[Federal Register Volume 79, Number 62 (Tuesday, April 1, 2014)]
[Proposed Rules]
[Pages 18223-18243]
[FR Doc No: 2014-06757]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 284

[Docket No. RM14-2-000]

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

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
proposing, as part of a series of orders, to revise its regulations at
section 284.12 to better coordinate the scheduling of natural gas and
electricity markets in light of increased reliance on natural gas for
electric generation, as well as to provide additional flexibility to
all shippers on interstate natural gas pipelines. The proposed
revisions in this Notice of Proposed Rulemaking deal principally with
revision of the operating day and scheduling practices used by
interstate pipelines to schedule natural gas transportation service.
These proposed revisions affect the business practices of the natural
gas industry, which the industry has developed through the North
American Energy Standards Board, and which the Commission has
incorporated by reference into its regulations. The Commission,
therefore, is providing the natural gas and electric industries with
six months to reach consensus on standards, consistent with the
Commission's guidance, including any revisions or modifications to the
proposals provided herein.

DATES: Comments are due November 28, 2014.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
     Electronic Filing through http://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format.
     Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures Section of this document.

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

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: Federal Energy Regulatory Commission

Table of Contents

                                                             Paragraph
                                                               Nos.

I. Background...........................................              12
    A. Current Natural Gas and Electric Scheduling                    13
     Systems............................................
        1. Nationwide Scheduling for Natural Gas                      13
         Interstate Pipeline Transportation.............
        2. Electric Scheduling..........................              19
        3. Commission Conferences.......................              22
II. Discussion..........................................              27
    A. Overview.........................................              27
    B. Gas Day..........................................              36
        1. Background and Issues........................              36
        2. Commission Proposal..........................              39
    C. Natural Gas Transportation Timely Nomination                   41
     Cycle..............................................
        1. Background and Issues........................              41
        2. Commission Proposal..........................              48
    D. Modified Intra-Day Nomination Timeline...........              55
        1. Background and Comments Received.............              55
        2. Commission Proposal..........................              63
    E. Clarification Regarding the ``No-Bump'' Rule for               71
     Pipelines with Enhanced Nomination Services........
    F. Multi-Party Transportation Contracts.............              76
III. Notice of Use of Voluntary Consensus Standards.....              82
IV. Information Collection Statement....................              83
V. Environmental Analysis...............................              87

VI. Regulatory Flexibility Certification................              88
VII. Comment Procedures.................................              90
VIII. Document Availability.............................              94

List of Tables, Figures, and Equations

Table 1: NAESB Gas Nomination Cycles.......................           16
Figure 1--Recent winter load--Eastern and Central Regions             40
 (non-holiday weekdays, Dec.-Feb.).........................
Figure 2--Recent winter load--Mountain and Pacific Regions            40
 (non-holiday weekdays, Dec.-Feb.).........................
Table 2: Electric Commitment Results Publication Timetable.           43

    1. In this Notice of Proposed Rulemaking (Proposed Rule or NOPR),
and in two contemporaneous orders, the Federal Energy Regulatory
Commission (Commission) is proposing interrelated actions to address
certain natural gas and electric industry coordination challenges that
arise, in part, from increased reliance on natural gas for electricity
generation. The Commission's proposed actions focus primarily on the
scheduling practices of the natural gas transportation and electricity
markets. The reforms proposed herein and the two contemporaneous orders
build upon the comments made during Commission staff technical
conferences and in comments filed in Docket No. AD12-12-000.
    2. In this Proposed Rule, the Commission proposes to amend its
regulations at section 284.12 relating to the scheduling of
transportation service on interstate natural gas pipelines to better
coordinate the scheduling practices of the natural gas and electricity
industries, as well as to provide additional scheduling flexibility to
all shippers on interstate natural gas pipelines. In a separate order,
the Commission is instituting a proceeding, under section 206 of the
Federal Power Act (FPA),\1\ to coordinate the day-ahead scheduling of
Independent System Operators (ISOs) and Regional Transmission
Organizations (RTOs) with the revised interstate natural gas pipeline
schedule.\2\ In addition, in a separate order, the Commission is also
instituting a proceeding, under section 5 of the Natural Gas Act
(NGA),\3\ 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.\4\
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    \1\ 16 U.S.C. 824e (2012).
    \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).
    \3\ 15 U.S.C. 717d.
    \4\ Posting of Offers to Purchase Capacity, 146 FERC ] 61,203
(2014). See also 18 CFR 284.8(d)(2013).
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    3. The Commission's existing regulations \5\ regarding interstate
natural gas pipelines' scheduling incorporate by reference the
standards of the North American Energy Standards Board (NAESB)
Wholesale Gas Quadrant (WGQ), a consensus standards organization
representing all segments of the natural gas industry as well as the
wholesale electric power industry.\6\ Since 1996 these standards have
established nationwide timelines that the industry and the Commission
have determined most efficiently schedule natural gas transactions
across interconnecting pipelines. This standardized nomination timeline
has resulted in a complementary standard timeframe in which parties
acquire natural gas supplies.
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    \5\ See 18 CFR 284.12(a) and (b) (2013).
    \6\ NAESB is accredited by the American National Standards
Institute (ANSI) as an accredited standards organization, which
ensures that NAESB complies with ANSI's requirements that its
procedures are open to materially affected parties and that the
standards represent a reasonable consensus of the industry without
domination by any single interest or interest category.
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    4. The Commission meanwhile has accepted regional variation in the
development of scheduling practices in ISO and RTO markets, each of
which has established its own timelines for submission of bids and
posting of awards.
    5. While the nationwide natural gas nomination timeline has proven
resilient over the last 17 years, recent developments in electricity
markets signal that changes to the gas nomination schedule may be
needed. Reliance on natural gas as a fuel for electric generation has
steadily increased in recent years.\7\ This trend is expected to
continue, resulting in greater interdependence between the natural gas
and electric industries.\8\ Several events over the last few years,
such as the Southwest Cold Weather Event,\9\ and the recent extreme and
sustained cold weather events in the eastern U.S. in January 2014,\10\
show the crucial interrelationship between natural gas pipelines and
electric transmission operators and underscore

