[Federal Register Volume 80, Number 79 (Friday, April 24, 2015)]
[Rules and Regulations]
[Pages 23197-23227]
[FR Doc No: 2015-09275]

Vol. 80

Friday,

No. 79

April 24, 2015

Part III

Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Part 284

Coordination of the Scheduling Processes of Interstate Natural Gas
Pipelines and Public Utilities; Final Rule

Federal Register / Vol. 80 , No. 79 / Friday, April 24, 2015 / Rules
and Regulations

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM14-2-000; Order No. 809]

Coordination of the Scheduling Processes of Interstate Natural
Gas Pipelines and Public Utilities

AGENCY: Federal Energy Regulatory Commission.

ACTION: Final rule.

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SUMMARY: In this Final Rule, the Federal Energy Regulatory Commission
(Commission) is revising its regulations to better coordinate the
scheduling of wholesale natural gas and electricity markets in light of
increased reliance on natural gas for electric generation, as well as
to provide additional scheduling flexibility to all shippers on
interstate natural gas pipelines. The revised regulations in this Final
Rule modify the scheduling practices used by interstate pipelines to
schedule natural gas transportation service and provide additional
contracting flexibility to firm natural gas transportation customers
through the use of multi-party transportation contracts. The revisions
in this Final Rule, together with the Commission's action in certain
related proceedings, will better ensure the reliable and efficient
operation of both the interstate natural gas pipeline and electricity
systems.

DATES: This rule will become effective July 8, 2015. The incorporation
by reference of certain publications listed in this rule is approved by
the Director of the Federal Register as of July 8, 2015.

FOR FURTHER INFORMATION CONTACT:
Anna Fernandez (Legal Information), Federal Energy Regulatory
Commission, Office of the General Counsel, 888 First Street NE.,
Washington, DC 20426,<PHONE_NUMBER>.

Caroline Daly Wozniak (Technical Information), Federal Energy
Regulatory Commission, Office of Energy Policy and Innovation, 888
First Street NE., Washington, DC 20426,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

ORDER NO. 809

FINAL RULE

Table Of Contents

                                                              Paragraph
                                                               numbers

I. Background..............................................           4.
    A. Notice of Proposed Rulemaking.......................          12.
    B. NAESB...............................................          17.
    C. Subsequent Developments.............................          21.
II. Discussion.............................................          23.
III. Gas Day...............................................          26.
    A. NOPR Proposal.......................................          26.
    B. NOPR Comments.......................................          28.
    C. Data Request and ISO and RTO Responses..............          49.
    D. Comments on Data Request............................          61.
    E. Commission Determination............................          62.
IV. Natural Gas Transportation Nomination Timeline.........          71.
    A. Background..........................................          71.
    B. Natural Gas Transportation Day-Ahead Cycles.........          75.
        1. NOPR Proposal...................................          78.
        2. Revised NAESB Day-Ahead Nomination Cycles.......          82.
        3. NOPR Comments...................................          84.
        4. Commission Determination........................          87.
    C. Intraday Nomination Cycles..........................          89.
        1. NOPR Proposal...................................          91.
        2. NAESB's Revised Intraday Nomination Cycles......          93.
        3. Comments........................................          94.
        4. Commission Determination........................         104.
V. DSPS Proposal...........................................         108.
    A. Background..........................................         108.
    B. DSPS's Proposed National Changes....................         111.
        1. Comments........................................         112.
        2. Commission Determination........................         121.
    C. 1-Year Pilot Program................................         124.
        1. Comments........................................         125.
        2. Commission Determination........................         127.
VI. Multi-Party Transportation Contracts...................         128.
    A. Background..........................................         128.
    B. NOPR Proposal.......................................         130.
    C. Comments............................................         133.
    D. Commission Determination............................         142.
VII. Notice of Use of Voluntary Consensus Standards........         149.
VIII. Incorporation By Reference...........................         150.
IX. Information Collection Statement.......................         153.
X. Environmental Analysis..................................         161.
XI. Regulatory Flexibility Act Certification...............         162.
XII. Implementation Schedule...............................         165.
    A. Comments............................................         165.
    B. Commission Determination............................         168.
XIII. Document Availability................................         172.
XIV. Effective Date and Congressional Notification.........         175.

    1. In this Final Rule, the Federal Energy Regulatory Commission
(Commission) revises Part 284 of the Commission's regulations relating
to the scheduling of transportation service on interstate natural gas
pipelines to better coordinate the scheduling practices of the
wholesale natural gas and electric industries, as well as to provide
additional scheduling flexibility to all shippers on interstate natural
gas pipelines. The Final Rule changes the nationwide Timely Nomination
Cycle nomination deadline for scheduling natural gas transportation
from 11:30 a.m. Central Clock Time (CCT) to 1:00 p.m. CCT and revises
the intraday nomination timeline, to include adding an additional
intraday scheduling opportunity during the gas operating day (Gas Day).
The Final Rule effectuates these changes by incorporating by reference
into the Commission's regulations the standards developed and filed by
the North American Energy Standards Board (NAESB).\1\ The revised
regulations in this Final Rule also provide additional contracting
flexibility to firm natural gas transportation customers through the
use of multi-party transportation contracts.
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    \1\ NAESB is accredited by the American National Standards
Institute (ANSI) as an accredited standards organization. NAESB
complies with ANSI's requirements that its procedures are open to
materially affected entities and that the standards represent a
reasonable consensus of the industry without domination by any
single interest or interest category.
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    2. On March 20, 2014, the Commission instituted proceedings under
section 206 of the Federal Power Act (FPA) \2\ to ensure that each
Independent System Operator's (ISO) and Regional Transmission
Organization's (RTO) scheduling, particularly its day-ahead scheduling
practices, correlate with any revisions to the natural gas scheduling
practices ultimately adopted by the Commission in this Final Rule. The
Section 206 Order provides that ninety days after publication of this
Final Rule in the Federal Register each ISO and RTO is required to
propose tariff revisions to coordinate its day-ahead market with the
changes adopted herein or to show cause why its existing scheduling
practices need not be changed. This Final Rule--together with actions
already undertaken by the Commission in other dockets as discussed
below, additional regional efforts underway by market participants and
stakeholders, and any actions taken in the section 206 proceeding on
ISO and RTO scheduling practices--is designed to better ensure the
reliable and efficient operation of both the interstate natural gas
pipeline and electricity systems.
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    \2\ California Independent System Operator Corp., et al, order
initiating investigation into ISO/RTO scheduling practices and
establishing paper hearing procedures, 146 FERC ] 61,202 (2014)
(Section 206 Order).
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    3. However, for the reasons described below, the Commission
declines to adopt the proposal to change the start of the Gas Day. It
is not clear that requiring a change in the Gas Day start time would
provide sufficient benefits to outweigh the operational and safety
impacts and costs of making such a change. While the Commission
declines to take action in this proceeding to change the start of the
Gas Day on a nation-wide basis, we note that since the issuance of the
NOPR in March 2014 both ISO-NE and PJM (the two regions that appear to
be of the most concern) have recently undertaken operational and market
actions to address the availability and performance of generators,
including gas-fired generators, in their footprints. These and other
regional efforts to address generator performance may result in natural
gas-fired generators and other market participants in these regions
taking actions to alleviate some of the electric industry fuel supply
concerns underlying the Gas Day proposal in the NOPR.

I. Background

    4. The Commission's existing regulations incorporate by reference
the interstate natural gas pipeline scheduling business practice
standards of NAESB's Wholesale Gas Quadrant (WGQ).\3\ NAESB is a
consensus standards organization composed of representatives of all
segments of the natural gas industry and the electric power industry.
Since 1996, these standards have established nationwide timelines that
the industry and the Commission have determined are necessary to
establish a more efficient and integrated pipeline grid.
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    \3\ See 18 CFR 284.12(a) and (b) (2014).
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    5. The existing 24-hour operating day, or Gas Day, for interstate
natural gas pipelines begins at 9:00 a.m. CCT and ends at 9:00 a.m. CCT
the following day. All nominations for interstate natural gas pipeline
transportation service are for a daily quantity to be transported over
the 24-hour Gas Day.\4\ The rate at which a shipper may use its
contracted quantity on a given interstate pipeline, also known as a
flow rate, is determined by the individual pipeline's tariff and the
flexibility of that pipeline to permit shippers to use gas on other
than a uniform hourly basis over the 24-hour Gas Day (i.e., non-ratable
flows). Except for special services, pipeline services are generally
based on the assumption of uniform hourly flows over the Gas Day.\5\
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    \4\ The NAESB WGQ standards refer to CCT which refers to the
actual time in the Central Time Zone, reflecting Central Standard
Time or Daylight Savings Time, whichever is applicable.
    \5\ During much of the year, most interstate natural gas
pipelines can accommodate significant variations in hourly flow
rates. However, during high demand periods when pipeline
capabilities are being fully utilized to provide firm transportation
services, a pipeline may announce a critical notice period, where
shippers are expected to stay in balance. Some pipelines also offer
enhanced services that permit subscribing shippers more variable
hourly flow rates.
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    6. The current NAESB WGQ standards establish four standard
nomination periods (i.e., periods during which a shipper can request
transportation service under its contract) for a Gas Day. As summarized
in Table 1 below, shippers have two nomination opportunities prior to
the day of gas flow, the Timely Nomination Cycle and the Evening
Nomination Cycle, and two opportunities to revise their nominations on
the day of gas flow (Intraday 1 and Intraday 2). Individual pipelines
may offer additional scheduling opportunities beyond the standard
nomination cycles.\6\
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    \6\ See, e.g., Texas Gas Transmission LLC, 137 FERC ] 61,093
(2011), order on compliance, 138 FERC ] 61,176 (2013) (Texas Gas);
and Gulf South Pipeline Company LP, 141 FERC ] 61,262 (2012) (Gulf
South).

