ FPL Energy Comments at 13.
---------------------------------------------------------------------------

Commission Determination
    55. The Commission's regulations permit releasing shippers to use 
price indices or other formula rates on all pipelines, regardless of 
whether the pipeline has included a provision allowing the use of 
indices as part of its discounting provisions, so long as the prices 
are less than maximum rate in the pipeline's tariff. Section 284.8(b) 
\28\ of the Commission's regulations states that ``firm shippers must 
be permitted to release their capacity, in whole or in part, without 
restrictions on the terms or conditions for release,'' and section 
284.8(e) \29\ mandates that such a release may not be ``over the 
maximum rate.'' All pipelines are permitted to use price indices in 
discount transactions either through provisions in their tariffs or by 
means of filing a non-conforming service agreement.\30\ Providing 
releasing shippers with this flexibility is consistent with the 
``original intent of the Commission's capacity release regulations by 
providing releasing shippers with the flexibility to structure capacity 
release transactions that best fit their business needs.'' \31\
---------------------------------------------------------------------------

    \28\ 18 CFR 284.8(b).
    \29\ 18 CFR 284.8(e).
    \30\ Natural Gas Pipeline Co. of America, 82 FERC ] 61,298, 
62,179-80 (1998) (non-conforming provisions relating to discounts 
``must be on file and approved by the Commission--either in 
Natural's pro forma service agreement or as nonconforming 
contracts'').
    \31\ Standards for Business Practices of Interstate Natural Gas 
Pipelines, Order No. 587-N, 67 FR 11906 (March 18, 2002), FERC 
Stats. & Regs., Regulations Preambles ] 31,125 at P 21 (Mar. 11, 
2002).
---------------------------------------------------------------------------

    56. INGAA has expressed concern about possible problems in 
implementing this requirement on pipelines that do not provide for 
indexed releases in their tariffs. Under the Commission regulations, 
the releasing shipper is responsible for clearly setting out the terms 
and conditions of the release and that would include the means for 
implementing the formula rate. This is also an issue on which NAESB can 
develop standards to ensure that such releases can be processed quickly 
and efficiently.
    57. Some of the comments suggest that the price cap be lifted for 
capacity release transactions. This issue is already being addressed by 
the Commission in Docket Nos. RM06-21-000 and RM07-4-000, so it is not 
appropriate to address in this proceeding.
2. Pipelines' Ability To Permit Shippers To Choose Alternate Delivery 
Points
    58. In its Final Report, NAESB requested clarification regarding 
the ability of pipelines to permit shippers to shift gas deliveries 
from a primary to a secondary delivery point when a pipeline constraint 
occurs upstream of both points. Such changes would make it easier for 
shippers to redirect gas supplies to generators during periods when 
capacity is scarce. NAESB

[[Page 38764]]

provided, as an example, that a customer has 100 dekatherms scheduled 
to flow from a primary receipt point through the posted point of 
restriction to a primary delivery point. Under the same contract, the 
customer then requests a nomination change to move 50 of the 100 
dekatherms to a secondary delivery point that is outside its 
transportation path but still through the posted point of restriction.
    59. In the NOPR, the Commission discussed Order No. 637-B, which 
provided that pipelines must implement within-the-path scheduling under 
which a shipper seeking to use a secondary delivery point within its 
scheduling path has priority over another shipper seeking to use the 
same delivery point but that point is outside of its transportation 
path.\32\ In addition, it stated that the scenario posed by NAESB was a 
slight variation of the within-the-path scheduling, and clarified that 
it would be reasonable to permit the reassignment as posited in most 
cases.
---------------------------------------------------------------------------

    \32\ Regulation of Short-Term Natural Gas Transportation 
Services, 92 FERC ] 61,062 at 61,168-70 (2000).
---------------------------------------------------------------------------

Comments
    60. Salt River supports the ability of a gas shipper to make 
changes to its delivery point (from primary to alternate) once it has 
been confirmed through a constraint point without having it be treated 
as a new nomination. It argues that this ability better enables the 
electric industry to ensure that gas can move to the facilities that 
require it on an intra-day basis without having to be concerned about 
pro-rata curtailments or scheduled quantity cuts.\33\
---------------------------------------------------------------------------

    \33\ Salt River Comments at 3.
---------------------------------------------------------------------------