the need for improvements in the coordination of natural gas and
electric markets. The differences between the nationwide natural gas
scheduling timeline and the regional electric scheduling timelines can
create complications for interstate pipelines and electric transmission
operators in coordinating the scheduling of the two industries.
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    \7\ See, e.g., Energy Information Administration, Fuel
Competition in Power Generation and Elasticities of Substitution
(June 2012); ISO-NE., Addressing Gas Dependence at 3 (July 2012)
(reliance on natural gas-fired electricity in the region increased
from five percent in 1990 to 51 percent in 2011), http://www.iso-ne.com/committees/comm_wkgrps/strategic_planning_discussion/materials/natural-gas-white-paper-draft-july-2012.pdf.
    \8\ See, e.g., North American Electric Reliability Corporation,
2013 Special Reliability Assessment: Accommodating an Increased
Dependence on Natural Gas for Electric Power; Phase II: A
Vulnerability and Scenario Assessment for the North American Bulk
Power System at 1 (May 2013) (``Over the past decade, natural gas-
fired generation rose significantly from 17 percent to 25 percent of
U.S. power generation and is now the largest fuel source for
generation capacity. Gas use is expected to continue to increase in
the future, both in absolute terms and as a share of total power
generation and capacity.''); http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_PhaseII_FINAL.pdf; Energy
Information Administration, Annual Energy Outlook 2013 Early Release
Overview (2013) (showing electric generation from natural gas rising
from 13 percent in 1993 to 30 percent in 2040); http://www.eia.gov/forecasts/aeo/er/early_elecgen.cfm; The New England State Committee
on Electricity, Natural Gas Infrastructure and Electric Generation:
A Review of Issues Facing New England (Dec. 14, 2012), http://www.nescoe.com/uploads/Phase_I_Report_12-17-2012_Final.pdf.
    \9\ 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.
    \10\ 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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    6. In light of these concerns, the Commission, since early 2012,
has engaged in a dialogue with natural gas pipelines, electric
transmission operators, and other market participants and stakeholders
in both industries regarding natural gas and electric industry
coordination.\11\ In a report issued on November 15, 2012, Commission
staff noted that, among other topics, industry participants highlighted
the need for greater alignment of natural gas and electric scheduling
practices.\12\ At the direction of the Commission, staff conducted a
further technical conference in April 2013 to consider natural gas and
electric scheduling practices, where participants again discussed,
among other matters, whether and how natural gas and electric industry
schedules could be harmonized in order to achieve the most efficient
scheduling systems for both industries, whether additional nomination
opportunities for natural gas transportation can be provided and, if
so, under what conditions.\13\
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    \11\ 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.
    \12\ 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.
    \13\ 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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    7. During the technical conference, some ISOs and RTOs expressed
concern about the potential reliability effects on their systems if
gas-fired generators encounter difficulty in acquiring natural gas or
are subject to curtailment of natural gas supplies, particularly during
periods of high demand on both the interstate pipeline and electric
transmission systems. Interstate pipelines expressed similar concern
about the effect on their ability to deliver natural gas when electric
generators are dispatched and need to burn more natural gas than they
have nominated. Generators and transmission operators raised concerns
that managing fuel procurement risk can be a challenge because of the
different operating days used by the natural gas and electric
industries and because the timeframe for nominating natural gas
pipeline transportation service is not synchronized with the timeframe
during which generators receive confirmation of their bids in the day-
ahead electric markets. These differing timelines can cause significant
price and/or supply risk for gas-fired generators because, to obtain
the best gas price, the generators would need to nominate pipeline
transportation service before they know if their electric bid has been
confirmed.\14\ Generators, including generators in non-RTO markets,
raised concerns about the flexibility of the gas scheduling system to
accommodate their need to revise nominations in light of weather events
or other operational needs. Several conference participants stressed
that, due to the difficult policy questions involved, they would need
Commission policy guidance before they would be able to move forward on
coordination of their existing scheduling practices.
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    \14\ November Staff Report at 32.
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    8. Based on the current trend of increased use of 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 is proposing a set of related actions to address concerns
regarding the impacts of divergent interstate natural gas pipeline and
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.\15\ The Commission has identified
three major areas in which revisions to the nationwide natural gas
scheduling system seem appropriate. Therefore, in this Proposed Rule,
the Commission is proposing to:
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    \15\ The Commission has recognized that even the most efficient
standards need to be modified to accord with changing realities.
Standards for Business Practices of Interstate Natural Gas
Pipelines, Order No. 587, 61 FR 39053 (July 26, 1996), FERC Stats. &
Regs. Regulations Preambles July 1996-December 2000 ] 31,038, at
30,060 (1996). See American National Standards Institute, ANSI
Essential Requirements: Due Process Requirements for American
National Standards Sec.  4.7.1 (accessed 12/8/13) (requiring
periodic updates of standards); Eviatar Zerubavel, The
Standardization of Time: A Sociohistorical Perspective, 88 American
Journal of Sociology 1, 5-7 (July 1982) (uniform standards of time
are needed to coordinate industries).
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    a. Start the natural gas operating day (Gas Day) earlier in order
to ensure that gas-fired generators are not running short on gas
supplies during the morning electric ramp periods. The Commission is
proposing to move the start of the Gas Day from 9:00 a.m. Central Clock
Time (CCT) to 4:00 a.m. CCT.\16\
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    \16\ The NAESB WGQ standards refer to Central Clock Time which
reflects day-light savings changes.
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    b. Start the first day-ahead gas nomination opportunity (Timely
Nomination Cycle) for pipeline scheduling later than the current 11:30
a.m. CCT. Due to the fact that the Timely Nomination Cycle is the most
liquid of the gas nomination cycles, this change will allow electric
utilities to finalize their scheduling before gas-fired generators must
make gas purchase arrangements and submit nomination requests for
natural gas transportation service to the pipelines. The Commission is
proposing to move the Timely Nomination Cycle to 1:00 p.m. CCT.\17\
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    \17\ The Commission is not proposing any changes to the Evening
Cycle.
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    c. 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. The Commission is
proposing to revise the existing standard intraday nomination cycles,
including adding an early morning nomination cycle with a mid-day
effective flow time and a new late-afternoon nomination cycle during
which firm nominations would have precedence over or be permitted to
bump already scheduled interruptible service. However, bumping would
not be permitted during the proposed final intraday nomination cycle.
In summary, the Commission is proposing to provide four standard
intraday nomination cycles to occur at 8:00 a.m. CCT (bump), 10:30 a.m.
CCT (bump), 4:00 p.m. CCT (bump) and 7:00 p.m. CCT (no-bump).\18\
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    \18\ See the Appendix for a Table summarizing the Commission's
proposed scheduling timeline.
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    9. The Commission also clarifies in this Proposed Rule its policy
concerning the ability of a pipeline to permit firm shippers to bump an
interruptible shipper's nomination during any enhanced nomination
opportunity proposed by the pipeline (beyond the standard nomination
opportunities). We also propose to require all interstate pipelines to
offer multi-party service agreements, similar to those already offered
by some interstate pipelines. Such multi-party service agreements can
provide multiple shippers the flexibility to share interstate pipeline
capacity to serve complementary needs in an efficient manner.
    10. Although we present specific proposed reforms to existing
natural gas industry scheduling practices in this Proposed Rule, we
continue to recognize that the natural gas and

electricity industries are best positioned to work out the details of
how changes in scheduling practices can most efficiently be made and
implemented, consistent with the policies discussed here. Therefore, we
are providing the natural gas and electric industries, through NAESB,
with a period of 180 days after publication of the Proposed Rule in the
Federal Register to reach consensus on any revisions to the
Commission's proposals and either file consensus standards with the
Commission or notify the Commission of its inability to reach consensus
on any revisions to the Commission's proposals. The Commission
appreciates the recent work of the Natural Gas Council (NGC), the
Desert Southwest Pipeline Stakeholders (DSPS), and others to formulate
proposals for Commission consideration. These efforts represent a
significant step forward in helping to address the scheduling issues
confronting the natural gas and electric industries, and we encourage
these parties to continue their work and participate in the NAESB
process to formulate a consensus proposal, consistent with the policies
discussed herein. In addition, while the proposals in this Proposed
Rule focus on natural gas industry regulations, we expect the electric
industry (particularly the ISOs and RTOs) to participate in these
efforts to help ensure that the resulting consensus reasonably
accommodates the interests of both industries.
    11. In the event that NAESB is able to reach a consensus on
revisions to the Commission's proposals, comments on those consensus
standards, as well as comments on the Commission's proposals, are to be
filed 240 days after publication of the Proposed Rule in the Federal
Register. Because NAESB is an ANSI accredited consensus standards
organization, the Commission could incorporate by reference in a final
rule consensus standards filed by NAESB.\19\ In the event that NAESB in
unable to reach a consensus on any revisions to the Commission's
proposals, comments on the Commission's proposals also are to be filed
240 days after publication of the Proposed Rule in the Federal
Register. If the Commission adopts regulations that have not been
approved by NAESB, it will 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.
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    \19\ Pub L. 104-113, 12(d), 110 Stat. 775 (1996), 15 U.S.C. 272
note (1997); OMB Circular A-119 (agency ``must use voluntary
consensus standards, both domestic and international, in its
regulatory'' as well as procurement activities).
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I. Background

    12. In order to put these related Commission actions in context, we
first provide a description of the current interstate natural gas and
electric utility scheduling systems and the issues raised during the
Commission conferences and in filed comments in Docket No. AD12-12-000.