                                  Table 1--Current NAESB Gas Nomination Cycles
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                                   Nomination deadline    Notification of         Nomination
         Nomination cycle                  (CCT)          schedule  (CCT)      effective  (CCT)    Bumping of IT
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Timely...........................  11:30 a.m..........  4:30 p.m...........  9:00 a.m. Next Day.  N/A.
Evening..........................  6:00 p.m...........  10:00 p.m..........  9:00 a.m. Next Day.  Yes.
Intraday 1.......................  10:00 a.m..........  2:00 p.m...........  5:00 p.m. Current    Yes.
                                                                              Day.
Intraday 2.......................  5:00 p.m...........  9:00 p.m...........  9:00 p.m. Current    No.
                                                                              Day.
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    7. With respect to electric industry scheduling practices, the
Commission has accepted regional variation in the development of
scheduling practices in ISO and RTO electric markets, each of which has
established its own scheduling timelines. For most electric utilities,
the 24-hour operating day begins at 12:00 a.m. local time. The ISOs'
and RTOs' practice of scheduling resources generally includes the
commitment and dispatch of sufficient, deliverable generation to supply
load in a reliable least cost manner, all based on generator
availability and the transmission facilities that will be in service
that day. To perform the unit commitment and dispatch processes used to
develop daily resource schedules, each ISO and RTO has its own timeline
for collecting supply offers from generators and expected demand from
load serving entities on the day prior to the operating day. The ISOs
and RTOs then run market algorithms that determine the least cost set
of resources that can be used to serve the next day's load. Each ISO
and RTO also performs a reliability unit commitment process to procure
resources, in addition to those resources committed to serve the load
bid into the day-ahead market, as necessary to meet the ISO's or RTO's
own forecast of the next day's load or other system needs. Each ISO and
RTO establishes its own timing for executing the day-ahead and
reliability scheduling processes, including the times of day when bids
and offers are due to the system operator, when the market and
reliability processes are run, and when the results of the scheduling
processes are made available to generators.\7\
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    \7\ FERC, Operator-Initiated Commitments in RTO and ISO Markets,
Docket No. AD14-14-000 (Dec. 2014), available at http://www.ferc.gov/legal/staff-reports/2014/AD14-14-operator-actions.pdf.
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    8. In non-ISO and RTO systems, the Commission's pro forma OATT
specifies that firm interchange schedules need to be submitted by 10:00
a.m. day-ahead or a reasonable time that is generally accepted in the
region and is consistently adhered to by the Transmission Provider.\8\
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    \8\ Pro forma OATT section 13.8. Schedules for Non-Firm Point-
To-Point Transmission Service must be submitted to the Transmission
Provider no later than 2:00 p.m. of the day prior to commencement of
such service. Pro forma OATT section 14.6.
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    9. Recent developments in the wholesale natural gas and electricity
industries--particularly the organized electricity markets--signal that
changes to the gas nomination schedule may be needed.\9\ Reliance on
natural gas as a fuel for electric generation has steadily increased in
recent years.\10\ This trend is expected to continue, resulting in
greater interdependence between the natural gas and electric
industries.\11\ Several events over the last few years, such as the
Southwest Cold Weather Event \12\ and the extreme and sustained cold
weather events in the eastern U.S. in January 2014,\13\ show the
crucial interrelationship between natural gas pipelines and electric
transmission operators and underscore the need for improvements in the
coordination of wholesale natural gas and electric markets.
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    \9\ The Commission is directing ISOs and RTOs to make
corresponding changes in the Section 206 Order.
    \10\ See, e.g., U.S. Energy Information Administration, Annual
Energy Outlook 2014 with projections to 2040 at ES-4 (April 2014);
North American Electric Reliability Corporation, 2014 Long-Term
Reliability Assessment (November 2014) at 19.
    \11\ See, e.g., U.S. Energy Information Administration, Annual
Energy Outlook 2014 with projections to 2040 (April 2014) (Natural
gas-fired generation is projected to overtake coal-fired generation
for U.S. electricity generation by 2040. Natural gas' share of U.S.
electricity generation is projected to increase from 30 percent in
2012 to 35 percent in 2040.); ICF Assessment of New England's
Natural Gas Pipeline Capacity to Satisfy Short and Near-Term
Electric Generation Needs: Phase II Final Report (November 20,
2014); North American Electric Reliability Corporation, 2014 Long-
Term Reliability Assessment (November 2014) at 13.
    \12\ See FERC/NERC, Report on Outages and Curtailments During
the Southwest Cold Weather Event of February 1-5, 2011 (2011),
available at http://www.ferc.gov/legal/staff-reports/08-16-11-report.pdf.
    \13\ The widespread and record low temperatures during January
2014 resulted in coincident record peak demand for natural gas
throughout the Midwest, Northeast, Mid-Atlantic, and Southeast
regions leading to constrained pipeline capacity and high natural
gas prices. In addition, in February 2014, arctic temperatures
limited the availability of natural gas to supply New Mexico and
Southern California leading CAISO to issue a system alert and a
request for consumers to reduce power demand around the system.
CAISO invoked increasingly stringent measures throughout the day to
move generation off natural gas, reduce demand, and maintain
sufficient supply to meet firm load. See FERC Staff Presentation
``Recent Weather Impacts on the Bulk Power System,'' January 16,
2014, http://www.ferc.gov/CalendarFiles/20140116102908-A-4-Presentation.pdf.
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    10. Since early 2012, the Commission has conducted multiple
technical conferences and requested comment on various aspects of gas-
electric interdependence and coordination in order to better understand
the interface between the electric and natural gas pipeline industries
and identify areas for improved coordination.\14\ In a report issued on
November 15, 2012, Commission staff noted that natural gas and electric
industry participants highlighted the need for greater alignment of
natural gas and electric scheduling practices.\15\ At the direction of
the Commission, staff conducted an additional technical conference in
April 2013 to specifically discuss natural gas and electric scheduling
practices, including whether and how natural gas and electric industry
scheduling practices could be harmonized in order to achieve more
efficient scheduling practices for both industries.\16\
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    \14\ See Coordination Between Natural Gas and Electricity
Markets, Docket No. AD12-12-000 (Feb. 15, 2012), available at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=12893828.
    \15\ Staff Report on Gas-Electric Coordination Technical
Conferences, Docket No. AD12-12-000 (Nov. 15, 2012) (November Staff
Report), available at http://elibrary.ferc.gov/idmws/File_List.asp.
    \16\ Coordination between Natural Gas and Electricity Markets,
Docket No. AD12-12-000 (Mar. 5, 2013) (Notice of Technical
Conference), available at http://elibrary.ferc.gov/idmws/File_list.asp?document_id=14095482.
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    11. At the April 2013 conference, participants identified several
areas in which the differences between the nationwide natural gas
schedule and the regional electric schedules can affect the provision
of reliable service and may create inefficiencies in scheduling that
result in less cost effective use of resources. The participants
identified three major issues. These included: (1) The difference
between the standardized operating day of interstate natural gas
pipelines and the operating days of electric utilities (including ISOs
and RTOs); (2) the lack of coordination between the day-ahead process
for nominating interstate natural gas pipeline transportation services
and the day-ahead process for scheduling electric generators,
particularly those in the ISOs and RTOs; and (3) the lack of intraday
nomination opportunities on interstate natural gas pipelines, which
limits the ability of gas-fired electric generators, as well as other
shippers, to revise their nominations during the operating day. Several
conference participants stressed that, due to the difficult policy
questions involved, they would need Commission policy guidance before
they would be able move forward on coordination of the natural gas and
electric industries existing scheduling practices.

A. Notice of Proposed Rulemaking

    12. Based on the increased reliance on natural gas as a fuel for
electric generation and in consideration of the discussions at the
2012-2013 technical conferences and filed comments, the Commission
concluded that the concerns identified by the industries warranted
further action. On March 20, 2014, the Commission issued the Notice of
Proposed Rulemaking (NOPR or Proposed Rule) to address concerns

with divergent interstate natural gas pipeline and wholesale electric
utility scheduling practices, as well as concerns regarding the
flexible and efficient use of pipeline capacity by natural gas-fired
generators and other shippers.\17\
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    \17\ Coordination of the Scheduling Processes of Interstate
Natural Gas Pipelines and Public Utilities, 79 FR 18223 (Apr. 1,
2014), FERC Stats. & Regs ] 32,700 (2014) (cross-referenced at 146
FERC ] 61,201 (2014)) (NOPR).
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    13. The NOPR proposed three changes to the nationwide natural gas
scheduling practices: (1) Move the start of the Gas Day from 9:00 a.m.
CCT to 4:00 a.m. CCT; (2) move the start of the first day-ahead gas
nomination opportunity for pipeline scheduling (Timely Nomination
Cycle) from the current 11:30 a.m. CCT to 1:00 p.m. CCT;\18\ and (3)
modify the current intraday nomination timeline to provide four
intraday nomination cycles, instead of the existing two, to provide
greater flexibility to all pipeline shippers.
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    \18\ The Commission did not propose any changes to the Evening
Nomination Cycle.
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    14. The NOPR also proposed to require interstate natural gas
pipelines to offer multi-party transportation contracts to provide
multiple shippers the flexibility to share interstate pipeline capacity
to serve complementary needs in an efficient manner, and the NOPR
provided clarification of the Commission's no-bump policy with respect
to any enhanced nomination opportunity proposed by a pipeline (beyond
the standard nomination opportunities).
    15. Recognizing that the natural gas and electricity industries
were best positioned to work out the details of how changes in
scheduling practices could most efficiently be made and implemented,
the Commission provided the natural gas and electric industries,
through NAESB, with a period of 180 days after publication of the NOPR
in the Federal Register to reach consensus on any revisions to the
Commission's proposals regarding the Gas Day and pipeline nomination
timeline and either file consensus standards with the Commission or
notify the Commission of the natural gas and electric industries'
inability to reach consensus on any revisions to the Commission's
proposals. Comments on NAESB's consensus standards, as well as comments
on the Commission's proposals, were to be filed 240 days after
publication of the NOPR in the Federal Register, or November 28, 2014.
In the NOPR, the Commission stated that if the Commission were to adopt
regulations that have not been approved by NAESB, it would expect NAESB
to integrate the Commission's regulations into its standards within 90
days of the effective date of the final rule and to notify the
Commission when the standards have been approved.
    16. On the same day the NOPR was issued, the Commission issued two
other orders, which, in conjunction with the NOPR, were designed to
better ensure the reliable and efficient operation of both the
interstate natural gas pipeline and electricity systems. In one order,
the Commission instituted proceedings under section 206 of the Federal
Power Act (FPA) \19\ to ensure that each ISO's and RTO's scheduling
practices, particularly its day-ahead scheduling practices, correlate
with any revisions to the natural gas scheduling practices ultimately
adopted by the Commission in the instant proceeding.\20\ In the Section
206 Order, the Commission required each ISO and RTO within ninety days
of the publication of a Final Rule in this proceeding to: (1) Make a
filing that proposes tariff changes to adjust the time at which the
results of its day-ahead energy market and reliability unit commitment
process (or equivalent) are posted to a time that is sufficiently in
advance of the Timely and Evening Nomination Cycles, respectively, to
allow gas-fired generators to procure natural gas supply and pipeline
transportation capacity to serve their obligations; or (2) show cause
why such changes are not necessary. In the second order, the Commission
instituted proceedings, under section 5 of the Natural Gas Act (NGA)
\21\ to examine whether interstate natural gas pipelines are providing
notice of offers to purchase released pipeline capacity in accordance
with section 284.8(d) of the Commission's regulations.\22\
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    \19\ 16 U.S.C. 824e (2012).
    \20\ Section 206 Order, 146 FERC ] 61,202.
    \21\ 15 U.S.C. 717d.
    \22\ Posting of Offers to Purchase Capacity, 146 FERC ] 61,203
(2014). See also 18 CFR 284.8(d) (2013).
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B. NAESB

    17. Following issuance of the NOPR, NAESB reconvened the Gas
Electric Harmonization (GEH) Forum as the platform for the gas and
electric industries to consider the NOPR proposals, as well as to
develop any consensus-based alternatives to the NOPR proposals.\23\ The
GEH Forum was tasked with developing a recommendation for consideration
by the NAESB Board of Directors (Board). The GEH Forum and NAESB Board
convened several meetings between April and June 2014 with nearly five
hundred active participants and over seven-hundred participants
monitoring the activity, representing all facets of the wholesale gas
and wholesale electric markets.\24\
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    \23\ The NAESB Board of Directors formally defined consensus of
the GEH Forum as 67 percent affirmative vote of each of the
wholesale gas and wholesale electric quadrants and 40 percent
affirmative vote of each of the segments of the two quadrants.
    \24\ NAESB June 18, 2014 Report at 11.
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    18. Four alternatives to the NOPR proposal were considered during
the final GEH Forum meeting.\25\ The day-ahead and intraday nomination
cycles in each package were the same,\26\ but the start of the Gas Day
in each package was different. Disagreement over the start of the Gas
Day prevented the GEH Forum from reaching consensus on any of the
alternative proposals to the NOPR.\27\ The GEH Forum was also unable to
reach consensus on an alternative proposal that did not define the Gas
Day, but contained the same day-ahead and intraday nomination schedule
as the four alternative proposals. Several participants expressed
concern that any alternative proposal would be incomplete without a Gas
Day start time, and indicated that they could not support a package
that did not include the start of the Gas Day.\28\
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    \25\ Id. at 9.
    \26\ Id. at 8. The nomination deadline for the Timely and
Evening Nomination Cycles were the same as those proposed in the
NOPR--1:00 p.m. CCT and 6:00 p.m. CCT, respectively. The modified
NAESB standards proposed only three intraday nomination
opportunities, instead of four as proposed in the NOPR. The
nomination deadlines for Intraday 1, Intraday 2 and Intraday 3 would
be at 10:00 a.m. (bump), 2:30 p.m. (bump), and 7:00 p.m. (no-bump),
all CCT.
    \27\ Id. at 9-10.
    \28\ Id.
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    19. Despite the inability of the GEH Forum to reach consensus, the
NAESB Board directed the WGQ to proceed with the development of
standards related to the day-ahead and intraday nomination cycles given
the broad agreement among industry participants on those issues.\29\
Electric utilities could participate in the WGQ meetings, but only
members of the WGQ were eligible to participate in the final vote
(i.e., Wholesale Electric Quadrant (WEQ) members that are not also
members of the WGQ, such as the ISO and RTO segment, were ineligible to
vote on the standards).
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    \29\ Id. at 10.
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    20. On June 18, 2014, NAESB filed a status report with the
Commission. On September 29, 2014, NAESB filed a second report to
supplement the June 18 report and to inform the Commission of the
modifications to the NAESB WGQ Business Practice Standards that were

developed at the direction of the NAESB Board.\30\ The modified NAESB
WGQ Business Practice Standards revise the nomination timeline to
provide for three intraday nomination cycles in addition to the Timely
and Evening Nomination Cycles. NAESB stated that nomination cycles are
not dependent upon a specific start time to the Gas Day and are
implementable with whichever time the Commission chooses as a start of
the Gas Day. On November 26, 2014, NAESB filled another report to
inform the Commission of the options the organization may pursue to
respond to Commission action within the ninety-day deadline provided in
the NOPR, if the Commission adopts regulations not approved by NAESB.
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    \30\ NAESB reports that, in total, there are modifications to
twenty-three NAESB WGQ Business Practice Standards: The NAESB WGQ
Nomination Related Standard Nos. 1.1.18, 1.2.4, 1.3.1, 1.3.2, 1.3.3,
1.3.4, 1.3.13, 1.3.14, 1.3.41, 1.3.42, 1.3.51, and 1.3.80, the NAESB
WGQ Flowing Gas Related Standard Nos. 2.2.5, 2.3.5, and 2.3.21, the
NAESB WGQ Quadrant Electronic Delivery Mechanism Related Standard
No. 4.3.90, and the NAESB WGQ Capacity Release Related Standard Nos.
5.3.2, 5.3.44, 5.3.45, 5.3.48, 5.3.49, 5.3.53, and 5.3.54. NAESB
states that, pursuant to the direction given by the NAESB Board of
Directors, the NAESB WGQ Business Practice Standards are silent as
to a start time of the Gas Day. Accordingly, references to the
specific start time of the Gas Day in NAESB WGQ Standard No. 1.3.1
have been removed and replaced by the placeholder: [?]. Likewise,
NAESB WGQ Standard No. 1.3.41 was revised to contain a generic
reference to the start time of the Gas Day. NAESB states that,
should the Commission identify a specific start time of the Gas Day,
it will revise the language of the NAESB WGQ Business Practice
Standards as necessary. NAESB WGQ Annual Plan Item 11c which
modified the NAESB standards was approved by the NAESB WGQ Executive
Committee and ratified by the NAESB membership on September 22,
2014. In addition, Minor Correction M14018 was applied to these
standards effective October 10, 2014.
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C. Subsequent Developments