    61. Dominion agrees with the determination of shipper priority in 
the Commission's example, it is concerned that there may be other 
caveats beyond the one posited in which the Commission's specific 
``clarification'' may not be appropriate. Florida Cities has no 
objection to the Commission's proposed clarification, but states that 
the Commission should not require all pipelines to require this 
accommodation without exception. It states that any prior arrangements 
concerning delivery point nominations are preserved. For example, 
Florida Cities contends that Florida Gas Transmission Company, LLC has 
a system in which secondary delivery point nominations are considered 
on a ``jump ball basis'', meaning the ability of a shipper to move its 
nomination from the primary delivery point to the secondary delivery 
point will be contingent upon whether secondary point nominations for 
that flow day create a need for the allocation of capacity instead of 
by virtue of pathing rights.\34\
---------------------------------------------------------------------------

    \34\ Florida Cities Comments at 8.
---------------------------------------------------------------------------

    62. INGAA requests that the Commission clarify in the Final Rule 
that its proposed clarification is not intended to revise its policies 
concerning capacity allocation or to broaden shippers' flexible point 
rights beyond those set out in Order Nos. 637.\35\ El Paso further 
requests that the Commission state that the normal processes for new 
standards development apply to any new standards proposed relating to 
this issue.\36\
---------------------------------------------------------------------------

    \35\ INGAA Comments at 8.
    \36\ El Paso Comments at 4.
---------------------------------------------------------------------------

Commission Determination
    63. The Commission is not modifying its requirement for within-the-
path scheduling as adopted in Order No. 637. The example posited by 
NAESB appears consistent with the within-the-path scheduling concept 
and with pipeline proposals that have been accepted.\37\ It would not 
be appropriate for the Commission here to try to provide generic 
clarification to cover all possible proposals by pipelines for 
according flexibility to shippers. These proposals will have to be 
judged on an individual basis. In addition, NAESB can consider through 
its consensus process possible standards for according increased 
receipt and delivery point flexibility.
---------------------------------------------------------------------------

    \37\ Algonquin Gas Transmission Co., Director Letter Order, 
Docket No. RP06-69-000 (November 22, 2005); Texas Eastern 
Transmission, LP, Director Letter Order, Docket No. RP06-70-000 
(November 22, 2005).
---------------------------------------------------------------------------

3. Changes to the Intraday Nomination Gas Schedule
    64. In its Final Report, NAESB raised the possibility of developing 
standards that would offer an additional intraday nomination cycle with 
rights for firm shippers to bump interruptible nominations. NAESB 
suggested that such a standard would provide more flexibility to 
shippers, including power generators, with firm transportation rights 
so that they can nominate for natural gas supporting their market 
clearing times. In the NOPR, the Commission explained that its bumping 
policy requires that the last intra-day nomination opportunity would be 
one in which firm nominations do not bump interruptible nominations, 
but that NAESB could consider whether to add another intra-day 
nomination opportunity with bumping rights prior to the final non-
bumping opportunity, or to develop additional changes to its nomination 
timeline to better coordinate with electric scheduling.
Comments
    65. Various commenters support the development of a standard to 
modify the timing of the existing nomination schedule or add an 
additional nomination period.\38\ Dominion states that having an 
additional cycle(s) is desirable, as it would allow firm shippers to 
ensure their gas flows and thereby help repair the disconnect between 
the gas and electric scheduling timelines. Duke agrees, and requests 
that the NAESB WEQ be allowed to determine whether any additional 
nomination cycle will produce the desired effects of greater shipper 
flexibility and security.
---------------------------------------------------------------------------

    \38\ E.g., Dominion, Duke, Florida Cities, FPL Energy, Salt 
River, TVA.
---------------------------------------------------------------------------

    66. FPL Energy and Florida Cities do not object to the addition of 
a new intraday nomination cycle so long as any new nomination 
opportunity does not carry bumping rights in the event that it becomes 
the next to last nomination opportunity. Florida Cities states that if 
such rights were afforded, interruptible shippers may be forced into 
the market late with little chance of finding a replacement market. In 
addition, FPL Energy is concerned that having more opportunities to 
bump interruptible service could cause supply sources that cannot shut 
down quickly to limit their sales to firm shippers, thus harming those 
shippers wishing to utilize interruptible service. On the other hand, 
while TVA agrees with the addition of a new intraday nomination cycle, 
it requests that the Commission eliminate the ``no-bump'' rule 
entirely, as it puts interruptible transportation on equal footing with 
the highest priority firm transportation, i.e., a shipper paying the 
lowest rate on the system can displace those shippers that pay one of 
the highest rates on the system.
    67. Other participants oppose the introduction of an additional 
nomination cycle.\39\ Carolina Gas states that having another intra-day 
nomination opportunity would create unnecessary administrative 
complexities and would require significant modifications to Carolina 
Gas' Internet Web site. El Paso states that transportation service 
providers must already complete complex allocation and confirmation 
processes within a limited timeframe. Among other objectives, these 
processes are designed to ensure that the nominated gas supply is 
available and the