A. Current Natural Gas and Electric Scheduling Systems

1. Nationwide Scheduling for Natural Gas Interstate Pipeline
Transportation
    13. The nationwide natural gas standards originated in 1995, when
all segments of the natural gas industry agreed to form the Gas
Industry Standards Board (GISB) (the precursor to NAESB) as its vehicle
to formalize the creation of industry-wide communication standards.\20\
Later in 1995, after conducting an industry technical conference, the
Commission issued an Advanced Notice of Proposed Rulemaking (ANOPR),
requesting the submission of proposals by GISB to standardize business
practices across the interstate natural gas pipeline grid.\21\ One of
the Commission's principal concerns was the standardization of
nomination and confirmation schedules.
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    \20\ Under its charter and by-laws, GISB was open to all members
of the gas industry and utilized open and balanced consensus voting
procedures to ensure that a standard was acceptable to all industry
segments.
    \21\ Standards for Business Practices of Interstate Natural Gas
Pipelines, Advanced Notice of Proposed Rulemaking, 73 FERC ] 61,104
(1995).
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    14. After the issuance of the ANOPR, the industry mobilized under
the GISB procedures, with over 500 individuals participating in 45 days
of meetings over a period of 53 business days to produce consensus on a
comprehensive set of business practice standards covering nominations
and confirmations, flowing gas, invoicing, capacity release, and
electronic communication.\22\ The industry concluded that a nationwide
timeline for scheduling and nominating natural gas transportation was
needed given the interconnected nature of pipelines. As GISB stated,
``the standard nomination timeline allows a shipper whose transaction
spans more than one pipeline the certainty that the transaction will
really `work' as contemplated.'' \23\ In Order No. 587, the Commission
incorporated these nationwide standards into its regulations,
recognizing the need for nationwide, as opposed to regional scheduling,
for interstate natural gas pipeline service.\24\ Since 1996, the
nationwide framework of scheduling timelines has remained in place,
with numerous improvements and modifications, such as the addition in
1997 of standardized intraday nomination opportunities.\25\
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    \22\ Standards for Business Practices of Interstate Natural Gas
Pipelines, Notice of Proposed Rulemaking, 61 FR 19211 (May 1, 1996),
FERC Stats. & Regs. Proposed-Regulations 1988-1998 ] 32,517, at
33,209 (1996).
    \23\ Order No. 587, FERC Stats. & Regs. ] 31,038, at 30,067.
    \24\ ``An integrated pipeline grid means that an East Coast LDC
can nominate gas from a producer located in any time-zone on the
North American continent. If an upstream-downstream system or a
regional system were used, the LDC would not get confirmation of the
first leg of the journey until well after it gets confirmation of
the final downstream leg (which is probably well after the close of
its business day).'' Id. at 30,068.
    \25\ See Standards for Business Practices of Interstate Natural
Gas Pipelines; Order No. 587-G, 63 FR 20072 (Apr. 23, 1998), FERC
Stats. & Regs. Regulations Preambles July 1996-December 2000 ]
31,062 (1998); Order No. 587, FERC Stats. & Regs. ] 31,038, at
30,060 (recognizing that standards development requires continuous
adaption to changed circumstances: ``standards development is not
like a sculptor forever casting his creation in bronze, but like a
jazz musician who takes a theme and constantly revises, enhances,
and reworks it'').
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    15. The natural gas scheduling system is based on several
underlying principles. First, the Gas Day is standard nationwide,
beginning at 9:00 a.m. CCT and ending at 9:00 a.m. CCT the following
day. All nominations for transportation service are for a daily
quantity to be transported over that 24-hour period. The rate at which
a shipper may use its contracted quantity, also known as a flow rate,
on a given pipeline is determined by the individual pipeline's tariff
and the flexibility of that pipeline to permit non-ratable flows.
Except for special services, pipeline services are generally based on
the assumption of uniform hourly flows over the Gas Day. While Table 1
below lists the effective times for nominations, changes to these
nominations are limited by the remainder of a shipper's daily quantity
and the remaining hours of the Gas Day.\26\ Second, 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,\27\ followed by
secondary-firm, within-the-path \28\ nominations, secondary-firm,
outside of the path nominations, and finally nominations from shippers
holding interruptible transportation capacity.
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    \26\ 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).
    \27\ 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.
    \28\ Secondary-firm nominations are firm nominations that
include at least one secondary point. Within-the-path nominations
are nominations where the secondary nomination point is contained
wholly within the primary points listed in the shipper's contract.
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    16. 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 the figure below, the first two nomination opportunities occur the
day before gas flows, and the second two opportunities occur during the
day of gas flow.

                                      Table 1--NAESB Gas Nomination Cycles
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                                  Nomination deadline    Notification of    Nomination effective
        Nomination cycle                 (CCT)            schedule (CCT)            (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.
Intra-Day 1.....................  10:00 a.m..........  2:00 p.m...........  5:00 p.m. Current     Yes.
                                                                             Day.
Intra-Day 2.....................  5:00 p.m...........  9:00 p.m...........  9:00 p.m. Current     No.
                                                                             Day.
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    Before a pipeline schedules a shipper's requested quantity under
these standards, the pipeline confirms the shipper's nomination with
upstream and downstream parties 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 Local Distribution
Company (LDC), has sufficient capacity to accept that gas.
    17. The Timely Nomination Cycle is the most liquid time to acquire
both natural gas supply and transportation capacity. During that 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.\29\ In subsequent nomination cycles, firm service
scheduled in an earlier cycle cannot be displaced or bumped by another
firm nomination for that Gas Day.\30\ In addition, firm intraday
nominations have priority over, and thus can displace or bump scheduled
and flowing interruptible transportation.\31\ 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.'' \32\ However, the final intraday nomination (Intra-Day 2)
cycle is a ``no-bump'' cycle, meaning that interruptible transportation
previously arranged for cannot be displaced or bumped by a firm Intra-
Day 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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    \29\ See P 14 supra.
    \30\ 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'').
    \31\ 18 CFR 284.12(b)(1)(i) (2013); Order No. 587-G, FERC Stats.
& Regs. ] 31,062 at 30,672.
    \32\ Id. at 30,671.
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    18. 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 utilize these additional scheduling opportunities if the
upstream or downstream pipelines cannot confirm those scheduling
changes. Currently, several pipelines offer additional nomination
cycles.\33\
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    \33\ See, e.g., Texas Gas Transmission LLC, 137 FERC ] 61,093
(2011), order on compliance, 138 FERC ] 61,176 (2013) (Texas Gas);
Gulf South Pipeline Company LP, 141 FERC ] 61,262 (2012).
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2. Electric Scheduling
    19. Scheduling practices in the electric industry vary by region.
In terms of processes that are run by the ISOs and RTOs, the practice
of scheduling resources generally includes the commitment and dispatch
of sufficient, deliverable generation to supply load in a least cost
manner, all based on generator availability and the transmission
facilities that will be in service that day. These processes for
scheduling resources also account for imports and exports, the
provision of ancillary services, and contingencies that may limit the
availability of certain generation or transmission assets during the
operating day.
    20. To perform the unit commitment and dispatch processes used to
develop daily resource schedules, ISOs and RTOs collect supply offers
from generators and expected demand from load serving entities. The
ISOs and RTOs then run market algorithms that, accounting for
transmission constraints and other operational limitations, determine
the least cost set of resources that can be used to serve load.
Additionally, 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 and, in
some cases, other system needs. These reliability processes vary in
each ISO and RTO--both in name and in details of implementation.
    21. In terms of when resource scheduling processes take place, for
most electric utilities the 24-hour operating day begins at 12:00 a.m.
local time. In ISO and RTO regions, the system operators run the day-
ahead unit commitment and dispatch in the day leading up to the
operating day. Once these processes are run, they become effective at
the beginning of the operating day. 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. The individual ISO and RTO day-ahead

schedules are discussed in greater detail below.
    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.\34\
---------------------------------------------------------------------------

    \34\ Pro forma OATT Sec.  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 Sec.  14.6.
---------------------------------------------------------------------------

3. Commission Conferences
    22. As noted above, the Commission has engaged in an extensive
dialogue with industry on gas-electric coordination issues. These
efforts were first formalized on February 15, 2012, when the Commission
issued a notice in Docket No. AD12-12-000 requesting comments on
various aspects of gas-electric interdependence and coordination in
response to questions posed by members of the Commission.\35\ In order
to better understand the interface between the electric and natural gas
pipeline industries and identify areas for improved coordination, the
questions covered a variety of topics including market structures and
rules, scheduling, communications, infrastructure and reliability. In
response to the notice, the Commission received comments from 79
entities that raised concerns, including the need for alignment of
natural gas and electric scheduling.
---------------------------------------------------------------------------

    \35\ Coordination Between Natural Gas and Electricity Markets,
Docket No. AD12-12-000 (Feb. 15, 2012) (Notice Assigning Docket No.
and Requesting Comments), available at http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=12893828. See also Commissioner
Philip D. Moeller, Request for Comments of Commissioner Moeller on
Coordination between the Natural Gas and Electricity Markets (Feb.
3, 2012), available at http://www.ferc.gov/about/com-mem/moeller/moellergaselectricletter.pdf; Commissioner Cheryl A. LaFleur,
Statement regarding Standards for Business Practices for Interstate
Natural Gas Pipelines (Feb. 16, 2012, available at http://www.ferc.gov/media/statements-speeches/lafleur/2012/02-16-12-lafleur-G-1.asp.
---------------------------------------------------------------------------

    23. During August 2012, the Commission convened five regional
conferences for the purpose of exploring these issues and obtaining
further information from the electric and natural gas industries
regarding coordination between the industries. Representatives from a
cross-section of both industries attended the regional conferences,
with total attendance exceeding 1,200 registrants. As noted above, the
November Staff Report following these conferences stated that, among
other topics, participants highlighted the need for alignment of
natural gas and electric scheduling. Generators participating in the
ISO and RTO markets stated that managing fuel procurement risk can be a
challenge because the natural gas and electric operating days are not
aligned. Many participants voiced concerns related to whether
establishing a standard energy day for both industries is warranted,
whether and how utilities can most effectively match their scheduling
times with the nationwide natural gas scheduling timeline, whether
additional nomination opportunities for natural gas can be provided
and, if so, under what conditions. Participants also pointed out that
changes to natural gas scheduling practices can have national
implications given the operational structure of the pipeline system and
that whether changes to the scheduling practices of the natural gas or
electric industries are necessary to better align these two markets has
been a matter of debate among the industries for a number of years.
    24. On November 15, 2012, the Commission issued an order directing
further technical conferences and reports.\36\ In this order, the
Commission recognized that questions raised at the conferences, related
to scheduling and other issues, were of sufficient importance that they
warranted a separate technical conference to focus on the details
relating to scheduling.\37\ Therefore, the Commission directed, among
other things, that Commission staff convene a technical conference to
identify areas in which additional Commission guidance or potential
regulatory changes could be considered.\38\
---------------------------------------------------------------------------