    21. On October 15, 2014, the Commission issued a notice of NAESB's
September 29 report. The notice provided that comments in response to
the NOPR should address the alternate proposal submitted to NAESB by
the Desert Southwest Pipeline Stakeholders during the formal comment
period on the proposed modifications to the NAESB WGQ standards.\31\
Comments on the NOPR were due on November 28, 2014. Seventy-five
comments were filed. Comments were received from all sectors of both
industries, including ISOs and RTOs, electric utilities, interstate
natural gas pipelines, local distribution companies (LDC), producers,
state regulators, electric generators, and other interested persons.
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    \31\ NAESB Sept. 29, 2014 Report at Appendix C.
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    22. On December 12, 2014, Commission staff requested data from each
of the six jurisdictional ISOs and RTOs regarding their experience with
the impact on reliable and efficient operations of natural gas-fired
generators running out of their daily nomination of natural gas
transportation service during the morning electric ramp, to the extent
this occurs. California Independent System Operator Corporation
(CAISO), ISO New England Inc. (ISO-NE), Midcontinent Independent System
Operator, Inc. (MISO), New York Independent System Operator, Inc.
(NYISO), PJM Interconnection, L.L.C. (PJM), and Southwest Power Pool,
Inc. (SPP) each filed a response to the data request. On February 2,
2015, American Public Gas Association (APGA), Natural Gas Council, New
England LDCs,\32\ and the Enhanced Reliability Coalition \33\ filed
comments on the ISO and RTO responses.
---------------------------------------------------------------------------

    \32\ New England LDCs include the following: Bay State Gas
Company d/b/a/Columbia Gas of Massachusetts, The Berkshire Gas
Company, Connecticut Natural Gas Corporation, Fitchburg Gas and
Electric Light Company, City of Holyoke, Massachusetts Gas and
Electric Department, City of Norwich, Department of Public
Utilities, Liberty Utilities (EnergyNorth Natural Gas) Corp. d/b/a
Liberty Utilities, Middleborough Gas & Electric Department, New
England Natural Gas Company d/b/a Liberty Utilities, Northern
Utilities, Inc., NSTAR Gas Company, The Southern Connecticut Gas
Company, Westfield Gas & Electric Department and Yankee Gas Services
Company.
    \33\ The Enhanced Reliability Coalition represents the views of
a wide variety of electric and gas industry companies located
throughout the United States and Canada that provide services such
as natural gas production, interstate and intrastate gas pipeline
transportation, natural gas distribution, natural gas procurement
for core and industrial customers, natural gas procurement for
electric generation, natural gas storage, electric generation,
electric transmission, natural gas and electricity marketers, retail
electric service, competitive retail electric and natural gas
service, and electric procurement for customers.
---------------------------------------------------------------------------

II. Discussion

    23. Based on the record developed in this proceeding, the
Commission is taking final action to address certain natural gas and
electric industry coordination challenges resulting from the divergent
interstate natural gas pipeline and electric utility scheduling
practices. The Commission is revising its regulations to incorporate by
reference the modified NAESB WGQ Business Practice Standards, which
revise the standard nomination timeline for interstate natural gas
pipelines.\34\ These changes will revise the most liquid nomination
cycle for scheduling natural gas transportation, the nationwide day-
ahead Timely Nomination Cycle, so that the nomination deadline will be
1:00 p.m. CCT rather than 11:30 a.m. CCT, and will include an
additional intraday scheduling opportunity, as well as conforming other
standards to these revisions.\35\ The Commission is also revising its
regulations to provide additional contracting flexibility to firm
natural gas transportation customers through the use of multi-party
transportation contracts. However, the Commission declines to adopt the
NOPR proposal to move the start of the Gas Day.
---------------------------------------------------------------------------

    \34\ NAESB's WGQ Annual Plan Item 11c and Minor Correction
MC14018.
    \35\ See Appendix.
---------------------------------------------------------------------------

    24. The Commission expects that these changes will provide
significant benefits to both the natural gas and electricity
industries, and will improve coordination between the industries.
Moving the Timely Nomination Cycle to an hour and a half later will
allow electric transmission operators additional time to complete their
day-ahead scheduling sufficiently before the Timely Nomination Cycle
deadline, so that gas-fired generators receive electric market dispatch
instructions prior to the deadline for acquiring pipeline capacity in
the Timely Nomination Cycle. The vast majority of commenters from both
the gas and electric industries support this change. This change is
further complemented by NAESB's revised three intraday nomination
cycles that will provide shippers with greater flexibility to revise
their nominations to adjust to system conditions and changes to load
during the Gas Day. The addition of an afternoon bumpable cycle,
together with a later, evening no-bump cycle, should afford firm
transportation shippers, particularly those in the western United
States, more of an opportunity to revise nominations to take into
account weather and load changes. The comments in this proceeding show
that these nationwide changes are supported broadly across the natural
gas and electric industries.
    25. The Commission does not find a sufficient record at this time
to revise the nationwide Gas Day start time as proposed in the NOPR. As
discussed in more detail below, it is not clear that requiring a change
in the Gas Day start time would provide sufficient benefits to outweigh
the operational and safety impacts and costs of making such a change.
The record developed here--including the comments received on the NOPR
proposal and the data responses submitted by the ISOs and RTOs--
suggests that the concerns underlying the proposal to change the Gas
Day start time, to the extent they exist, are primarily regional in
nature. As a result, we find that it is appropriate to allow the
changes to the standard natural gas pipeline nomination timelines in
this

Final Rule, as well as changes to market rules and practices in the
electric industry, to be implemented and evaluated without changing the
nationwide Gas Day. While we will not revise the nationwide Gas Day in
this proceeding, ongoing regional efforts to address electricity market
reforms and fuel assurance, and the individual section 206 proceedings
initiated by the Commission to review ISO and RTO day-ahead scheduling
practices, provide opportunities to seek regional solutions to the
concerns underlying the Gas Day proposal in the NOPR.

III. Gas Day

A. NOPR Proposal

    26. In the NOPR, the Commission proposed to move the start of the
Gas Day from 9:00 a.m. CCT to 4:00 a.m. CCT. The Commission expressed
concern about the potential impact of the difference in start times of
the natural gas and electric operating days on the reliable and
efficient operation of electric transmission system and interstate
natural gas pipelines. Specifically, the Commission identified two
problems resulting from the natural gas and electric operating days
beginning at different times. First, the electric operating day
currently extends over two Gas Days. Therefore, gas-fired generators
committed across a single electric operating day must procure gas
supply and schedule gas transportation across two Gas Days. Second, the
current 9:00 a.m. CCT start of the Gas Day occurs in the middle of the
morning electric load ramp in some regions, creating a situation where
electric load is increasing at the same time natural gas-fired
generators may be running out of their daily nomination of natural gas
transportation service.
    27. The Commission proposed to move the start of the Gas Day
earlier, to 4:00 a.m. CCT, to address concerns expressed by several
commenters--such as ISO-NE and NYISO--that the current Gas Day start
time presents operational challenges resulting in gas-fired generators
running out of scheduled natural gas capacity during the morning
electric ramp period, and having to wait until 9:00 a.m. CCT before
being able to rely on their next day gas nomination. The Commission
stated that this change would mean that generators in all regions would
be able to approach the morning electric peak, as well as most of the
morning ramp period, with new daily gas nominations and, therefore, the
proposal should largely eliminate the concern that some gas-fired
generators will be unable to run during a substantial part of the
morning electric ramp period because they have burned through their
nominated gas before the start of the next Gas Day.

B. NOPR Comments

    28. Thirteen commenters, particularly electric industry
participants, filed comments in support of the Commission's proposal to
move the start of the Gas Day to 4:00 a.m. CCT.\36\ These commenters
argue that, currently, operational problems and logistical challenges
result from the electric operating day extending over two Gas Days and
the fact that the current 9:00 a.m. CCT Gas Day splits the morning
electric load ramp into two Gas Days.\37\ Southern Company explains
that under the current 9:00 a.m. CCT Gas Day, sharp early morning ramps
in the winter take place at the end of the Gas Day resulting in gas-
fired generators' hourly gas usage markedly increasing over the last
eight hours of the Gas Day.\38\ According to Southern Company, because
of this timing its system operators' option for ensuring sufficient
fuel to meet the requirements of the morning ramp is limited to holding
back consumption during the prior evening peak.\39\
---------------------------------------------------------------------------

    \36\ ACES Comments at 7; AECI Comments at 3; Ameren Comments at
2; Calpine Comments at 10; Con Edison Comments at 5; EquiPower
Comments at 8; Exelon Comments at 7; First Energy Comments at 3; IRC
Comments at 2; ISO-NE Comments at 2; NESCOE Comments at 2; PUCO
Comments at 4; Southern Companies at 6.
    \37\ Calpine Comments at 10-11; Essential Power Comments at 3;
IRC Comments at 3; ISO-NE Comments at 3-4; PUCO Comments at 4.
    \38\ Southern Company provides as an example a supplier who, on
January 7 to January 8, 2014 increased gas use on a major pipeline
from less than 40,000 MMBtu in hour 16 to nearly 50,000 MMBtu in
hour 23. Southern Company Comments at 7.
    \39\ Southern Company Comments at 7.
---------------------------------------------------------------------------

    29. ISO-NE states that under the current 9:00 a.m. CCT Gas Day, the
preceding Gas Day ends--with supplies and daily transportation
quantities from that preceding day potentially running short--just when
gas-fired generation is critically needed to ensure that electricity
supply is available to match demand during the morning electric load
ramp.\40\ IRC states that generators could exhaust gas supply by
incorrectly anticipating their next day electric schedule, or by
operating differently in real-time than anticipated when nominating
day-ahead gas supplies.\41\
---------------------------------------------------------------------------

    \40\ ISO-NE Comments at 3-4.
    \41\ IRC argues that while earlier postings of ISO and RTO day-
ahead market results may help generators know the amount of gas to
nominate to meet their electric commitments, posting day-ahead
electric market results earlier does not solve the concern about
generators nominating gas across two different electric days. IRC
Comments at 3.
---------------------------------------------------------------------------

    30. Some commenters state that moving the Gas Day to 4:00 a.m. CCT
or earlier would be helpful to owners of gas-fired resources by
allowing them to nominate and schedule their fuel and transportation
requirements in the day-ahead Timely Nomination Cycle--the most liquid
cycle--to cover the morning electric ramp and the evening peak of a
single electric day while also being able to make adjustments
throughout the day in the intraday cycles.\42\ IRC and ISO-NE state
that planning for and including the entire morning electric ramp in the
initial Gas Day operating plan is inherently more reliable to serve
electric load requirements.\43\ ISO-NE states that moving the start of
the Gas Day earlier should address instances when gas-fired generators
find they are running out of scheduled natural gas capacity during the
morning ramp period and have to wait until the 9:00 a.m. CCT start of
the Gas Day to obtain additional supply or transportation.\44\
Equipower and Con Edison state that changing the start of the Gas Day
will benefit system reliability in that generators exhausting their gas
supply prior to the end of the Gas Day will do so during the middle of
the night, when both the gas and electric systems are in a relatively
low-load, steady-state condition and electric system operators have
more flexibility to increase output from slow-ramping units, instead of
during the morning ramping hours.\45\ Southern Company explains that
with the start of the Gas Day moved to 4:00 a.m. CCT, operators can
eliminate five hours of significant gas burn from the latter half of
the preceding Gas Day and shift the steepest part of the morning ramp
into the beginning of the next Gas Day when operators have the most
flexibility to address their needs by adjusting gas scheduling and/or
generation for the remaining hours.\46\ This shift would eliminate the
current problem of system operators holding back gas consumption during
the evening peak because of the morning electric ramp.\47\
---------------------------------------------------------------------------