[[Page 38765]]

nominated market is ready to receive the gas.
---------------------------------------------------------------------------

    \39\ E.g., Carolina Gas, El Paso, EPSA, INGAA.
---------------------------------------------------------------------------

    68. INGAA asserts that neither altering the existing scheduling 
timeline nor adding an additional intra-day nomination cycle with 
bumping rights guarantees that a power generator will be able to 
nominate primary firm transportation capacity when the generator most 
needs that capacity, and states that any reliability issue concerning 
gas supply to electric generators should be addressed through 
individual pipeline proceedings. EPSA states that it is unclear whether 
the addition of another nomination opportunity with or without bumping 
rights would produce any significant improvement in the reliable 
performance of the system.
Commission Determination
    69. As we stated in the NOPR, the Commission has recognized the 
interest of interruptible shippers in achieving business certainty by 
making the last intra-day nomination opportunity one in which firm 
nominations do not bump interruptible nominations.\40\ However, within 
the confines of current Commission policy, NAESB should actively 
consider whether changes to existing intra-day schedules would benefit 
all shippers, and provide for better coordination between gas and 
electric scheduling. In addition, the NAESB nomination timeline 
establishes only the minimum requirement to which pipelines must 
adhere. We fully expect that individual pipelines supporting gas-fired 
generators will be considering the addition of other intra-day 
nomination opportunities that would be of benefit to their shippers.
---------------------------------------------------------------------------

    \40\ NOPR at P 23.
---------------------------------------------------------------------------

III. Implementation Dates and Procedures

    70. Pipelines and public utilities are required to implement the 
standards we are incorporating by reference in this Final Rule by 
November 1, 2007. In addition, pipelines and public utilities are 
required to file a statement by November 1, 2007 as to whether they 
have established the required procedures in WEQ Standard 011-1.2/WGQ 
Standard 0.3.12 and WEQ Standard 011-1.6/WGQ Standard 0.3.15. To reduce 
the burden on filers, we are not requiring pipelines and public 
utilities to make filings to include these standards in their tariffs 
at this time. These standards will be included in tariffs when the 
pipelines and public utilities file to incorporate in their tariffs the 
next revised version of the NAESB standards.

IV. Notice of Use of Voluntary Consensus Standards

    71. In section 12(d) of the National Technology Transfer and 
Advancement Act of 1995, Congress affirmatively requires federal 
agencies to use technical standards developed by voluntary consensus 
standards organizations, like NAESB, as the means to carry out policy 
objectives or activities unless use of such standards would be 
inconsistent with applicable law or otherwise impractical.\41\ NAESB 
approved the standards under its consensus procedures. Office of 
Management and Budget Circular A-119 (Sec.  11) (February 10, 1998) 
provides that federal agencies should publish a request for comment in 
a NOPR when the agency is seeking to issue or revise a regulation 
proposing to adopt a voluntary consensus standard or a government-
unique standard. On October 25, 2006, the Commission issued a NOPR that 
proposed to incorporate by reference NAESB's Gas/Electric Coordination 
Standards. The Commission took comments on the NOPR into account in 
fashioning this Final Rule.
---------------------------------------------------------------------------

    \41\ Pub L. No. 104-113, Sec.  12(d), 110 Stat. 775 (1996), 15 
U.S.C. Sec.  272 note (1997).
---------------------------------------------------------------------------

V. Information Collection Statement

    72. The Office of Management and Budget's (OMB) regulations in 5 
CFR 1320.11 (2005) require that it approve certain reporting and 
recordkeeping requirements (collections of information) imposed by an 
agency. Upon approval of a collection of information, OMB will assign 
an OMB control number and an expiration date. Respondents subject to 
the filing requirements of this Rule will not be penalized for failing 
to respond to these collections of information unless the collections 
of information display a valid OMB control number.
    73. The final rule upgrades the Commission's current business 
practice and communication standards to include standardized 
communication protocols between interstate pipelines and power plant 
operators and transmission owners and operators. The implementation of 
these standards and regulations is necessary to improve coordination 
between the gas and electric industries, to improve communications 
about scheduling of gas-fired generators and to improve the reliability 
in both industries. The following burden estimates include the costs to 
implement the WEQ's and WGQ's definitions and business practice 
standards providing for coordination and which will establish 
communication protocols between interstate natural gas pipelines and 
power plant operators and transmission owners and the various electric 
industry operators. The implementation of these data requirements will 
help the Commission carry out its responsibilities under the Federal 
Power Act and Natural Gas Act of promoting the efficiency and 
reliability of the electric and gas industries' operations. The 
Commission's Office of Energy Markets and Reliability will use the data 
for general industry oversight.
    74. The Commission sought comments to comply with these 
requirements. Comments were received from sixteen entities. No comments 
addressed the reporting burden imposed by these requirements and 
therefore the Commission will use the same estimates in the final rule. 
The substantive issues raised by the commenters are addressed in this 
preamble.