    \36\ Coordination Between Natural Gas and Electricity Markets,
141 FERC ] 61,125 (2012) (November 15 Order).
    \37\ Id. P 6.
    \38\ Id. P 8.
---------------------------------------------------------------------------

    25. Pursuant to the November 15 Order, the Commission held a
technical conference on April 25, 2013 (April 2013 technical
conference) regarding natural gas and electric scheduling practices,
and issues related to whether and how natural gas and electric industry
schedules could be harmonized in order to achieve the most efficient
scheduling systems for both industries.\39\ More than 300 persons,
representing a cross-section of industry, participated in the April
2013 technical conference, and discussed four major topic areas:
natural gas and electric operating day, natural gas nomination cycles,
the No-Bump Rule, and electric scheduling and market rules.\40\
---------------------------------------------------------------------------

    \39\ 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.
    \40\ Supplemental Notice of Technical Conference, Docket No.
AD12-12-000, at 4-7 (Apr. 3, 2013) (Supplemental Notice of Technical
Conference), available at http://elibrary.ferc.gov:0/idmws/doc_info.asp?document_id=14104023.
---------------------------------------------------------------------------

    26. The participants in these conferences identified a number of
specific areas in which the differences between the nationwide natural
gas schedule and the regional electric schedules can affect the ability
to provide reliable service and may create inefficiencies in scheduling
that result in less cost effective use of resources. The major issues
identified by the participants were: (1) The discontinuity between the
operating days of electric utilities (including ISOs and RTOs) and the
standardized operating day of interstate natural gas pipelines; (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 of
the ISOs and RTOs; and (3) the lack of intraday nomination
opportunities on interstate natural gas pipelines, which may limit the
ability of gas-fired electric generators, as well as other shippers, to
revise their nominations during the operating day.

II. Discussion

A. Overview

    27. The growing reliance on natural gas as a fuel for electric
generation, combined with differences in business practices between the
two industries, has the potential to create challenges for interstate
natural gas pipelines, electric transmission operators and electric
generators in assuring reliable and efficient operations. This problem
is particularly acute for some ISOs and RTOs and those gas-fired
generators operating in their markets. At the same time, in areas of
the country where bilateral markets are prevalent and storage is
minimal, customers are looking for added flexibility. The Commission is
proposing in this NOPR, and the related orders, to take actions that
provide for better coordination in scheduling between the industries,
while respecting the differences between the industries in their
operational and business needs. These proposed reforms will help to
ensure just and reasonable rates and terms and conditions of service
for both wholesale electric generation and transmission and natural gas
transportation.
    28. Scheduling practices on the interstate natural gas pipeline
system

and electric transmission systems are similar in some respects. For
both systems, planning and scheduling take place one day ahead of the
operating day based on weather forecasts and other factors affecting
demand. In addition, scheduling on both systems needs to be adjusted
during the operating day as energy supply and demand factors change.
However, physical and operational differences exist between the
systems. Due in part to limited electric storage, electric transmission
operators continuously and near instantaneously need to balance supply
and demand to ensure the system remains in equilibrium. Natural gas, on
the other hand, moves at a much slower rate than electricity.\41\
Pipelines maintain balance between supply and demand through the use of
linepack and operational storage, and allow for variations in customer
deliveries from equal hourly flow rates on an as available or best-
efforts basis.\42\ As a result, an interstate pipeline must plan in
advance so that it has sufficient linepack and/or storage to satisfy
variations in expected hourly demand on the system. Such advance
planning is particularly important for serving gas-fired generators,
because electric generators can draw significant volumes of natural gas
off a pipeline, sometimes as much as industrial users or a small city.
Accordingly, increased use of natural gas by the electric industry can
have a significant impact on the delivery capabilities of interstate
natural gas pipelines.\43\ Consequently, improvements in the
coordination of the electric and natural gas nomination and scheduling
practices could provide greater opportunities for gas-fired generators
to obtain needed natural gas supplies and for pipelines to plan for
their expected demands. Providing these opportunities will be
beneficial for both industries in helping to ensure reliable and
efficient operations.
---------------------------------------------------------------------------

    \41\ See American Gas Association, ``How Does the Natural Gas
Delivery System Work?'' at http://www.aga.org/KC/ABOUTNATURALGAS/CONSUMERINFO/Pages/NGDeliverySystem.aspx (last visited Dec. 17,
2013) (``Natural gas moves through the transmission system at up to
30 miles per hour, so it takes several days for gas from Texas to
arrive at a utility receipt point in the Northeast''). While most
pipelines schedule service based on an assumption of same day
deliverability of natural gas from receipt to delivery point, this
ability is provided through the pipeline's ability to plan for
nominated service by increasing line pack to support expected loads.
    \42\ 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 constrained pipeline may announce a critical notice
period, where shippers are expected to stay in balance. Some
pipelines also offer enhanced services that permit shippers to
subscribe to services providing more variable hourly flow rates.
    \43\ See North American Electric Reliability Corp., Special
Reliability Assessment: A Primer of the Natural Gas and Electric
Power Interdependency in the United States, at 85-86 (Dec. 2011)
(``the electric utility loads are as large, or larger, than many of
the LDC loads and, in some cases, can exceed the capabilities of the
smaller diameter pipelines'').
---------------------------------------------------------------------------

    29. The Commission has identified specific areas of concern with
respect to the lack of coordination between the scheduling practices of
the industries. In most ISO or RTO markets, a natural gas-fired
generator does not know if it is going to be dispatched until after the
ISO or RTO processes day-ahead or real-time market bids and determines
which resources are economical to run on a particular day or hour.
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
transportation capacity may not be available or economical, given the
day-ahead market clearing price.\44\ A generator that opts to see if it
is scheduled before acquiring natural gas and pipeline transportation
therefore will not be able to obtain natural gas and transportation
during the time period when these markets are the most liquid.\45\
While during many periods of the year interstate natural gas pipelines
may have available capacity to provide service to gas-fired generators,
during periods when the pipeline is constrained, the ability of
generators to arrange transportation service when the market is most
liquid may be critical to that gas-fired generators' ability to provide
service.
---------------------------------------------------------------------------

    \44\ 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.
    \45\ Currently, only NYISO provides the results of its day-ahead
market clearing process to generators before the deadline for
submitting natural gas transportation nominations for the Timely
Nomination Cycle. See Table 2, below.
---------------------------------------------------------------------------

    30. Even in areas outside of the ISOs and RTOs, gas-fired
generators have concerns regarding their ability to revise their
pipeline nominations during the operating day to respond to changing
weather conditions and other operational needs when capacity becomes
constrained. Some natural gas-fired generators have sought to ensure
reliability by subscribing to firm pipeline service, but have found
that the standard, nationwide nomination opportunities for interstate
natural gas pipeline transportation service may not provide them with
sufficient opportunities to reschedule gas supplies for unanticipated
weather events after the Timely Nomination Cycle.
    31. The Commission concludes that these concerns, and other issues
identified during our dialogues with industry, warrant further action
in this proceeding and the two related proceedings we are instituting
concurrently with this Proposed Rule. These concerns generally fall
into two categories.
    32. First, the Commission is concerned about the potential impact
on the reliable and efficient operation of electric transmission
systems and interstate natural gas pipelines of divergences between the
start times of the natural gas and electric operating days, and
mismatches in the timelines for scheduling interstate natural gas
pipeline transportation service and scheduling wholesale electric sales
made by gas-fired generators for the next day. In particular, the
Commission is concerned that
    (1) the current 9:00 a.m. Central Clock Time (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, resulting in the gas-fired generator
being unable to meet its obligations under the terms of their electric
offers; and
    (2) in most ISO and RTO regions, the timelines for announcing the
results of the day-ahead energy market process and committing
generating units to run the next operating day occur after the deadline
for the Timely Nomination Cycle (11:30 a.m. CCT), meaning gas-fired
generators are not certain they will be called upon to operate until
after the period when pipeline capacity is most available and natural
gas supply markets are most liquid.
    33. Second, the Commission is concerned that existing interstate
natural gas pipeline scheduling practices and the application of some
of the Commission's regulations by pipelines may not provide sufficient
flexibility to meet the needs of natural gas-fired generators, and
could be limiting the efficient use of existing pipeline
infrastructure, thereby making less capacity available to shippers
(including natural gas-fired generators). Specifically, the limited
number of standard intraday nomination cycles for