    \42\ ACES Comments at 7; AECI Comments at 3; Ameren Comments at
5; Calpine Comments at 11-12; IRC Comments at 2; ISO-NE Comments at
4.
    \43\ IRC Comments at 3; ISO-NE Comments at 5.
    \44\ ISO-NE Comments Brandien Testimony at 4.
    \45\ Equipower Comments at 8-9; Con Edison Comments at 7.
    \46\ Southern Company Comments at 8.
    \47\ Id.
---------------------------------------------------------------------------

    31. ISO-NE states that the current Gas Day start time also
straddles a time of peak gas demand for other pipeline shippers, such
as LDCs, which further inhibits the ability to procure gas during the
morning ramp.\48\ Con Edison asserts that, on the natural gas side, a
4:00 a.m. CCT start of the Gas Day would avoid virtually all of the
natural gas ramping

period. According to Con Edison, this would allow natural gas system
operators time to respond before loads reach their peak by, for
example, shifting receipts among gate stations and/or utilizing on-
system storage if there is an event on its system.\49\ Furthermore, Con
Edison states that forecast deviations should also be reduced if a 4:00
a.m. CCT start of the Gas Day is approved because it would minimize the
time between when natural gas is purchased and nominated and when it is
consumed.\50\
---------------------------------------------------------------------------

    \48\ ISO-NE Comment at 4.
    \49\ Con Edison Comments at 7-8.
    \50\ Id. at 8-9.
---------------------------------------------------------------------------

    32. Thirty-five commenters, particularly natural gas industry
participants, support the retention of the current 9:00 a.m. CCT Gas
Day and oppose the Commission's proposal to move the start of the Gas
Day to 4:00 a.m. CCT.\51\
---------------------------------------------------------------------------

    \51\ AF&PA Comments at 9; AGA Comments at 24; ANGA Comments at
2; American Public Gas Association Comments at 2; BHE Comments at 3;
Castex Comments at 5; CenterPoint Energy Comments at 4; CPG Comments
at 6; DCP Comments at 2; Direct Energy Comments at 2; Dominion
Comments at 3; DTE Gas Comments at 3; Enhanced Reliability Coalition
Comments at 5; Gas Processors Association Comments at 1; GRS
Comments at 2; INGAA Comments at 13; IOGA Comments at 1; IPAA
Comments at 2; Kinder Morgan Comments at 8; MSGC Comments at 11;
National Grid Comments at 1; Natural Gas Council Comments at 2; New
England LDCs Comments at 3; NiSource Comments at 2; NorthWestern
Energy Comments at 3; Northwest Gas Association et al. at 1; NGSA
Comments at 4; Northern Municipal Distributors/Midwest Region Gas
Task Force Comments at 6; NW Industrial Gas Users Comments at 3;
PG&E Comments at 2; Southwest IS Comments at 4; Southern Star
Comments at 6; Texas Pipeline Association Comments at 1; WBI Energy
Comments at 5; XES Comments at 5.
---------------------------------------------------------------------------

    33. INGAA and Direct Energy contend that generator de-rates may
have a number of causes unrelated to the Gas Day start time such as a
nomination made based on an estimate of needs or a change in the ISO's
or RTO's request for generation.\52\ Numerous commenters also argue
that it is highly uncertain that a 4:00 a.m. CCT Gas Day would increase
electric reliability and that the speculative benefits of such a change
appear limited.\53\
---------------------------------------------------------------------------

    \52\ INGAA Comments at 16; Direct Energy Comments at n.10.
    \53\ AGA Comments at 32; BHE Comments at 4; CPG Comments at 8;
Dominion Comments at 17; Enhanced Reliability Coalition Comments at
20; Kinder Morgan Comments at 8; MSCG Comments at 11; New England
LDCs Comments at 16; NGSA Comments at 5; NW Industrial Gas Users
Comments at 6.
---------------------------------------------------------------------------

    34. Many commenters state that an earlier start to the Gas Day will
not create additional capacity on pipelines during peak demand
conditions to meet large swings in generator demand nor will it solve
critical pipeline capacity availability issues that some regions are
experiencing, particularly on a long-term basis.\54\ Several commenters
emphasize that the problems involving gas-electric coordination
identified in the NOPR exist primarily in New England, are generally
isolated to a single customer class, and, therefore, urge regional
changes to be implemented.\55\ Dominion and IPAA state that the NOPR
appears designed to address the problems identified by the electric
market participants in the Northeast, but fails to take into account
concerns in other regions of the country or the concerns of the gas
industry as a whole.\56\
---------------------------------------------------------------------------

    \54\ BHE Comments at 8; CPG Comments at 8; Enhanced Reliability
Coalition Comments at 20; INGAA Comments at 28; National Fuel
Comments at 6; NGSA Comments at 5; NiSource Comments at 8; Southern
Star Comments at 6; WBI Energy Comments at 7.
    \55\ BHE Comments at 11-12; Dominion Comments at 17; Enhanced
Reliability Coalition Comments at 10; IPAA Comments at 3; New
England LDCs Comments at 13; NiSource Comments at 8; WBI Energy
Comments at 7.
    \56\ Dominion Comments at 24; IPAA Comments at 2-3; MSCG
Comments at 11-12; NWIGU Comments at 3.
---------------------------------------------------------------------------

    35. Numerous commenters raise concerns regarding the potential for
adverse impacts on reliability and safety and the danger of increased
operational risk to the natural gas industry resulting from a 4:00 a.m.
CCT Gas Day, particularly in the west.\57\ For example, AGA states that
the vast natural gas infrastructure is, in many instances, unmanned and
not supported electronically, thus often requiring the dispatch of
personnel to remote worksites to make the necessary physical changes to
maintain services and operations.\58\ INGAA and NiSource explain that,
despite the industry's move toward the use of automated systems such as
supervisory control and data acquisition (SCADA), there are still
numerous situations in which a pipeline needs to employ on-site field
technicians to staff certain types of equipment to ensure safe and
efficient facility operations and to make any necessary manual
adjustments.\59\ Commenters argue that changing the start of the Gas
Day to 4:00 a.m. CCT may create operational and safety risks due to the
increased need for field work along the gas supply chain during
nighttime hours, particularly during emergency situations when bad
weather may exacerbate the effects of darkness.\60\ New England LDCs
state that while LDCs would take additional precautions to mitigate the
risk of employees undertaking tasks when it is fully dark, even with
artificial lighting, the total light available is likely to be less
than that provided by natural daylight and that electric power is not
available in many places.\61\
---------------------------------------------------------------------------

    \57\ See e.g., AGA Comments at 29; American Public Gas
Association Comments at 7 and 9; Castex Comments at 7; CPG Comments
at 6; Dominion Comments at 22; Enhanced Reliability Coalition
Comments at 10; Gas Processors Association Comments at 6; GRS
Comments at 2-3; IPAA Comments at 2; National Grid Comments at 3;
New England LDCs Comments at 14; Northwest Gas Association et al.
Comments at 2; NW Industrial Gas Users Comments at 5; PG&E Comments
at 2; Puget Comments at 8; Southern Star Comments at 6; Texas
Pipeline Association Comments at 9; WBI Comments at 2.
    \58\ AGA Comments at 31.
    \59\ NiSource Comments at 7.
    \60\ AGA Comments at 29; American Public Gas Association
Comments at 7; CPG Comments at 7; GRS Comments at 3; INGAA Comments
at 20; IOGA Comments at 4; National Grid Comments at 4; New England
LDCs Comments at 4; NiSource Comments at 7; Northwest Gas
Association et al. at 2; PG&E Comments at 3; Texas Pipeline
Association Comments at 12.
    \61\ New England LDCs further state it would not be economical
to provide lighting other than truck lights and flash lights. New
England LDCs Comments at 21.
---------------------------------------------------------------------------

    36. Numerous commenters argue that a 4:00 a.m. CCT Gas Day would
result in performing certain critical operations, which require complex
and risky worker decision making, at a time when many operators may
suffer from fatigue or lack of concentration.\62\ Commenters state that
this change would increase the risk of worker error, impaired reaction
time, situational awareness, judgment, attention, memory and resulting
accidents and injury to personnel due to fatigue from interrupted sleep
cycles.\63\ Commenters cite studies identifying serious and substantial
pipeline safety risks due to human fatigue in the Control Room and
providing recommendations to avoid critical decision making and
communication between 2:00 a.m. and 6:00 a.m. local time.\64\
---------------------------------------------------------------------------

    \62\ CenterPoint Comments at 4; Enhanced Reliability Coalition
Comments at 15; New England LDCs Comments at 4; NiSource Comments at
6; Northwest Gas Association et al. Comments at 2; PG&E Comments 3-
5; Texas Pipeline Association Comments at 12; WBI Comments at 7.
    \63\ Dominion Comments at 22; INGAA Comments at 26-27; New
England LDCs Comments at 22; Texas Pipeline Association Comments at
11-12.
    \64\ AGA Comments at 31-32; Dominion Comments at 22; INGAA
Comments at 26-27; New England LDCs Comments at 23; PG&E Comments at
3-4; Puget Comments at 8-9; Texas Pipeline Association Comments at
11-12.
---------------------------------------------------------------------------

    37. AGA, New England LDCs, and CenterPoint contend that a flurry of
significant activities occur approximately three hours before or at the
start of the Gas Day \65\ and that these

activities would be difficult or costly to do if the Gas Day start time
were moved to 4:00 a.m. CCT.\66\ Commenters also state that, in
providing reliable service, pipelines and LDCs are required to make
manual changes to numerous facilities throughout the country prior to
the start of every Gas Day to ensure delivery.\67\ National Grid states
that requiring these changes to occur at 4:00 a.m. CCT would place
unnecessary operational and financial burdens on LDCs and could
adversely affect their ability to prepare to meet morning natural gas
load demands.\68\
---------------------------------------------------------------------------

    \65\ These activities include: Updating weather forecasts,
forecasting demand from various customer groups (including gas-fired
generators), forecasting interruptible service requirements,
verifying volumes from interconnected pipelines, determining
operational issues and notifications on interconnected pipelines,
evaluating supply options, evaluating balancing needs, coordinating
storage injections or withdrawals, planning for intraday gas flow
changes, evaluating volume balancing needs of the current day, and
adjusting peaking supply.
    \66\ AGA Comments at 29; CenterPoint at n. 7; New England LDCs
Comments at 21.
    \67\ AGA states that a survey of LDCs revealed that nineteen out
of fifty-three LDCs conduct manual operations hourly, and that
another nineteen LDCs conduct manual operations daily. AGA Comments
at 29 and 31. PG&E states that it has assessed its daily operations
and concluded that annually, a minimum of 2,200 manual and 3,500
automated operating changes will shift to 4:00 a.m. (CCT), and thus
during the night, rather than during the daylight hours, if the
start of the Gas Day is changed. PG&E Comments at 3. See also DCP
Comments at 3; Dominion Comments at 22; Enhanced Reliability
Coalition Comments at 16; INGAA Comments at 24; National Grid
Comments at 4; WBI Comments at 6.
    \68\ National Grid Comments at 4.
---------------------------------------------------------------------------

    38. Commenters note that requiring workers to travel in the dark is
particularly problematic for facilities located in remote areas.\69\
Some safety concerns associated with employees on roads in these early
hours include: Decreased visibility, roads not yet cleared of ice or
snow, decreased mental alertness of employees and other drivers, and
increased animal activity on roads.\70\ Thus, NGSA states that
operational practicalities would create a need to delay field work
until daylight hours when conditions are more conducive to a safe
working environment.\71\
---------------------------------------------------------------------------

    \69\ Texas Pipeline Association Comments at 12; CPG Comments at
7; INGAA Comments at 22; IOGA Comments at 4; WBI Comments at 6; ERC
Comments at 16; DCP Comments at 3; Texas Pipeline Association
Comments at 13; NiSource Comments at 10.
    \70\ CPG Comments at 7.
    \71\ NGSA Comments at 12; INGAA Comments at 19.
---------------------------------------------------------------------------

    39. Commenters state that the optimum time for packing the pipeline
\72\ is when customer demands are low and, therefore, pipelines and
LDCs with pipeline operations currently use the late night and early
morning hours to pack their systems in anticipation of the morning
load.\73\ Commenters state that, particularly in the west, the proposed
Gas Day change would reduce the number of hours available to pack the
pipeline, thus jeopardizing the ability of pipeline operators to
pressurize their systems to meet peak morning natural gas demands.\74\
---------------------------------------------------------------------------

    \72\ Enhanced Reliability Coalition explains that pipelines
generally accommodate the hourly differences in supply and demand
through storage and the build-up of system inventory, that is,
system packing, in which gas is accumulated within the pipeline
system in order to meet the rapid outflows often needed by
customers. Enhanced Reliability Coalition Comments at 7.
    \73\ AGA Comments at 30-31; Dominion Comments at 20; Enhanced
Reliability Coalition Comments at 7-8; Northwest Gas Association
Comments at 2; PG&E Comments at 6.
    \74\ Dominion Comments at 20; Enhanced Reliability Coalition
Comments at 8-9; Northwest Gas Association Comments at 2; Puget
Comments at 6.
---------------------------------------------------------------------------