[[Page 38766]]

----------------------------------------------------------------------------------------------------------------
                                                                     Number of
                 Data collection                     Number of     responses per     Hours per     Total number
                                                    respondents     respondent       response        of hours
----------------------------------------------------------------------------------------------------------------
FERC-549C.......................................              93               1              20           1,860
FERC-717........................................             220               1              33           7,260
                                                 ---------------------------------------------------------------
    Totals......................................  ..............  ..............  ..............           9,120
----------------------------------------------------------------------------------------------------------------

    Total Annual Hours for Collection (Reporting and Recordkeeping, (if 
appropriate)) = 9,120.
    Information Collection Costs: The Commission sought comments on the 
costs to comply with these requirements but no comments were received 
addressing these cost estimates.
    The Commission will therefore use the same estimates in the final 
rule. It has projected the average annualized cost for all respondents 
to be the following: \42\
---------------------------------------------------------------------------

    \42\ The total annualized cost for the two information 
collections is $ 1,368,000. This number is reached by multiplying 
the total hours to prepare a response (hours) by an hourly wage 
estimate of $150 (a composite estimate that includes legal, 
technical and support staff rates). $1,368,000 = $150 x 9,120.

------------------------------------------------------------------------
                                             FERC-549C       FERC-717
------------------------------------------------------------------------
Annualized Capital/Startup Costs........        $279,000      $1,089,000
Annualized Costs (Operations &                       N/A             N/A
 Maintenance)...........................
                                         -------------------------------
    Total Annualized Costs..............         279,000       1,089,000
------------------------------------------------------------------------

    75. OMB regulations \43\ require OMB to approve certain information 
collection requirements imposed by agency rule. The Commission is 
submitting this Final Rule to OMB for review and approval of the 
information collections. These information collections are mandatory 
requirements.
---------------------------------------------------------------------------

    \43\ 5 CFR 1320.11.
---------------------------------------------------------------------------

    Title: Standards for Business Practices of Interstate Natural Gas 
Pipelines (FERC-549C) Standards for Business Practices and 
Communication Protocols for Public Utilities (FERC-717) (formerly Open 
Access Same Time Information System).
    Action: Proposed collections.
    OMB Control No.: 1902-0174 and 1902-0173.
    Respondents: Business or other for profit, (Public Utilities and 
Natural Gas Pipelines (Not applicable to small business.)).
    Frequency of Responses: One-time implementation (business 
procedures, capital/start-up).
    76. Necessity of Information: The Commission's regulations adopted 
in this rule are necessary to further the process begun in Order No. 
587 of creating a more efficient and integrated pipeline grid by 
standardizing the business practices and electronic communication of 
interstate pipelines and expanded in Order No. 676 to create a more 
efficient and integrated electric transmission grid by standardizing 
the business practices and electronic communication of public 
utilities. The Commission has reviewed the requirements pertaining to 
business practices and electronic communication of public utilities and 
natural gas pipelines and made a preliminary determination that the 
proposed revisions are necessary to establish more efficient 
coordination between the gas and electric industries. Requiring such 
information ensures both a common means of communication and common 
business practices to improve communications for participants engaged 
in the sale of electric energy at wholesale and the transportation of 
natural gas.
    77. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street, NE., Washington, DC 20426 [Attention: 
Michael Miller, Office of the Deputy Chief Information Officer, ED-30, 
(202) 502-8415, or michael.miller@ferc.gov] or the Office of Management 
and Budget, Office of Information and Regulatory Affairs, Attention: 
Desk Officer for the Federal Energy Regulatory Commission, 725 17th 
Street, NW., Washington, DC 20503. The Desk Officer can also be reached 
at (202) 395-4650, or fax: (202) 395-7285.