interstate natural gas pipeline transportation may not be sufficient to
meet the needs of gas-fired generators to obtain capacity to deliver
additional natural gas supplies during the electric operating day. In
addition, even where interstate natural gas pipelines provide
additional intraday opportunities to obtain transportation service,
there appears to be a lack of clarity as to how the Commission's
regulations regarding the ``bumping'' of interruptible customers should
be applied to those additional nomination cycles. Finally, while some
pipelines currently permit multiple shippers, including natural gas-
fired generators, the flexibility to share pipeline capacity under a
single firm transportation contract, the Commission's regulations do
not require all pipelines to offer shippers this option.
    34. We recognize that making modifications to the nationwide
natural gas scheduling system and instituting the other reforms
proposed in these three proceedings will not, and cannot, resolve all
of the concerns that may arise with increased utilization of natural
gas by electric generators. However, we conclude that the adjustments
to the Gas Day and interstate natural gas pipeline nomination timeline
proposed herein promise to provide significant assistance in helping to
improve coordination of the natural gas and electric nomination and
scheduling systems, while maintaining the substantial efficiencies
gained through standardization of the natural gas scheduling system.
The Commission intends that these reforms, along with the additional
actions we propose in Docket Nos. EL14-22-000, et al. and RP14-442-000,
will serve to better ensure the reliable and efficient operation of
both interstate natural gas pipeline and electricity systems.
    35. While we are putting forth specific proposals (described in
more detail below) in these areas, we continue to recognize that the
natural gas and electricity industries are best positioned to work out
the details of how changes in scheduling practices can most efficiently
be made and implemented, consistent with the policies discussed here.
For this reason, as noted above, we are providing time for the two
industries to reach consensus on standards in these areas, including
standards potentially different than the specific proposals herein.
Participants in the NAESB process should explore whether consensus can
be reached on any changes to the scheduling practices at issue in this
Proposed Rule that would address the policy concerns identified herein.
We urge both the natural gas and electric industries to once again
marshal their resources and jointly consider all proposals and seek
reasonable compromise on a broadly supported and comprehensive set of
standards that will achieve the needed integration of the natural gas
and electric industry scheduling practices.

B. Gas Day

1. Background and Issues
    36. As noted, the natural gas and electric operating days are each
24 hours long, but they begin at different times. As a result, each
electric operating day currently extends over two Gas Days and a gas-
fired generator committed for one electric operating day must manage
fuel and transportation arrangements across two Gas Days. Several
commenters in the Docket No. AD12-12-000 proceeding have indicated that
the current Gas Day start time presents operational challenges because
it occurs when gas-fired generation is critically needed to ensure that
supply is available to match demand during the morning electric load
ramp. As gas-fired generators approach the end of the Gas Day during
the morning electric load ramp, they could exhaust either the
contractual entitlements of their transportation contracts or their
supply of natural gas.\46\ In addition, the Gas Day start time
straddles a time of peak gas demand for other pipeline shippers, such
as LDCs.
---------------------------------------------------------------------------

    \46\ Natural gas transportation contracts are based on
volumetric entitlements over a single Gas Day.
---------------------------------------------------------------------------

    37. In support of an earlier start to the Gas Day, ISO-NE and NYISO
have expressed concern that gas-fired generators sometimes exhaust
their daily gas entitlements before the end of the Gas Day and
subsequently may not be able to meet increasing morning electricity
demands during the last hours of the Gas Day. When this occurs, ISO-NE
and NYISO assert that they must search for alternative available
generating units while electric load is ramping up and approaching its
morning peak. ISO-NE and NYISO commented that shifting the start of the
Gas Day earlier would improve gas-electric coordination and, NYISO
noted, would also improve reliability.\47\ They noted that moving the
start of the Gas Day earlier would enable gas-fired resources needed
for the peak morning period to timely nominate and schedule supply to
support their ability to generate electricity at the start of the
morning electrical peak,\48\ and would provide generators more
flexibility in attaining balancing services to avoid derating their
units.\49\ NYISO also argued that, as a result of its proposed change,
any generator derates that occurred at the end of the Gas Day would
occur during the overnight hours, which is a preferable period from an
electric reliability perspective.\50\
---------------------------------------------------------------------------

    \47\ NYISO Comments, Docket No. AD12-12-000, at 5 (filed June
25, 2013); ISO-NE Comments, Docket No. AD12-12-000, at 9 (filed July
5, 2013).
    \48\ ISO-NE Comments, Docket No. AD12-12-000, at 9-10 (filed
July 5, 2013).
    \49\ NYISO Comments, Docket No. AD12-12-000, at 5 (filed June
25, 2013); ISO-NE Comments, Docket No. AD12-12-000, at 9-10 (filed
July 5, 2013).
    \50\ NYISO Comments, Docket No. AD12-12-000, at 5-6 (filed June
25, 2013).
---------------------------------------------------------------------------

    38. Additional commenters noted support for or willingness to move
the Gas Day start time earlier. In particular, INGAA and NGSA indicated
willingness to consider moving the Gas Day earlier, but provided no
specific suggestions on a new start time.\51\ However, NGSA expressed
concerns that an earlier start to the Gas Day may introduce safety
risks associated with manual field operations for field crews.\52\ For
example, NGSA stated that currently a producer may need to divert gas
from one pipeline connected to a field to another pipeline, because of
price changes, market demand, or pipeline maintenance. NGSA stated that
starting the gas operating day when it is still dark raises safety
concerns for employees making these adjustments. According to NGSA,
these concerns will result in either: (1) Increased costs to light all
production areas to avoid potential safety issues, or (2) a reduced
ability to use more than one interconnected pipeline.\53\ In addition,
INGAA asserts that the Commission must ensure that producers are able
to physically deliver natural gas into a pipeline if the Gas Day is
moved to an earlier time; otherwise INGAA states that an earlier start
may not be workable. PJM stated that moving the start of the Gas Day to
5:00 a.m. CCT could potentially be helpful because the peak electric
period would no longer split the Gas Day.\54\ While MISO stated it is
not experiencing issues related to natural gas-fired unit derates, MISO
indicated that it would support moving the start of the Gas Day earlier
if it minimizes the uncertainty surrounding fuel procurement for gas-
fired generators, as long as the nomination

schedule did not also move to an earlier time.\55\
---------------------------------------------------------------------------

    \51\ INGAA Comments, Docket No. AD12-12-000, at 7 (filed June
26, 2013); NGSA Comments, Docket No. AD12-12-000, at 9 (filed July
16, 2013).
    \52\ NGSA Comments, Docket No. AD12-12-000, at 9 (filed July 16,
2013).
    \53\ Id. n.7.
    \54\ PJM Comments, Docket No. AD12-12-000, at 5 (filed July 3,
2013).
    \55\ MISO Comments, Docket No. AD12-12-000, at 4 (filed July 3,
2013).
---------------------------------------------------------------------------

2. Commission Proposal
    39. To alleviate some of the problems resulting from the
misalignment of the gas and electric operating day, the Commission
proposes to move the start of the Gas Day to earlier than its current
9:00 a.m. CCT time to better accommodate the load increase during the
morning for both the electric and natural gas systems, which, in some
time zones, begins prior to the 9:00 a.m. CCT start of the Gas Day.
Moving the start of the Gas Day earlier should address instances in
which gas-fired generators find that they are running out of scheduled
natural gas capacity during the morning ramp period, and have to wait
until 9:00 a.m. CCT before being able to rely on their next day gas
nomination. As a consequence, gas-fired generators should be less
likely either to incur imbalances on pipelines or inform electric
transmission operators that they are unavailable.
    40. The Commission is proposing to move the start of the Gas Day to
4:00 a.m. CCT. 4:00 a.m. CCT would preserve the nationwide scheduling
efficiencies for natural gas, while reasonably accommodating the timing
of morning electric ramp periods across all four time zones. As Figures
1 and 2 below show, a 4:00 a.m. CCT Gas Day start time would occur at
the beginning of the morning electric ramp in the East, and before the
morning electric ramp in other regions of the country. Moving the Gas
Day to 4:00 a.m. CCT as compared to 9:00 a.m. CCT 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. This should largely eliminate the concern that
some gas-fired generators will be unable to run during a substantial
part of the morning ramp period, because they have burned through their
nominated gas before the start of the next Gas Day.
[GRAPHIC] [TIFF OMITTED] TP01AP14.002

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

    \56\ Source: Velocity Suite. Data covers 2012/13 winter for all
regions except SERC, which depicts 2011/12 winter. Figures 1 and 2
were created with data from Ventyx's Energy Velocity software suite,
which makes available a dataset of total hourly load for all North
American ISOs and RTOs, and total hourly historical demand for
certain non-ISO/RTO planning areas. From these datasets, Commission
staff isolated data relating to the regions shown above, and focused
on a ``winter'' period of December 2012, January 2013, and February
2013 (except where noted by an asterisk). Each line represents the
average hourly load during said winter period for non-holiday
weekdays and is normalized to the average peak load for that period
by dividing by each line's maximum value.