    40. Some commenters assert that moving the Gas Day earlier will
also make it more difficult for gas industry participants to coordinate
necessary activities.\75\ INGAA and NGSA state that, given the number
of transactions and operational assets involved in addressing issues
that may arise near the beginning of the Gas Day,\76\ and given the
unbundled nature of the industry, daily coordination among industry
participants is required to ensure the uninterrupted delivery of gas to
those who need it.\77\
---------------------------------------------------------------------------

    \75\ INGAA Comments at 18-19; Natural Gas Council Comments at 9-
10; NGSA Comments at 11-13.
    \76\ For example, (1) there may be mismatches between
nominations and actual gas receipts or deliveries, (2) gas may not
come on-line as planned or expected, (3) equipment may malfunction,
especially in cold weather, (4) not all equipment is automated, (5)
gas flows may need to be redirected manually from one pipeline to
another, and (6) maintenance projects may affect gas flows.
    \77\ INGAA Comments at 18-19; Natural Gas Council Comments at 9-
10.
---------------------------------------------------------------------------

    41. NW Industrial Gas Users and New England LDCs argue that their
regions rely on Canadian supplies and, since Canadian pipelines will
not necessarily switch their Gas Day start time in response to a
Commission ruling, mismatches at U.S./Canadian delivery points into
U.S. pipelines could cause delays and/or interruptions in flows as well
as operational difficulties for shippers scheduling gas deliveries
using pipelines in both countries.\78\
---------------------------------------------------------------------------

    \78\ New England LDCs Comments at 23-24; NW Industrial Gas Users
Comments at 4.
---------------------------------------------------------------------------

    42. Enhanced Reliability Coalition and AF&PA state that if a 4:00
a.m. CCT Gas Day start is adopted, all of the hours of flow for gas
nominated in the intraday cycles would be reduced by five hours,
resulting in approximately a 25 to 45 percent reduction, depending on
the cycle.\79\ Commenters state that this change would eliminate the
flexibility that the current intraday service provides and that
shippers would face even greater difficulty in using intraday
nomination cycles to adjust to unanticipated changes in demand or other
unforeseen events that occurred after the Timely or Evening nomination
cycles.\80\
---------------------------------------------------------------------------

    \79\ AF&PA Comments at 9-10; Enhanced Reliability Coalition
Comments at 19.
    \80\ AF&PA Comments at 9-10; Enhanced Reliability Coalition
Comments at 20; MSCG Comments at 12-13.
---------------------------------------------------------------------------

    43. Several commenters state that, under the current 9:00 a.m. CCT
Gas Day, many pipelines provide an opportunity for shippers to submit
``clean up'' or ``retro'' nominations in the final hours of the current
Gas Day in order to balance loads and reduce potential exposure to
imbalance penalties.\81\ Commenters assert that an unintended
consequence of moving the Gas Day to 4:00 a.m. CCT is that pipelines
may not be able to offer these enhanced balancing/clean-up services
that provide flexibility to shippers, and these services could be more
difficult for shippers to utilize and manage.\82\ AGA and INGAA state
that under a 4:00 a.m. CCT Gas Day model, it would be exceedingly
difficult to replicate this type of business activity, and market
liquidity, in the 1:00 a.m. CCT timeframe, since key decision-makers
would not be on duty at that hour.\83\
---------------------------------------------------------------------------

    \81\ AGA Comments at 30; Calpine Comments at 14; CenterPoint
Comments at n.7, INGAA Comments at 21; Natural Gas Council Comments
at 10; NiSource Comments at 6-7; Puget Comments at 8; Spectra
Comments at 4.
    \82\ AGA Comments at 30; Calpine Comments at 15; Enhanced
Reliability Coalition Comments at 14; INGAA Comments at 21; Natural
Gas Council Comments at 10; Spectra Comments at 4.
    \83\ AGA Comments at 30; INGAA Comments at 23.
---------------------------------------------------------------------------

    44. Some commenters state that there is a concern that non-
jurisdictional entities may not adjust to a 4:00 a.m. CCT Gas Day and
that a lack of action, or timely action, by some operators on the
upstream portion of the natural gas delivery chain could occur for
various reasons, such as concerns over costs of the change and worker
safety at night, particularly during inclement weather.\84\ Dominion
and Enhanced Reliability Coalition assert that if gas suppliers and
producers do not operate on the same Gas Day as pipelines, then
pipelines may have difficulty obtaining necessary supplies and will
need to manage swings with line pack and storage until producers make
necessary changes, decreasing the pipeline's operating flexibility.\85\
Texas Pipeline

Association, Gas Processors Association, and INGAA state that this
change would also require the modification and renegotiation of
numerous non-jurisdictional contracts that specify a 9:00 a.m. CCT Gas
Day.\86\
---------------------------------------------------------------------------

    \84\ Enhanced Reliability Coalition Comments at 11-12; Gas
Processors Association Comments at 6-7; MSCG Comments at 12;
NiSource Comments at 7; NW Industrial Gas Users Comments at 3-4;
PG&E Comments at 6; Texas Pipeline Association Comments at 9.
    \85\ Dominion Comments at 21; Enhanced Reliability Coalition
Comments at 12.
    \86\ Texas Pipeline Association Comments at 11; Gas Processors
Association Comments at 9.
---------------------------------------------------------------------------

    45. CenterPoint Energy, Northern Municipal Distributors/Midwest
Region Gas Task Force, and New England LDCs assert that a 4:00 a.m. CCT
Gas Day would negatively impact interruptible customers served by LDCs,
including electric generation customers.\87\ CenterPoint and Northern
Municipal Distributors/Midwest Region Gas Task Force contend that
shifting the Gas Day to 4:00 a.m. CCT would be difficult for these
interruptible customers because they do not have employees available
for a third overnight shift to accommodate late changes and would
therefore have to discontinue use of gas earlier in the day.\88\
CenterPoint states that this change may reduce reliability and
jeopardize service to firm customers which could include electric
generation customers.\89\
---------------------------------------------------------------------------

    \87\ CenterPoint Comments at 4-5; New England LDCs Comments at
19; Northern Municipal Distributors/Midwest Region Gas Task Force
Comments at 11-12.
    \88\ CenterPoint Comments at 4-5; Northern Municipal
Distributors/Midwest Region Gas Task Force Comments at 11-12.
    \89\ CenterPoint Comments at 4-5.
---------------------------------------------------------------------------

    46. Essential Power urges the Commission to adopt a 12:00 a.m.
Eastern Prevailing Time (EPT) Gas Day to align with the electric day
and allow a generator to match its gas purchases and electric operation
in the dispatch day.\90\ If the Commission ultimately determines that
an earlier start to the Gas Day is necessary, National Grid recommends
moving the start to 12:00 a.m. CCT to align with the electricity
operating day for most electric utilities.\91\ MSCG, however, proposes
that it would be most practical to implement a uniform operating day
that requires electric system operators to adapt to the natural gas
system's commercial practices and therefore, states the uniform day
should start at a time later than 4:00 a.m. CCT.\92\ AGA, Con Edison,
Dominion, EPSA, ISO-NE., and National Fuel argue that the Commission
should not consider other Gas Day start times between 4:00 a.m. and
9:00 a.m. CCT.\93\
---------------------------------------------------------------------------

    \90\ Essential Power Comments at 4.
    \91\ National Grid Comments at 2.
    \92\ MSCG Comments at 7.
    \93\ AGA Comments at 25-26; Con Edison Comment at 9; Dominion
Comments at 27-28; EPSA Comments at 8; ISO-NE Comments at 5;
National Fuel Comments at 3.
---------------------------------------------------------------------------

    47. Gas industry participants cite high cost as a key reason for
opposing the Gas Day proposal.\94\ A number of commenters discuss the
information technology and staffing costs associated with the proposal
including providing overtime compensation, hiring new employees to
cover the earlier start to the Gas Day, retraining employees, and
reprogramming SCADA systems.\95\ Commenters provided a range of cost
estimates for SCADA/IT modifications and staffing requirements, with
some above $3 million.\96\ Several commenters also discuss the costs of
mitigating safety issues raised by moving the Gas Day to 4:00 a.m.
CCT.\97\ Dominion states that approximately $2.5 million will be
required to modify tariffs and contracts.\98\ MSCG and BHE estimate the
overall cost of compliance with the NOPR changes, including the changes
to the Gas Day, will be in the $5 million range for one jurisdictional
interstate natural gas pipeline, which indicates the cost of compliance
for all 166 interstate natural gas pipelines would far exceed the $7.5
million estimated in the NOPR.\99\
---------------------------------------------------------------------------

    \94\ See, e.g., AF&PA Comments at 9-10; AGA Comments at 27-28;
American Public Gas Association Comments at 14-15; BHE Comments at 4
& 9-13; Center Point Comments at 4-6; Dominion Comments at 17, 20,
25-27; DTE Comments at 3; Northern Municipal Distributors/Midwest
Region Gas Task Force Comments at 6; PG&E Comments at 7-8.
    \95\ AGA Comments at 28; CenterPoint Comments at 4; NiSource
Comments at 5; NWGA et al. Comments at 2; MSCG Comments at 16-17.
    \96\ See, e.g., Dominion Comments at 26. Dominion states that a
4:00 a.m. CCT Gas Day will result in an estimated one-time cost of
$3.8 million for modifications related to their SCADA system,
electronic bulletin board, and information technology management
system, and estimated on-going annual costs of $125,000. Dominion
anticipates hiring one or two additional transportation analysts,
with annual on-going costs of between $85,000 and $170,000.
Additionally, Dominion anticipates one-time implementation costs of
$2.5 million to modify existing tariffs and contracts, and $1.7
million to reprogram transportation, storage, production, and
gathering meters.
    \97\ Enhanced Reliability Coalition at 17.
    \98\ Dominion Comments at 26.
    \99\ BHE Comment at 10-11; MSCG Comments at 16-17.
---------------------------------------------------------------------------

    48. Commenters also address the significant costs entities other
than interstate natural gas pipelines will incur as a result of the
Proposed Rule.\100\ PG&E states that compliance with the Gas Day
proposal will result in an estimated one-time implementation cost of
between $2 and $3 million for the reprogramming of SCADA systems,
metering devices, and information technology management systems, as
well as estimated ongoing annual costs of $600,000 for additional
nighttime field personnel, traders, schedulers, and other staff-related
costs.\101\ Puget states that aligning their operations with the Gas
Day proposal would have an estimated one-time implementation cost of
$300,000 for modifications related to their SCADA system, metering
devices, and information technology management systems.\102\ Downstream
gas industry commenters (e.g., LDCs) also caution that interstate
pipelines will raise rates for pipeline transportation and storage
services in order to recover the compliance costs of implementing the
Gas Day proposal.\103\

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

    \100\ AGA Comments at 28; American Public Gas Association
Comments at 7 and 14; New England LDCs Comments at 21-22; Producer
Coalition Comments at 6; Puget Comments at 16-17.
    \101\ PG&E Comments at 7-8.
    \102\ Puget Comments at 8.
    \103\ See, e.g., AF&PA Comments at 9; AGA Comments at 28;
American Public Gas Association Comments at 15; BHE Comments at 11;
IECA Comments at 5-6; INGAA Comments at 27; New England LDCs
Comments at 25; MSCG Comments at 17; NiSource Comments at 5.
---------------------------------------------------------------------------

C. Data Request and ISO and RTO Responses

    49. On December 12, 2014, Commission staff requested data, for 2013
and 2014, from each of the six jurisdictional ISOs and RTOs regarding
the impact on reliable and efficient operations of natural gas-fired
generators running out of their daily nomination of natural gas
transportation service during the morning electric ramp, to the extent
this occurs.
    50. In its response, CAISO states that it believes gas-fired
generators in its balancing authority generally do not face problems
securing sufficient fuel to meet the morning electric ramp under
existing electric and gas market timelines.\104\ CAISO was not able to
locate any record of a gas-fired generator de-rating a unit during the
hours of 3:00 a.m. and 9:00 a.m. CCT due to the generator exhausting
its daily nomination of natural gas transportation service prior to the
end of the Gas Day. CAISO states that it does not believe it has
committed generation out of merit order in anticipation of natural gas-
fired generators running out of their nominated gas transportation at
the end of the Gas Day.\105\ The data submitted by CAISO indicates that
in 2013 and 2014 fuel-related gas-fired generator outages and de-rates
during the morning electric ramp were about as common on average as
fuel-related de-rates during the other hours of the operating day.\106\
---------------------------------------------------------------------------

    \104\ CAISO Data Response at 7-8.
    \105\ Id. at 6.
    \106\ See Tables 1 and 2 CAISO Data Response at 6. In 2013 and
2014, 17 percent to 33 percent of fuel related de-rates and outages
occurred during the hours of 3:00 a.m. and 9:00 a.m.