VI. Environmental Analysis

    78. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\44\ The 
Commission has categorically excluded certain actions from these 
requirements as not having a significant effect on the human 
environment.\45\ The actions adopted here fall within categorical 
exclusions in the Commission's regulations for rules that are 
clarifying, corrective, or procedural, for information gathering 
analysis, and dissemination, and for sales, exchange, and 
transportation of natural gas and electric power that requires no 
construction of facilities. Therefore, an environmental assessment is 
unnecessary and has not been prepared in this Final Rule.
---------------------------------------------------------------------------

    \44\ Regulations Implementing the National Environmental Policy 
Act, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & 
Regs., Regulations Preambles 1986-1990 ] 30,783 (1987).
    \45\ 18 CFR 380.4 (2006).
---------------------------------------------------------------------------

VII. Regulatory Flexibility Act

    79. The Regulatory Flexibility Act of 1980 (RFA) \46\ generally 
requires a description and analysis of final rules that will have 
significant economic impact on a substantial number of small entities. 
The regulations adopted here impose requirements only on interstate 
pipelines and public utilities, the majority of which are not small 
businesses, and would not have a significant economic impact. These 
requirements are, in fact, designed to benefit all customers, including 
small businesses. Accordingly, pursuant to section 605(b) of the RFA, 
the Commission hereby certifies that the regulations adopted herein 
will not have a significant adverse impact on a substantial number of 
small entities.
---------------------------------------------------------------------------

    \46\ 5 U.S.C. 601-612.
---------------------------------------------------------------------------

VIII. Document Availability

    80. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all

[[Page 38767]]

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 p.m. Eastern time) at 888 First Street, 
NE., Room 2A, Washington, DC 20426.
    81. From FERC's Home Page on the Internet, this information is 
available on eLibrary. The full text of this document is available on 
eLibrary in PDF and Microsoft Word format for viewing, printing, and/or 
downloading. To access this document in eLibrary, type the docket 
number excluding the last three digits of this document in the docket 
number field. User assistance is available for eLibrary and the FERC's 
Web site during normal business hours from FERC Online Support at (202) 
502-6652 (toll-free at 1-866-208-3676) or e-mail at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-

8371, TTY (202) 502-8659. E-Mail the Public Reference Room at 
public.refererenceroom@ferc.gov.

IX. Effective Date and Congressional Notification

    82. These regulations are effective August 15, 2007. The Commission 
has determined, with the concurrence of the Administrator of the Office 
of Information and Regulatory Affairs of OMB, that this rule is not a 
``major rule'' as defined in section 351 of the Small Business 
Regulatory Enforcement Fairness Act of 1996.

List of Subjects in 18 CFR Parts 38 and 284

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

    By the Commission.
Kimberly D. Bose,
Secretary.

0
In consideration of the foregoing, the Commission amends parts 38 and 
284 of Chapter I, Title 18, Code of Federal Regulations, as follows.

PART 38--BUSINESS PRACTICE STANDARDS AND COMMUNICATION PROTOCOLS 
FOR PUBLIC UTILITIES

0
1. The authority citation for part 38 continues to read as follows:

    Authority: 16 U.S.C. 791-825r, 2601-2645; 31 U.S.C. 9701; 42 
U.S.C. 7101-7352.

0
2. Section 38.1 is revised to read as follows:

Sec.  38.1  Applicability.

    This part applies to any public utility that owns, operates, or 
controls facilities used for the transmission of electric energy in 
interstate commerce or for the sale of electric energy at wholesale in 
interstate commerce and to any non-public utility that seeks voluntary 
compliance with jurisdictional transmission tariff reciprocity 
conditions.

0
3. Section 38.2 is amended by adding new paragraph (a)(8) to read as 
follows:

Sec.  38.2  Incorporation by reference of North American Energy 
Standards Board Wholesale Electric Quadrant standards.

    (a) * * *
    (8) Gas/Electric Coordination Standards (WEQ-011, Version 1, as 
adopted in Recommendation R04021 July 8, 2005).
* * * * *

PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE 
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES

0
4. The authority citation for part 284 continues to read as follows:

    Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C. 7101-7352; 
43 U.S.C. 1331-1356.

0
5. In Sec.  284.12, paragraph (a)(1)(i) is revised to read as follows:

Sec.  284.12  Standards for pipeline business operations and 
communications.

    (a) * * *
    (1) * * *
    (i) Additional Standards (General Standards and Creditworthiness 
Standards) (Version 1.7, December 31, 2003) and Additional Standards 
(Gas/Electric Operational Communications) (Version 1.8, September 30, 
2006, with minor corrections applied December 31, 2006).
* * * * *
[FR Doc. E7-13591 Filed 7-13-07; 8:45 am]

BILLING CODE 6717-01-P