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

[GRAPHIC] [TIFF OMITTED] TP01AP14.003

    The Commission recognizes that moving the start of the Gas Day to
4:00 a.m. CCT may result in increased costs to mitigate potential
safety issues associated with employees conducting manual operations in
the dark.\58\ However, it is unclear the frequency with which those
circumstances occur.\59\ On balance, the Commission finds that the
overall benefits to both industries of moving the Gas Day earlier so
that the morning ramp period for gas-fired generators and other gas
consumers is included in a single Gas Day outweigh the potential for
increased costs that may be incurred. In addition, as discussed below,
we are also proposing changes in the intraday nomination cycles, which
should minimize concerns expressed by NGSA and others that an earlier
start to the Gas Day may adversely affect the ability of shippers to
balance their gas flows by the next Gas Day. Both industries should
consider whether modifications to this proposal could reduce overall
costs without unduly jeopardizing coordination between the industries.
---------------------------------------------------------------------------

    \57\ Source: Velocity Suite. Data covers 2012/13 winter for
regions except DSW and NWPP, which depict 2011/12 winter.
    \58\ NGSA Comments, Docket No. AD12-12-000, at 10 & n.7 (filed
July 16, 2013).
    \59\ While NGSA states that there are situations during the
normal course of business in which a producer may need to make
manual adjustments to divert gas from one pipeline to another, it
does not state how often such adjustments are required or the extent
to which those adjustments would need to be performed at the start
of the Gas Day. NGSA Comments, Docket No. AD12-12-000, at 10 & n.7
(filed July 16, 2013).
---------------------------------------------------------------------------

C. Natural Gas Transportation Timely Nomination Cycle

1. Background and Issues
    41. 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 shown in Table 1 above,
under the current NAESB WGQ Standard 1.3.2 and the Commission's
regulations,\60\ natural gas pipelines must offer pipeline shippers a
minimum of four nomination opportunities to schedule natural gas
transportation. Two of those standard nomination opportunities, the
Timely Nomination Cycle and the Evening Nomination Cycle, occur the day
before gas flows, while the other two nomination opportunities, Intra-
Day 1 and Intra-Day 2, are revising nominations the day of gas flow.
The Gas Day starts at 9:00 a.m. CCT and natural gas pipeline customers
are required to submit nominations for the Timely Nomination Cycle by
11:30 a.m. CCT.
---------------------------------------------------------------------------

    \60\ 18 CFR 284.12 (2013).
---------------------------------------------------------------------------

    42. As described above, 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.\61\ 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. Additionally, 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 and, in some cases, other system needs.
---------------------------------------------------------------------------

    \61\ SPP's Integrated Marketplace, including implementation of a
day-two market launched March 1, 2014. See Southwest Power Pool,
Inc., 144 FERC ] 61,224 (2013). For the purposes of describing SPP's
expected operation of its Integrated Marketplace in this order, we
will refer to SPP's most recently approved schedules that the
Commission accepted effective as of March 2014.
---------------------------------------------------------------------------

    43. The following table represents the times that bids must be
submitted and that the ISOs and RTOs post successful bids accepted in
their respective day-ahead markets. As demonstrated by Table 2, 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 for day-ahead natural gas
transportation nominations.

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

    44. The market for acquiring natural gas supply is most liquid on
weekday mornings between 8:00 a.m. and 9:00 a.m. CCT, prior to the
Timely Nomination Cycle deadline, and the majority of shippers place
nominations for next-day gas transportation service by the Timely
Nomination Cycle deadline.\62\ Commenters assert that although natural
gas supply can be purchased throughout the day through a limited
secondary market, there is a premium for natural gas supply and
interstate natural gas pipeline transportation capacity services
procured after the Timely Nomination Cycle.\63\ 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.
---------------------------------------------------------------------------

    \62\ November Staff Report at 31-32.
    \63\ Natural gas is traded in bilateral markets. Daily
transactions are mostly consummated in the morning hours before the
Timely Nomination Cycle deadline. The ability to find willing buyers
and sellers to act as counterparties of a commodity transaction is
greatest during these normal trading periods; the gas market is
``liquid'' during this time of day.
---------------------------------------------------------------------------

    45. The issue arising from the current timing of the Timely
Nomination Cycle is whether the electric markets are better served by
notifying gas-fired generators of their dispatch requirements before
the deadline for timely nominations or by allowing generators to
determine the most current gas prices before they must submit their
bids into the electric markets. Some generators prefer bidding into the
ISO and RTO markets after the Timely Nomination Cycle deadline so their
bids to supply electricity reflect the current natural gas prices,
whereas other generators want to know if they have been committed by
the ISO or RTO to operate before entering the market to obtain natural
gas supply and interstate natural gas pipeline transportation
capacity.\64\ Some ISOs and RTOs are concerned that when their markets
clear after the deadline for submitting nominations in the Timely
Nomination Cycle generators may not have procured gas and
transportation due to uncertainty with bids being accepted by the ISO/
RTO. This fuel uncertainty may result in reliability problems if these
generators ultimately cannot run as expected.\65\
---------------------------------------------------------------------------

    \64\ See, e.g., Calpine Corporation Comments, Docket No. AD12-
12-000, at 7 (filed Mar. 30, 2012) (``problems may occur when a unit
that has not been scheduled for dispatch is called upon after the
first day-ahead nomination period has passed.''); Equipower
Resources Corp. Comments, Docket No. AD12-12-000, at 3-4 (filed Mar.
30, 2012) (``natural gas-fired generator is forced to purchase and
nominate natural gas supplies before it knows whether its output
will clear the day-ahead market and be assigned a generation
commitment. . . . Consequently, a generator faces substantial risk
that it did not purchase the correct volume of natural gas,
potentially leaving it with a substantial surplus or deficiency of
natural gas'').
    \65\ PJM Comments, Docket No. AD12-12-000, at 5 (filed July 3,
2013); NYISO Comments, Docket No. AD12-12-000, at 3 (filed June 28,
2013).
---------------------------------------------------------------------------

    46. INGAA filed comments indicating a willingness to move the
Timely Nomination Cycle to 1:00 p.m. CCT to accommodate ISO and RTO
needs on the condition that the ISOs and RTOs reevaluate their
schedules for performing their market processes and committing
generators to ensure that generators will learn from their ISO or RTO
whether they will be dispatched before nominating for interstate
natural gas pipeline transportation service.\66\ INGAA contends that
the Timely Nomination Cycle, confirmation and scheduling process should
occur during normal business hours to ensure the availability of
counterparties necessary for the confirmation process. Consistent with
these comments, INGAA requests that the Timely Nomination Cycle,
including the confirmation and scheduling notification processes, be
completed no later than 5:00 p.m. CCT.\67\
---------------------------------------------------------------------------

    \66\ INGAA Comments, Docket No. AD12-12-000, at 3 (filed June
26, 2013).
    \67\ Id.
---------------------------------------------------------------------------

    47. NGSA similarly commented that any changes to the existing gas
operating schedule must provide sufficient time between the Timely
Nomination Cycle scheduling notification and the time that nominations
are required for the next available cycle.\68\ NGSA notes that it is
particularly critical that shippers not scheduled during the Timely
Nomination Cycle have time to secure alternative gas supply and
transportation arrangements during ordinary business hours. NGSA
further notes that after nominations are submitted the confirmation
process itself may require a series of time consuming communications,
and suggests that operators need a minimum of two hours to communicate
among all the relevant parties between the close of the Timely
Nomination Cycle and the time in which nominations are confirmed, and
possibly longer for instances in which interconnecting pipelines have
non-conforming nomination cycles. Like INGAA, NGSA stresses that the
confirmation deadline for the Timely Nomination Cycle must occur during
normal business hours.
---------------------------------------------------------------------------

    \68\ NGSA Comments, Docket No. AD12-12-000, at 7-8 (filed July
16, 2013).
---------------------------------------------------------------------------