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

    51. MISO states that it has not experienced any significant impacts
caused by generators running out of natural gas during the morning
ramp.\107\ MISO explains that its data of power plants' actual
performance and equipment failures does not reflect if fuel-related
outages were specifically due to generators having exhausted their
daily nomination of natural gas transportation service prior to the end
of the Gas Day.\108\ MISO submitted data providing the numbers of
natural gas-fired units reporting outages and de-rates with a cause
related to fuel during each month of 2013 and January through September
2014.\109\ In 2013, there were relatively few fuel-related gas-fired
generator outages and de-rates. In January and February of 2014, MISO
experienced far more fuel-related gas-fired generator outages and de-
rates, however, no more than 20 percent of the de-rates occurred during
the morning ramp period. In addition, MISO states that it has made many
recent enhancements to improve transparency of fuel-related matters in
the planning and operating horizons.\110\
---------------------------------------------------------------------------

    \107\ MISO Data Response at 1-3.
    \108\ Id.
    \109\ See Tables MISO Data Response at 2.
    \110\ MISO states that these enhancements and initiatives
include: (1) Conducting a Generator Winter Fuel Survey for Winter
2014/2015 to gain more transparency into MISO generators' approaches
related to fuel procurement practices; (2) creating (in 2014)
additional generator outage cause codes related to fuel in MISO's
outage scheduling tool to provide greater operational awareness to
MISO operators regarding fuel; (3) expanding the coordination field
trial between MISO planning and operations staff and ANR and NNG
pipeline staff to other pipelines; (4) a new overhead pipeline
operations display in the control room; and (5) a new consolidated
pipeline notice Web page. MISO Data Response at 5.
---------------------------------------------------------------------------

    52. In its response, SPP states that it does not require generators
to submit information related to their nominated gas transportation,
therefore, SPP does not have information responsive to the request
regarding de-rates due to gas-fired generators having exhausted their
daily nomination of natural gas transportation service prior to the end
of the Gas Day. SPP further states that it has not committed generation
out of merit order in anticipation of natural gas-fired generators
running out of nominated gas transportation.\111\ The data submitted by
SPP indicates that in 2013 and 2014 fuel related gas-fired generator
outages and de-rates during the morning electric ramp were about as
common on average as fuel-related de-rates during the other hours of
the operating day.\112\
---------------------------------------------------------------------------

    \111\ SPP Data Response at 3.
    \112\ See Tables 1 and 2 SPP January 14, 2015 Comments at
Attachment No. 1. In 2013 and 2014, 16 percent to 38 percent of fuel
related de-rates and outages occurred during the hours of 3:00 a.m.
and 9:00 a.m.
---------------------------------------------------------------------------

    53. ISO-NE., NYISO, and PJM provided supplemental data regarding
gas-fired generator de-rates in 2013 and 2014 due to issues related to
fuel limitations/availability. PJM and NYISO requested privileged
treatment of certain data submitted in response to the data request.
    54. ISO-NE provided, among other data, information on time periods
when generators reported reductions (i.e., de-rates) due to fuel
limitations. ISO-NE states that during 2013 and 2014 there were 173
reported gas-fired generator de-rates due to fuel limitations and 67 of
those were logged between 3:00 a.m. and 9:00 a.m. CCT. The morning de-
rates affected forty-nine days. To see if generators were de-rating due
to running out of gas, ISO-NE examined the reductions that ended when
the new Gas Day began (9:00 a.m. CCT).\113\ In 2013 and 2014, twenty
gas-fired generator de-rates due to fuel limitations, over 14 days, had
an identified ending time that coincided with the start of the next Gas
Day at 9:00 a.m. CCT. While ISO-NE states that it does not know whether
the de-rates occurred solely due to the exhaustion of natural gas
pipeline nominations, given the 9:00 a.m. CCT ending time of the de-
rates, ISO-NE believes this is likely the cause. ISO-NE further states
that the issues related to the availability of gas-fired resources in
New England are even more critical than the data provided shows and
that the severity of these issues has been masked because system
operators are required to take actions that diminish the frequency of
generation outage impacts due to gas reductions.\114\
---------------------------------------------------------------------------

    \113\ While these data do not show specifically whether the
generators exceeded their firm gas transportation schedule for the
day, ISO-NE states that the data suggests that the de-rates likely
resulted from the exhaustion of natural gas transportation service,
because the generators were able to come back on line at the start
of the new Gas Day.
    \114\ ISO-NE Data Response at 1.

                      Table 2--ISO-NE Gas-Fired Generator De-Rates Due to Fuel Limitations
----------------------------------------------------------------------------------------------------------------
                                                                                De-rates
                                                                 -----------------------------------------------
                                                                                Morning ramp
                              Year                                                  (3:00 a.m.-    With end time
                                                                       Total      9:00 a.m. CCT)   of 9:00 a.m.
                                                                                CCT
----------------------------------------------------------------------------------------------------------------
2013............................................................              97              39               8
2014............................................................              76              28              12
                                                                 -----------------------------------------------
    Total.......................................................             173              67              20
----------------------------------------------------------------------------------------------------------------
Source: ISO-NE Data Response at 2 and Attachment A.

    55. PJM provided a summary of the outage notifications due to lack
of fuel from natural gas-fired generators in 2013 and 2014 and non-
confidential system conditions on the relevant interstate natural gas
pipelines and LDCs.\115\ According to PJM's data response, in 2013, 62
percent of the unique generators that reported lack of fuel outages are
located behind an LDC.\116\ PJM also reports that 54 percent of the
generators reporting outages due to lack of fuel in 2014 are located
behind an LDC. In 2014, 60 percent of the generator-reported lack of
fuel outages occurred in January. The confidential data provided by PJM
shows that the vast majority of fuel-related gas-fired generator de-
rates in 2013, and a majority of the fuel-related gas-fired generator
de-rates in 2014, were caused by a limited number of generating units.
---------------------------------------------------------------------------

    \115\ See Table 3, PJM Data Response at 4. PJM notes that this
information may not be complete, as this data is not information
required by PJM. PJM collected these data from publicly available
information.
    \116\ A gas-fired generator may be limited in its ability to
receive or take gas in instances when there are constraints on an
LDC system, regardless of whether the gas-fired generator has
sufficient remaining nominated quantities of interstate pipeline
transportation.
---------------------------------------------------------------------------

    56. NYISO states that it identified 13 generators committed in 2013
and 2014

via Supplemental Resource Evaluation \117\ on days with de-rates
greater than 225 MW in any given hour. NYISO states that given the
times the Supplemental Resource Evaluations occurred, it is not clear
that any of the Supplemental Resource Evaluations were issued in
response to a generator de-rating due to having exhausted its daily
nomination of natural gas transportation service prior to the end of
the Gas Day. Instead, NYISO states the de-rates were more likely
related to limitations on natural gas customers' ability to receive or
take gas, such as Operational Flow Orders (OFO), which require gas
customers to operate within tight tolerances, or generator specific
issues that may, or may not, be related to the availability of gas
supply.\118\
---------------------------------------------------------------------------

    \117\ NYISO Manual 12: Transmission and Dispatching Operations
Manual Section 5.7.7 states ``SRE shall only be used to address
resource deficiencies; it shall not be used to reduce costs.''
    \118\ NYISO Data Response at 6.
---------------------------------------------------------------------------

    57. The confidential data submitted by NYISO shows the number of
gas-fired generator de-rates and the amount of energy reduced generally
decreased between 3:00 a.m. and 9:00 a.m. CCT. Specifically, over all
of 2013 and all of 2014, the total (by hour) number of gas-fired
generator de-rates related to fuel availability fell as the morning
progressed (between hours ending at 4:00 a.m. CCT and 9:00 a.m. CCT).
Similarly, over all of 2013 and all of 2014, the total (by hour) amount
of energy reduced later in the morning was less than the early-morning
reductions. If fuel related de-rates were caused by exhaustion of
nominated natural gas transportation capacity, the impact of the de-
rates would likely have been steady or worsening as more generating
units ran out of gas as the morning progressed towards 9:00 a.m. CCT.
    58. To provide another perspective on the overall impact on
reliability of the gas-fired generator de-rates during the morning
ramp, the Commission examined the monthly and hourly average values
\119\ of resulting energy reductions as a percentage of the available
operating reserves. Commission staff analysis of the data response
indicates that, in ISO-NE during 2013 and 2014, the energy reductions
were minimal relative to the operating reserves available to ISO-NE at
the time.
---------------------------------------------------------------------------

    \119\ For example, the average of all of the 6:00 a.m. CCT de-
rates in January.

                        Table 3--Gas-Fired Generator Reductions (De-Rates) as a Percent of Available Operating Reserves in ISO-NE
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    All 2014     All 2013     Jan 2014     Mar 2014                  Jan 2013     Feb 2013     Mar 2013
              Hour beginning (CCT)                    (%)          (%)          (%)          (%)       Nov 14 (%)      (%)          (%)          (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 a.m...........................................         0.47         0.69         0.14         1.08         2.10         0.00         0.90         1.47
4 a.m...........................................         0.39         0.49         0.14         0.69         2.11         0.00         0.53         0.83
5 a.m...........................................         0.26         0.32         0.07         0.01         2.11         0.02         0.91         0.01
6 a.m...........................................         0.29         0.48         0.17         0.18         2.11         0.16         1.38         0.06
7 a.m...........................................         0.43         0.61         0.57         0.31         2.11         0.42         1.25         0.43
8 a.m...........................................         0.55         0.70         0.57         0.47         2.11         0.61         1.00         0.92
--------------------------------------------------------------------------------------------------------------------------------------------------------

    59. In NYISO, during certain winter months,\120\ Commission staff
analysis of the data response indicates that the average hourly
reductions were potentially significant relative to the operating
reserves available to the NYISO, ranging up to 5.7 percent of reserves.
For all other months of 2013 and 2014, the average hourly reductions in
NYISO were less than one percent of the available operating reserves.
---------------------------------------------------------------------------

    \120\ January 2013, December 2013, January 2014, and February
2014.

    Table 4--Gas-Fired Generator Reductions (De-Rates) as a Percent of Available Operating Reserves in NYISO
----------------------------------------------------------------------------------------------------------------
                                      All 2014     All 2013     Jan 2014     Feb 2014     Jan 2013     Dec 2013
        Hour beginning (CT)             (%)          (%)          (%)          (%)          (%)          (%)
----------------------------------------------------------------------------------------------------------------
3:00 a.m..........................          1.6          2.1          3.7          1.9          3.4          6.1
4:00 a.m..........................          1.5          1.9          4.0          1.8          3.2          3.8
5:00 a.m..........................          1.7          2.1          3.8          2.2          3.5          4.9
6:00 a.m..........................          2.2          1.9          4.5          2.3          2.7          2.6
7:00 a.m..........................          3.2          2.0          5.4          2.3          2.7          3.1
8:00 a.m..........................          3.6          2.3          5.7          1.3          3.1          2.9
----------------------------------------------------------------------------------------------------------------

    60. In PJM in the winter months of 2014, Commission staff analysis
of the data response indicates that the average hourly reductions were
large relative to the operating reserves available to the ISO at the
time, ranging from 16.8 percent to 72.3 percent. The average hourly
reductions in the winter months of 2013 were also significant relative
to the operating reserves available to PJM, ranging from 5.6 percent to
10.1 percent.