2. Commission Proposal
    48. The Commission proposes to move the deadline for submitting
nominations in the Timely Nomination Cycle later than the current 11:30
a.m. CCT deadline, to 1:00 p.m. CCT, in order to provide sufficient
time for

electric utilities to complete their processes for selecting generating
resources to operate prior to this first, and most liquid, time in the
natural gas supply and interstate natural gas pipeline transportation
service markets. It appears that our objective of a later deadline for
submitting nominations in the Timely Nomination Cycle can be
accomplished without any other changes to the Timely Nomination Cycle
or Evening Cycle timelines, including the 4:30 p.m. CCT deadline for
the pipeline to provide notice of scheduled quantities. The three and a
half hour period from 1:00 p.m. CCT to 4:30 p.m. CCT is consistent with
INGAA and NGSA's comments that several hours are needed for pipelines
to confirm and provide scheduled quantities to shippers. However, the
industry can consider whether any revisions or changes are necessary to
accommodate a later Timely Cycle nomination deadline.
    49. To make sure that ISO and RTO market clearing processes will
sufficiently align with this later proposed nomination deadline for
submitting nominations in the Timely Nomination Cycle, the Commission
also is instituting a proceeding under section 206 of the Federal Power
Act (FPA) \69\ (in a contemporaneous order in Docket No. EL14-22-000 et
al.) to ensure that the ISOs and RTOs modify their day-ahead market
processes and scheduling such that generators will receive dispatch
instructions in sufficient time to be able to acquire natural gas and
transportation by the start of the Timely Nomination Cycle (as revised
in the instant proceeding) and to complete their supplemental
reliability dispatch in sufficient time for generators to use the
Evening Cycle. In addition, while the comments received by the
Commission in Docket No. AD12-12-000 mainly discuss the effect of such
a change on the ISO and RTO markets, a later Timely Nomination Cycle
deadline also should help ensure that gas-fired generation resources in
other regions are able to acquire interstate natural gas pipeline
transportation capacity and natural gas supply in time for day-ahead
commitments.\70\
---------------------------------------------------------------------------

    \69\ 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).
    \70\ See Pro Forma OATT Sec.  13.8 (firm day-ahead schedules
must be submitted by 10:00 a.m. local time).
---------------------------------------------------------------------------

    50. Under the current scheduling timelines, a gas-fired generator
in ISO and RTO markets that completes its scheduling after the Timely
Nomination Cycle must decide whether (a) to line-up supply and nominate
interstate natural gas pipeline transportation during the Timely
Nomination Cycle without knowing whether the gas-fired generator's
electric energy bid will subsequently clear the energy market; or (b)
to wait to see whether its bid clears the energy market, and then line-
up fuel supply and natural gas pipeline transportation in a later
nomination cycle. If a generator acquires natural gas and
transportation prior to learning whether it is dispatched, it runs the
risk of having to dispose of its natural gas supply and interstate
natural gas pipeline transportation capacity during the less liquid
Evening or Intra-Day nomination periods.\71\ However, if the generator
first waits to see if its bid clears the day-ahead market, it must try
and acquire natural gas and transportation during the less liquid
Evening or intraday gas transportation nomination cycles. In this
event, the generator runs the risk of potentially not being able to
find transportation capacity if the pipeline is fully scheduled.
---------------------------------------------------------------------------

    \71\ 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'').
---------------------------------------------------------------------------

    51. We recognize that gas-fired generators face commercial business
decisions that inform whether they prefer to bid into the day-ahead
electric markets before or after they have secured their gas supply and
transportation needs. There are also differences of opinion as to
whether electric scheduling should be completed prior to the submission
of interstate natural gas pipeline transportation nominations. Some
favor having the pipelines' Timely Nomination Cycle clear prior to
submission of bids into ISO/RTO markets, maintaining that gas-fired
generators will obtain the most accurate gas prices to inform their
energy bids into the organized markets. Others, however, maintain that
if electric market schedules clear first, gas-fired generators will
know by the Timely Nomination Cycle how much natural gas and interstate
natural gas transportation they need to procure and the generators will
have less need to obtain transportation and natural gas during less
liquid times.
    52. Taking these considerations into account, we are proposing that
the electric markets clear prior to the pipelines' Timely Nomination
Cycle. We conclude that moving the Timely Nomination Cycle later than
the current 11:30 a.m. CCT deadline, along with examining whether the
ISOs and RTOs should modify their day-ahead market processes, could
expand the options available to gas-fired generators. Currently, gas-
fired generators in some regions are not provided the opportunity to
buy natural gas and arrange natural gas transportation at a time when
they know the results of the day-ahead electric market and the natural
gas markets are most liquid. Gas-fired generators, therefore, must
either procure natural gas supply and transportation prior to knowing
whether they were committed or after the close of the Timely Nomination
Cycle, when the natural gas supply and transportation markets are less
liquid. Under our proposal, gas-fired generators would have the option
of arranging natural gas supply and transportation at the Timely
Nomination Cycle knowing the results of the day-ahead electric market.
In particular, this would forward the objective of minimizing
situations in which gas-fired generators, particularly those that opt
to procure natural gas supply and 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 system operation.
    53. Furthermore, as discussed above, a gas-fired generator's
inability to know whether its bid in the day-ahead market has been
selected prior to the deadline for the Timely Nomination Cycle may lead
to instances in which gas-fired generators must sell off excess natural
gas supply, procure more expensive natural gas supply, de-rate, or burn
more expensive fuels. We are concerned that any of these scenarios
could result in increased electricity costs and a shift away from the
least-cost mix of supply resources as determined by the ISO or RTO's
day-ahead dispatch and unit commitment. These circumstances could lead
to higher costs being passed on to wholesale customers. On the other
hand, if gas-fired generators know whether they were committed in the
day-ahead electric market prior to the Timely Nomination Cycle, these
generators 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 energy 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.
    54. We understand that moving the Timely Nomination Cycle to later
in the day may impose systems and administrative costs on other
interstate natural gas pipeline shippers. In balancing all of the
interests of the many affected customers, 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
natural gas industry will have sufficient time to complete the Timely
Nomination Cycle during normal business hours, as requested by INGAA
and NGSA, while electric transmission operators will be able to
complete their scheduling sufficiently prior to the Timely Nomination
Cycle to permit gas-fired generators to acquire natural gas and
pipeline capacity during the Timely Nomination Cycle. After considering
the potential effects of this proposal, the long-term benefits of
ensuring a better coordinated natural gas and electric industry appear
to warrant this change. The industries, however, should consider
whether a different timeline better fits their combined business needs.

D. Modified Intra-Day Nomination Timeline

1. Background and Comments Received
    55. In addition to the Timely and Evening Nomination Cycles,
pipelines currently must offer shippers at least two opportunities to
nominate natural gas during the day that gas is flowing. These
nomination opportunities are known as the Intra-Day 1 and Intra-Day 2
nomination cycles. The current nomination deadline for Intra-day 1 is
10:00 a.m. CCT on the current Gas Day, with confirmation at 2:00 p.m.
CCT, for gas flow at 5:00 p.m. CCT that same Gas Day, and the deadline
for Intra-day 2 nominations is 5:00 p.m. CCT on the current Gas Day
with confirmation and flow at 9:00 p.m. CCT that same Gas Day. As with
nominations made at the Timely or Evening Cycles, nominations for firm
service at the Intra-Day 1 cycle can ``bump'' an already scheduled
interruptible nomination. Pursuant to the ``No-Bump Rule,'' however,
nominations for firm service made at the Intra-Day 2 cycle cannot
``bump'' scheduled interruptible service.
    56. Some pipelines offer additional intraday nomination cycles or
other enhanced services.\72\ 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.\73\
These enhanced nomination opportunities are not standardized across the
nation, however, and therefore are not available to all shippers.
Consequently, for gas transactions that require transportation on more
than one pipeline, these additional intraday nomination opportunities
may have limited value because the pipelines without enhanced
nomination opportunities may not confirm the nominations. Thus, if not
all pipelines in the nomination chain offer additional nomination
opportunities, a shipper transporting gas on a pipeline that offers
such enhanced nominations may not be able to take advantage of that
opportunity, and therefore may not be able to schedule its capacity
until the next nation-wide nomination cycle.
---------------------------------------------------------------------------

    \72\ See, e.g., Texas Gas Transmission LLC., 137 FERC ] 61,093
(2011); Florida Gas Transmission Co., LLC, 141 FERC ] 61,161 (2012)
(order accepting pipeline proposal to add an Intra-day 3 Nomination
Cycle to accommodate anticipated flow changes for the final six
hours of the gas day).
    \73\ See, e.g., Tennessee Gas Pipeline Company, LLC's Tariff,
GT&C Section IV.2(e).
---------------------------------------------------------------------------

    57. A number of commenters \74\ suggested that the standard,
nation-wide nomination opportunities that are currently available may
not provide gas-fired generators or other shippers with sufficient
flexibility to adjust their nominations to respond to real-time changes
in their need for natural gas. These commenters requested that
additional, standardized intraday nomination opportunities be required
on interstate natural gas pipelines.
---------------------------------------------------------------------------

    \74\ See, e.g., APS Comments, Docket No. AD12-12-000, at 5
(filed Apr. 19, 2013), NYISO Comments, Docket No., AD12-12-000, at
3-2 (filed June 28, 2013) ISO-NE Comments, Docket No. AD12-12-000,
at 6 (filed July 5, 2013), Desert Southwest Pipeline Stakeholders
Comments, Docket No. AD12-12-000, at 14 (filed Jan. 31, 2014).
---------------------------------------------------------------------------