                         Table 5--Gas-Fired Generator Reductions (De-Rates) as a Percent of Available Operating Reserves in PJM
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    All 2014     All 2013     Jan 2014     Feb 2014     Mar 2014     Jan 2013     Feb 2013     Mar 2013
              Hour beginning (CCT)                    (%)          (%)          (%)          (%)          (%)          (%)          (%)          (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 a.m...........................................         13.7          5.0         54.7         25.8         17.2          9.3          7.1          5.9
4 a.m...........................................         13.1          5.0         50.5         25.5         16.8          9.5          7.0          5.6
5 a.m...........................................         13.0          4.8         48.9         25.3         17.0          8.7          6.7          5.9
6 a.m...........................................         15.1          5.1         60.6         27.9         19.5          8.9          7.0          6.7
7 a.m...........................................         17.3          5.3         72.3         32.2         21.4         10.1          7.5          6.8
8 a.m...........................................         17.1          5.2         72.1         30.8         21.1          9.7          7.4          6.5
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Comments on Data Request

    61. American Public Gas Association, New England LDCs, the Enhanced
Reliability Coalition, and Natural Gas Council filed comments regarding
the ISOs' and RTOs' data responses. These commenters argue that the
ISOs' and RTOs' responses clearly confirm that there is not a
nationwide problem during the morning electric ramp associated with the
current start time of the Gas Day.\121\ American Public Gas Association
and Natural Gas Council contend that the data submitted by the ISOs and
RTOs does not support the thesis that there is a causal link between
the start of the Gas Day and the reliability of gas-fired
generators.\122\ The Enhanced Reliability Coalition points out that in
2014, many of the instances in which generators in PJM indicated an
outage due to lack of fuel occurred during OFOs issued by pipelines and
that, in these circumstances, a change to the start of the Gas Day
would not have remedied the generator outages.\123\ Natural Gas Council
and New England LDCs state that the ISOs' and RTOs' responses fail to
provide sufficient record evidence for the Commission to meet its
burden under section 5 of the NGA that the current 9:00 a.m. CT Gas Day
start time is no longer just and reasonable, and that a 4:00 a.m. CT
start of the Gas Day is just and reasonable.\124\
---------------------------------------------------------------------------

    \121\ Natural Gas Council Feb. 2, 2015 Comments at 1-3.
    \122\ American Public Gas Association Feb. 2, 2015 Comments at
3-4; Natural Gas Council Comments at 2.
    \123\ Enhanced Reliability Coalition Feb. 2, 2015 Comments at 5.
    \124\ Natural Gas Council Feb. 2, 2015 Comments at 8; New
England LDCs Feb. 2, 2015 Comments at 3.
---------------------------------------------------------------------------

E. Commission Determination

    62. While certain efficiencies in scheduling could be achieved
through better harmonization of the natural gas and electric operating
days, the Commission concludes that the current record does not support
changing the start time of the nationwide natural Gas Day at this time.
    63. In the NOPR, the Commission expressed concern about the
potential impact of the difference in start times of the natural gas
and electric operating days on the reliable and efficient operation of
electric transmission systems and interstate natural gas pipelines. In
the NOPR, the Commission identified two problems resulting from the
fact that the natural gas and electric operating days begin at
different times. First, the electric operating day currently extends
over two Gas Days. Therefore, natural gas-fired generators committed
across a single electric operating day must procure gas supply and
schedule gas transportation across two Gas Days. Second, the current
9:00 a.m. CCT start of the Gas Day occurs in the middle of the morning
electric load ramp in some regions, creating a situation where electric
load is increasing at the same time natural gas-fired generators may be
running out of their daily nomination of natural gas transportation
service. We find, based on the comments and data responses, that there
is limited evidence to support the premise in the NOPR that the current
start of the Gas Day results in natural gas-fired generators de-rating
during the morning ramp due to exhausting nominated natural gas
transportation. As described in comments, gas-fired generator de-rates
may have a number of causes unrelated to the Gas Day start time, such
as a nomination made based on only an estimate of needs (especially
where the generator has not received a dispatch schedule from the
system operator), an unscheduled change in an ISO's or RTO's real-time
dispatch, or limitations on shippers' ability to receive or take gas,
among others.
    64. In addition, evidence in the record provided through the ISO
and RTO data responses did not provide sufficient support for changing
the nationwide Gas Day. The responses generally show that, to the
extent gas-fired generators de-rating during the morning ramp is a
significant problem, it appears to be isolated to the winter months in
specific regions.
    65. SPP, MISO, and CAISO all reported no issue with gas-fired
generator de-rates during the morning ramp. While ISO-NE, PJM, and
NYISO provided data suggesting that some de-rates during the morning
ramp are due to fuel-related issues, the data did not show whether
those de-rates are specifically due to gas-fired generators running out
of their daily nomination of natural gas transportation service. None
of the ISOs' or RTOs' outage management systems collect data containing
the level of detail and specificity to reflect if generator output
reductions (i.e., de-rates) and outages were specifically due to
natural gas-fired generators having exhausted their daily nomination of
natural gas transportation. Rather, the ISOs and RTOs track de-rates
and outages associated with the broad North American Electric
Reliability Corporation (NERC) code for fuel-related issues which
includes several other causes. Therefore, the Commission had to draw
inferences based on the data submitted in the record.
    66. The Commission concludes that there is limited evidence to
support the NOPR proposal to change the Gas Day. For example, in ISO-NE
very few gas-fired generator de-rates due to fuel limitations had an
ending time that coincided with the start of the next Gas Day at 9:00
a.m. CCT in 2013 and 2014. In addition, in PJM, a majority of the fuel
related gas-fired generator de-rates in 2014 and the vast majority of
fuel-related gas-fired generator de-rates in 2013 were caused by a
limited number of generating units. The Commission believes any
conclusions that can be drawn from the PJM data are weakened by the
idiosyncrasies of these units. Therefore, although gas-fired generator
de-rates due to fuel limitations appear problematic in certain regions
during certain times of the year, on balance, the Commission believes
this does not warrant changing the nationwide Gas Day.
    67. In addition, several commenters in this proceeding provide
compelling arguments indicating that moving the

nationwide Gas Day to 4:00 a.m. CCT will result in substantial
nationwide costs and potential operational and safety impacts for the
entire natural gas industry, including jurisdictional and non-
jurisdictional entities. The natural gas industry has identified
significant costs attendant on such a change, including the costs of
hiring and retraining employees, providing overtime compensation,
mitigating safety risks, modifying existing contracts, purchasing new
equipment, and reprogramming SCADA systems, nomination software, and
metering devices. The identified adverse operational and safety impacts
include a potential for reduced nighttime hours to pack the pipeline,
diminished opportunity for shippers to balance loads in the final hours
of the Gas Day, increased need for field work during nighttime hours,
and worker fatigue, among others.
    68. Therefore, we find, based on the record, that there has not
been a showing that the benefits of changing the nationwide Gas Day
from 9:00 a.m. CCT to 4:00 a.m. CCT sufficiently outweigh the potential
adverse operational and safety impacts on the natural gas industry to
justify action under NGA section 5 to require a change in the start of
the Gas Day.
    69. While the Commission declines to take action in this proceeding
to change the start of the Gas Day on a nation-wide basis, we note that
since the issuance of the NOPR in March 2014 both ISO-NE and PJM (the
two regions that appear to be of the most concern) have recently
undertaken operational and market actions to address the availability
and performance of generators, included gas-fired generators, in their
footprints.\125\ Beyond these measures, ISO-NE argues that the New
England region needs its generating resources and other entities to
make investments in firm fuel supplies and transportation, maintenance
of on-site fuel inventory, and dual fuel capability.\126\ ISO-NE states
that it is implementing the Pay-for-Performance proposal accepted by
the Commission to provide incentives for these investments.\127\
Similarly, PJM is focusing on long-term procedural improvements in a
recent Commission filing proposing a series of tariff reforms to ensure
that resources committed as capacity to meet PJM's reliability needs
are obligated to deliver energy and reserves when called upon.\128\
These and other regional efforts to address generator performance may
result in natural gas-fired generators and other market participants in
these regions taking actions to alleviate some of the electric industry
fuel supply concerns underlying the Gas Day proposal in the NOPR.\129\
In addition, the Commission is taking a range of actions in this Final
Rule, as discussed below, to better coordinate the scheduling of the
natural gas and wholesale electricity markets as well as to provide
additional scheduling flexibility to all shippers on interstate natural
gas pipelines.
---------------------------------------------------------------------------

    \125\ In ISO-NE these measures include changes to the ISO tariff
to: (1) Allow for better information sharing with the interstate
pipelines; (2) enhance offer flexibility; (3) accelerate the
timelines in the Day-Ahead Energy Market; (4) increase the amount of
reserves procured in the Forward Reserve Market; (5) enhance Forward
Reserve Market incentives; (6) improve generator auditing; and (7)
redefine Shortage Events in the Forward Capacity Market.
    Since January 2014 PJM has put into place a number of
improvements to help ensure generator availability this winter
including: (1) A process for generators to communicate any long-lead
notification time they require to start in order to ensure fuel
procurement; (2) a requirement for generators to ensure data
accuracy for existing information provided to PJM; (3) a requirement
for operational information to be submitted to PJM regarding dual
fuel capability, availability, and operational restrictions; and (4)
ability for generators, in certain circumstances, to update intraday
cost schedules to more accurately reflect real-time the cost of fuel
in their energy schedules.
    \126\ ISO-NE Data Response at 7.
    \127\ ISO New England Inc. and New England Power Pool, 147 FERC
] 61,172, order on compliance filing, 149 FERC ] 61,009 (2014).
    \128\ On March 31, 2015 Commission staff requested additional
information from PJM regarding PJM's proposal in Docket No. ER15-
623-000.
    \129\ In addition, the Commission recently issued an order
directing each RTO and ISO to file reports on the status of its
efforts to address fuel assurance issues. The Commission is
currently reviewing the RTO and ISO reports and the comments
submitted on those reports. Centralized Capacity Markets in Regional
Transmission Organizations and Independent System Operators and
Winter 2013-2014 Operations and Market Performance in Regional
Transmission Organizations and Independent System Operators, order
on technical conferences, 149 FERC ] 61,145 (2014).
---------------------------------------------------------------------------

    70. In addition to these ongoing efforts, the individual ISO and
RTO section 206 proceedings provide additional opportunities to seek
regional solutions. As discussed further below, the 206 Order requires
each ISO and RTO to adjust the time at which the results of its day-
ahead energy market and reliability unit commitment process (or
equivalent) are posted to a time that is sufficiently in advance of the
Timely and Evening Nomination Cycles, respectively, to allow gas-fired
generators to procure natural gas supply and pipeline transportation
capacity to serve their obligations, or show cause why such changes are
not necessary. In the Section 206 Order the Commission encouraged each
ISO and RTO to consider whether other market reforms would be
appropriate.\130\ Such regional electric market changes to diminish the
misalignment between the Gas Day and regional electric days may be less
costly and result in far less negative operational impacts.
---------------------------------------------------------------------------

    \130\ For example, RTOs and ISOs could consider the potential
benefits, cost, and operational burdens of adjusting the timing of
their operating day. Section 206 Order, 146 FERC ] 61,202 at P 19 &
n.14 (``In addition, we encourage RTOs and ISOs to consider whether
other market reforms would be appropriate.'').
---------------------------------------------------------------------------

IV. Natural Gas Transportation Nomination Timeline

A. Background

    71. In addition to the industries having different start times to
their operating days, the natural gas and electric industries operate
on different schedules within those days. As described above, and as
shown in Table 1 above, under the current NAESB WGQ Standard 1.3.2 and
the Commission's regulations,\131\ natural gas pipelines must offer
pipeline shippers a minimum of four nomination opportunities to
schedule natural gas transportation. Shippers have two nomination
opportunities prior to the day of gas flow, the Timely Nomination Cycle
and the Evening Nomination Cycle, and two nomination opportunities on
the day of gas flow (Intraday 1 and Intraday 2). Changes to a shipper's
nominations are limited by the remainder of a shipper's daily quantity
and the remaining hours of the Gas Day.\132\
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    \131\ 18 CFR 284.12 (2014).
    \132\ For example, if a shipper with a contract for 2,400 Dth/
day, schedules 1,200 Dth at the Timely Nomination Cycle, and submits
an intraday nomination at the Intra-Day 1 Cycle, that shipper can
increase its scheduled capacity, assuming capacity availability, by
no more than 1,600 Dth, bringing its total scheduled quantity to
2,000 Dth/day. This occurs because the shipper has already operated
for eight hours based on a daily nomination of 1,200 Dth (50 Dth/
hour). (8 hrs * 50 = 400 Dth). This leaves the shipper only 16 hours
to increase its flow rate to 100 Dth/hr, bringing its total daily
quantity to 2,000 Dth (400 Dth for the first 8 hours + 1,600 for the
remaining 16 hours).
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    72. Interstate natural gas pipelines schedule their systems based
on the priority of the transportation contract held by the shipper.
Nominations of firm transportation from a primary receipt point to a
primary delivery point (primary firm nominations) have the highest
priority,\133\ followed by secondary firm, within-the-path \134\

nominations, secondary firm, outside of the path nominations, and
finally nominations from shippers holding interruptible transportation
capacity. Before a pipeline schedules a shipper's requested quantity
under these standards, the pipeline confirms the shipper's nomination
with upstream and downstream entities to make sure the shipper has
contracted for sufficient gas with an upstream supplier to fulfill its
nomination and to ensure the downstream entity, such as a LDC, has
sufficient capacity to accept that gas.
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    \133\ A firm shipper's primary receipt and delivery points are
listed in its service agreement and define the guaranteed firm
transportation service the pipeline has contracted to provide that
shipper. The Commission also requires pipelines to permit shippers
to use all other points in the rate zones for which they pay on a
secondary firm basis.
    \134\ Secondary firm nominations are firm nominations that
include at least one secondary point. Within-the-path nominations
are nominations where the nominated secondary receipt and/or
delivery point is contained wholly within the primary points listed
in the shipper's contract.
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    73. The Timely Nomination Cycle is the most liquid time to acquire
both natural gas supply and transportation capacity. During the Timely
Nomination Cycle, all of the pipeline's nomination priorities are in
effect: Primary firm nominations have priority over secondary firm
nominations, and secondary firm nominations have priority over
interruptible transportation. In subsequent nomination cycles, firm
service, including secondary firm service, scheduled in an earlier
cycle cannot be displaced or bumped by another firm nomination for that
Gas Day.\135\ In addition, firm intraday nominations, including
secondary firm nominations, have priority over, and thus can displace
or bump, scheduled and flowing interruptible transportation.\136\ This
policy recognizes that ``firm shippers are paying reservation charges
for priority rights and those rights should include the right to have a
nomination become effective as early as possible on the Gas Day
following the nomination.'' \137\ However, the final intraday
nomination (Intraday 2) cycle is a ``no-bump'' cycle, meaning that
interruptible transportation previously arranged for cannot be
displaced or bumped by a firm Intraday 2 nomination. In approving this
arrangement (referred to as the ``No-Bump Rule''), the Commission found
that it would create a fair balance between firm and interruptible
shippers and provide necessary stability in the nomination system.
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    \135\ Transwestern Pipeline Company, 99 FERC ] 61,356, at P 12
(2002) (``the Commission's long standing policy on firm service is
that once scheduled, whether at primary or alternate points, the
service may not be bumped by a nomination by another firm
shipper'').
    \136\ 18 CFR 284.12(b)(1)(i) (2014); Standards for Business
Practices of Interstate Natural Gas Pipelines, Order No. 587-G, 63
FR 20072 (Apr. 16, 1998), FERC Stats. & Regs., Regulations Preamble
1996-2000 ] 31,062, at 30,672 (1998).
    \137\ Id. at 30,671.
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    74. Individual pipelines may offer additional scheduling
opportunities beyond the standard nomination cycles. However, shippers
transporting gas over multiple pipeline systems may have limited
ability to use these additional scheduling opportunities if the
upstream or downstream pipelines cannot confirm those scheduling
changes. Currently, several pipelines offer enhanced nomination
services \138\ and some pipelines permit more frequent nominations than
the four required by the current NAESB standards. Even if additional
nomination cycles are not detailed in the pipeline's tariff, some
pipelines' tariffs provide that the pipeline will make best efforts to
accommodate such incremental nominations throughout the day on a best
efforts basis.\139\
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    \138\ See, e.g., Texas Gas, 137 FERC ] 61,093, order on
compliance, 138 FERC ] 61,176; Gulf South, 141 FERC ] 61,262.
    \139\ See, e.g., Tennessee Gas Pipeline Company, LLC's Tariff,
GT&C Section IV.2(e).
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B. Natural Gas Transportation Day-Ahead Cycles

    75. The most liquid time to acquire natural gas supply for the next
day occurs before the 11:30 a.m. CCT deadline for submitting
nominations in the Timely Nomination Cycle. As a result, natural gas
purchasers may have to pay a premium to obtain supply after the Timely
Nomination Cycle, because there are fewer willing sellers later in the
day. Also, it may be more difficult to obtain next-day firm
transportation capacity after the Timely Nomination Cycle, because firm
transactions scheduled in the Timely Nomination Cycle cannot be bumped
in later nomination cycles and shippers may have already made capacity
release arrangements for the next day.\140\ After the Timely Nomination
Cycle, the Evening Nomination Cycle, beginning at 6:00 p.m. CCT, offers
the only standard opportunity to reschedule gas transportation for the
next Gas Day.
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    \140\ The Commission's current capacity release program allows a
firm shipper to sell (or release) its capacity to another entity
when it is not using it. The releasing shipper releases its capacity
by returning its capacity to the pipeline for reassignment to the
replacement shipper. The pipeline contracts with, and receives
payment from, the replacement shipper and then issues a credit to
the releasing shipper. The results of all releases are posted by the
pipeline on its Internet Web site and made available through
standardized, downloadable files.
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    76. Wholesale electricity markets operated by the ISOs and RTOs
also use a day-ahead energy market to set contractual commitments for
the next operating day. Market participants place day-ahead offers and
bids to sell and purchase, and these participants must make such
commitments prior to the close of the market. If the market clearing
process accepts these commitments, they become binding for the
following day. The following table shows for each ISO and RTO the
deadline for submission of generator bids and the time the winning bids
are posted by ISOs and RTOs in the day-ahead markets. As demonstrated
by Table 6, all ISOs and RTOs (with the exception of NYISO) publicize
accepted day-ahead dispatch bids after the current 11:30 a.m. CCT
nomination deadline for the Timely Nomination Cycle.

       Table 6--Electric Commitment Results Publication Timetable
------------------------------------------------------------------------
                                                           Time for
                                       Time for       publication of day-
            ISO/RTO               submission of bids   ahead commitment
                                        (CCT)             bids (CCT)
------------------------------------------------------------------------
California Independent System    12:00 p.m..........  3:00 p.m.
 Operator Corporation (CAISO).
ISO New England Inc. (ISO-NE)..  9:00 a.m...........  12:30 p.m.
PJM Interconnection, LLC (PJM).  11:00 a.m..........  3:00 p.m.
Midcontinent Independent System  10:00 a.m..........  2:00 p.m.
 Operator, Inc. (MISO).
New York Independent System      4:00 a.m...........  10:00 a.m.
 Operator, Inc. (NYISO).
Southwest Power Pool, Inc.       11:00 a.m..........  4:00 p.m.
 (SPP).
------------------------------------------------------------------------

    77. Because day-ahead electric generation commitments generally
occur after the natural gas transportation Timely Nomination Cycle, a
natural gas-fired generator must either submit its nomination for
natural gas transportation services before it knows when and how much
electricity it will be committed to produce the next day, or it must
wait until it receives its day-ahead commitment to nominate natural gas
transportation services, with the risk that during some periods natural
gas supply and transportation capacity may not be available or
economical, given the ISO and RTO day-ahead market clearing price.\141\
If a gas-fired generator acquires natural gas and transportation prior
to learning whether it is dispatched, it runs the risk of having to
sell off excess natural gas supply and pipeline transportation capacity
during the less liquid Evening or intraday Nomination Cycles to the
extent its bid does not clear the day-ahead market.\142\ If the gas-
fired generator waits to acquire natural gas supply and transportation
until its bid clears the day-ahead market, it would be doing so during
the less liquid Evening or intraday Nomination Cycles, where the
generator may be unable to acquire transportation capacity if the
pipeline is fully scheduled. While during many periods of the year,
gas-fired generators may be able to obtain natural gas and interstate
natural gas capacity throughout the day, their ability to procure
natural gas and transportation in the most liquid Timely Nomination
Cycle may be critical to their ability to provide service during
periods when the pipeline is constrained.
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    \141\ A natural gas-fired generator also faces different risks
depending on whether it enters into long-term natural gas purchase
arrangements or relies on short-term spot market natural gas
purchases.
    \142\ See, e.g., Equipower Resources Corp. Comments, Docket No.
AD12-12-000, at 3-4 (filed Mar. 30, 2012) (a generator that
purchases capacity and gas during the timely cycle and is not
dispatched ``is forced to sell excess volumes or purchase the volume
it is short in the intraday market. But the intraday market is
highly illiquid and sometimes nonexistent, resulting in the
generator: (1) Being exposed to imbalance penalties on the pipeline
if it cannot find a market for excess gas; (2) being unable to
operate its generator at expected output; (3) having to purchase
additional supplies at a premium; or (4) having to sell excess
supply at a discount'').
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1. NOPR Proposal
    78. The NOPR proposed to move the deadline for submitting
nominations in the Timely Nomination Cycle from 11:30 a.m. CCT to 1:00
p.m. CCT to provide sufficient time for electric utilities to complete
their processes for selecting day-ahead generating resources before the
Timely Nomination Cycle. The NOPR did not propose any other changes to
the Timely Nomination Cycle, including the existing 4:30 p.m. CCT
deadline for the pipeline to provide notice of scheduled quantities.
Thus, the NOPR proposed to shorten the time required to complete the
Timely Nomination Cycle from five hours (11:30 a.m. CCT to 4:30 p.m.
CCT) to three and one-half hours (1:00 p.m. CCT to 4:30 p.m. CCT). The
NOPR did not propose any changes to the existing Evening Nomination
Cycle, under which nominations must be submitted by 6:00 p.m. CCT,
confirmations are completed by 9:00 p.m. CCT, and the pipeline notifies
shippers of their scheduled quantities by 10:00 p.m. CCT.
    79. In an order issued contemporaneously with the NOPR, the
Commission instituted a proceeding under section 206 of the FPA
requiring each ISO and RTO within ninety days after the publication of
a Final Rule in this docket to: (1) Make a filing that proposes tariff
changes to adjust the time at which the results of its day-ahead energy
market and reliability unit commitment process (or equivalent) are
posted to a time that is sufficiently in advance of the Timely and
Evening Nomination Cycles, respectively, to allow gas-fired generators
to procure natural gas supply and pipeline transportation capacity to
serve their obligations; or (2) show cause why such changes are not
necessary.\143\
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    \143\ Section 206 Order, 146 FERC ] 61,202.
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    80. The NOPR proposed that moving the Timely Nomination Cycle to
1:00 p.m. CCT, along with examining whether the ISOs and RTOs should
modify their day-ahead market processes, could expand the options
available to gas-fired generators. Under the NOPR proposal, gas-fired
generators would have the option of arranging natural gas supply and
pipeline transportation at the Timely Nomination Cycle knowing the
results of the day-ahead electric market. This could minimize
situations in which gas-fired generators, particularly those that opt
to procure natural gas supply and pipeline transportation after the
day-ahead electric market results are posted, are unable to procure
sufficient resources to fulfill their electric market commitments and
to contribute to reliable electric system operation. If gas-fired
generators know whether they were committed in the day-ahead electric
market prior to the Timely Nomination Cycle, they may have a greater
opportunity to procure natural gas transportation in the Timely
Nomination Cycle--when there is the greatest opportunity to procure
pipeline capacity. This, in turn, could reduce the potential for gas-
fired generators to engage in costly actions that raise real-time
electric market prices. Thus, electric market outcomes may better
reflect expected operating costs if gas-fired generators were provided
with day-ahead market results prior to the Timely Nomination Cycle.
    81. It was recognized in the NOPR that moving the Timely Nomination
Cycle to later in the day may impose systems and administrative costs
on other interstate natural gas pipeline shippers. However, the NOPR
concluded a 1:00 p.m. CCT start time for the Timely Nomination Cycle
would appear to provide a reasonable balance of the electric and
natural gas industries' concerns. The NOPR concluded that the long-term
benefits of ensuring a better coordinated natural gas and electric
industry appear to warrant this change.
2. Revised NAESB Day-Ahead Nomination Cycles
    82. Consistent with the NOPR, NAESB revised its standards to move
the start of the Timely Nomination Cycle to 1:00 p.m. CCT, with
scheduled quantities becoming effective at the start of the next Gas
Day. However, unlike the NOPR, NAESB revised its standards to move the
deadline for the pipeline to notify shippers of their scheduled
quantities from 4:30 p.m. CCT to 5:00 p.m. CCT, stating the pipelines
require at least four hours to complete the Timely Nomination Cycle.
    83. While the NOPR did not propose any changes to the Evening
Nomination Cycle, NAESB revised its standards to provide that that
cycle be completed in three hours, rather than the current four hours,
with shippers being notified of their scheduled quantities at 9:00 p.m.
instead of 10:00 p.m. Under both the NOPR and NAESB's revised
standards, bumping of interruptible service is permitted in the Evening
Nomination Cycle and, consistent with current Commission policy,
already scheduled secondary firm service cannot be bumped. A comparison
of the current NAESB day-ahead nomination cycles and the revised NAESB
day-ahead nomination cycles are shown in Table 7 below.

                  Table 7--Day-Ahead Nomination Cycles
------------------------------------------------------------------------
                                  Current NAESB         Revised NAESB
 Time Shifts--all times CCT         standards             standards
------------------------------------------------------------------------
Timely:
    Nomination Deadline.....  11:30 a.m...........  1:00 p.m.
    Schedule Issued.........  4:30 p.m............  5:00 p.m.
    Start of Gas Flow.......  9:00 a.m............
Evening:
    Nomination Deadline.....  6:00 p.m............  6:00 p.m.
    Schedule Issued.........  10:00 p.m...........  9:00 p.m.
    Start of Gas Flow.......  9:00 a.m............
------------------------------------------------------------------------

3. NOPR Comments
    84. The large majority of commenters support moving the start time
for the Timely Nomination Cycle from 11:30 a.m. CCT to 1:00 p.m. CCT,
including commenters that do not generally support NAESB's intraday
nomination timeline.\144\ Many of the commenters that support NAESB's
nomination timeline state that, consistent with the Commission's
proposal, moving the Timely Nomination Cycle nomination deadline to
1:00 p.m. CCT will provide generators more time to acquire natural gas
supply and pipeline transportation after learning their electric
dispatch obligations, provided changes are made to the ISO and RTO