    58. For example, ISO-NE and NYISO suggest that the lack of
nomination opportunities impacts their ability to use gas-fired
generation capacity to respond to real time events.\75\ Specifically,
ISO-NE asserts that it is unable to anticipate which or when gas-fired
units will be able to respond to real time dispatch requests, and that
this uncertainty results in ISO-NE asking multiple units to come
online.
---------------------------------------------------------------------------

    \75\ ISO-NE Comments, Docket No. AD12-12-000, at 6-7 (filed July
7, 2013), NYISO Comments, Docket No. AD12-12-000, at 3 (filed June
28, 2013).
---------------------------------------------------------------------------

    59. In addition, APS and the Desert Southwest Pipeline Stakeholders
\76\ (DSPS) argue that gas-fired generators in their region typically
hold firm pipeline transportation capacity but cannot make full use of
that capacity to respond to a contingency that occurs during or after
their peak load period because of a lack of sufficient opportunities to
adjust nominations. According to APS and DSPS, the peak demand for
electricity in Arizona typically does not occur until approximately
5:00 p.m. Pacific Time, while the only intraday nomination deadlines
are 8:00 a.m. Pacific Time (Intra-Day 1) and the no-bump 3:00 p.m.
Pacific Time (Intra-Day 2).\77\ APS and DSPS maintain that firm
shippers should have superior rights to interruptible shippers and
should not be limited to bumping interruptible service only at 8:00
a.m. Pacific Time. APS and DSPS notes that they need to use gas-fired
generators to balance Variable Energy Resource production in the
Southwest. APS and DSPS state that during the extreme summer months
when capacity is often constrained, gas-fired electric utilities in the
Southwest routinely have to submit their final flow day nomination for
their gas requirements 2 to 9 hours before its system hits its peak
with 16 to 23 hours remaining in the current Gas Day. Accordingly, APS
suggests that, at a minimum, two additional intraday nomination cycles
be added; one bumpable cycle between the current Intra-Day 1 and Intra-
Day 2 cycles and another nomination opportunity after Intra-Day 2.\78\
NRG also supports the addition of a nomination cycle after Intra-day 2.
---------------------------------------------------------------------------

    \76\ The core members of the DSPS include The Arizona
Corporation Commission, Arizona Public Service Company, El Paso
Electric Company, New Mexico Gas Company, Inc., Public Service
Company of New Mexico, Salt River Project Agricultural Improvement
and Power District, Southwest Gas Corporation, and Tucson Electric
Power Company/UNS Gas, Inc.
    \77\ APS Comments, Docket No. AD12-12-000, at 4 (filed Apr. 19,
2013).
    \78\ Id. at 5-6.
---------------------------------------------------------------------------

    60. DSPS also proposes that the current NAESB nomination timeline
be modified to add an additional intraday nomination opportunity.\79\
DSPS proposes that the Intra-Day 1 cycle would continue to permit
bumping and maintain the current nomination deadline of 10:00 a.m. CCT
on the current Gas Day, but that Intra-Day 2 would provide an
additional bumping opportunity with a nomination deadline of 7:00 p.m.
CCT, with confirmation at

9:00 p.m. CCT, for gas flow at 10:00 p.m. on the current Gas Day. DSPS
also proposes a no-bump Intra-Day 3 cycle with a nomination deadline of
10:00 p.m. CCT, with confirmation at 1:00 a.m. CCT for gas flow at 1:00
a.m. on the current Gas Day. DSPS asserts that its proposal would
provide IT shippers with a final no-bump cycle that guarantees that an
IT shipper that is scheduled in Intra-Day 2 cannot be bumped in the
final cycle of the current Gas Day and would therefore have a minimum
of eleven hours of flow.\80\
---------------------------------------------------------------------------

    \79\ DSPS Comments, Docket No. AD12-12-000, at 28-29 (filed Jan.
31, 2014).
    \80\ DSPS Comments, Docket No. AD12-12-000, at 29 (filed Jan.
31, 2014).
---------------------------------------------------------------------------

    61. Tennessee Valley Authority (TVA) argues that the Commission's
No-Bump Rule creates an artificial barrier to firm service and should
be removed.\81\ TVA indicated that it has contracted for firm service,
including enhanced services for each of its gas-fired generation
facilities, but claims those services have limited value when
attempting to nominate capacity at an intraday cycle because the No-
Bump Rule allows interruptible transmission service to have priority
over firm service in the Intra-Day 2 nomination cycle.
---------------------------------------------------------------------------

    \81\ See, e.g., TVA Response, Docket No. AD12-12-000, at 3-4
(filed July 29, 2013). See also APS Comments, Docket No. AD12-12-
000, at 7-9 (filed Apr. 19, 2013).
---------------------------------------------------------------------------

    62. Several commenters, including INGAA, were open to the creation
of additional standard nomination cycles.\82\ They noted that, while
several pipelines offer services that provide additional flexibility,
these services and nomination opportunities are not standardized or
available to all shippers. INGAA requests, however, that gas flow for
any additional nomination cycles should occur at least eight hours
prior to the end of the Gas Day.\83\ NGSA commented that it is willing
to consider additional intraday nomination cycles provided that (1) the
No Bump Rule remains intact for any nomination opportunities after the
existing Intra-Day 2 cycle; (2) changes in nominations after business
hours are voluntary and mutually agreeable to all parties to the
transaction; (3) bumped parties are afforded sufficient time between
the pipeline's confirmation deadline and the next nomination deadline
to secure alternative supply and transportation arrangements; and (4)
consideration is given to upstream gas supply limitations and
producers' ability to respond to nomination changes.\84\ NGSA also
states that it supports individual pipeline efforts to offer enhanced
nomination cycles beyond the NAESB standardized schedule.
---------------------------------------------------------------------------

    \82\ INGAA Comments, Docket No. AD12-12-000, at 5 (filed June
26, 2013).
    \83\ INGAA Comments, Docket No. AD12-12-000, at 6 & n.6 (filed
June 26, 2013) (noting that such timing would be a ``natural
extension of the current NAESB nomination standards,'' and reasoning
that because the gas flow for the current Intra-Day 1 cycle is one
third of the way through the Gas Day, and the gas flow for the
Intra-Day 2 cycle is halfway through the Gas Day, that is seems
logical for gas flow for a third intraday opportunity to begin two-
thirds of the way through the Gas Day).
    \84\ NGSA Comments, Docket No. AD12-12-000, at 7 (filed July 16,
2013).
---------------------------------------------------------------------------

2. Commission Proposal
    63. To address concerns that the current standard, nation-wide
intraday nomination opportunities do not provide shippers--especially
natural gas-fired generators--with sufficient flexibility, the
Commission proposes to modify the current natural gas nomination
timeline so that in addition to the Timely and Evening nomination
cycles, shippers will have four intraday cycles to reschedule gas
rather than the existing two. The additional intraday nomination cycles
will maximize shippers' ability to make significant changes in their
intraday nominations, as well as provide firm shippers an additional,
bumpable late-afternoon nomination cycle. These proposed revisions will
provide gas-fired generators as well as other pipeline customers with
greater flexibility to revise their nominations to adjust to system
conditions and changes to load throughout the Gas Day. The last change
to the standardized intraday nomination schedule occurred in 1998, in
Order No. 587-G, and with the advancements in computer technology over
the last 15 years, pipelines today should be able to provide greater
nomination flexibility.\85\
---------------------------------------------------------------------------

    \85\ Order No. 587-G, FERC Stats. & Regs. ] 31,062 at 30,672.
---------------------------------------------------------------------------

    64. The timelines we propose below are based on the proposed
adoption of 4:00 a.m. CCT as the start of the Gas Day. The proposed
intraday nomination schedules seek to preserve a reasonable number of
hours between the intraday nomination periods and the end of the Gas
Day.\86\ This will provide shippers with reasonable opportunities to
reschedule gas based on the amount of contract demand or flow
remaining.\87\ While we propose nomination times below, we continue to
recognize that the natural gas and electricity industries are best
positioned to work out the details of how changes in scheduling
practices can most efficiently be made and implemented, consistent with
the policies discussed here. NAESB may also consider different
approaches to providing flexibility.\88\ The Commission proposes the
following new timeline for intraday nominations:
---------------------------------------------------------------------------

    \86\ The Appendix indicates the number of hours remaining in the
Gas Day for each of the proposed intraday nomination opportunities.
    \87\ As discussed earlier, supra at text accompany n.26,
intraday nominations are limited by the remainder of a shipper's
daily quantity relative to the remaining hours of the Gas Day. Under
the current standard nomination timeline, a 4:00 a.m. CCT start of
the Gas Day would have meant that shippers could only revise their
nomination at Intra-day 1 for an effective flow time of 5:00 p.m.
CCT by less than half of their remaining entitlements.
Comparatively, under the Commission's proposed nomination timeline,
shippers could revise their nomination at Intra-Day 1 for an
effective time of 12:00 p.m. CCT for up to 66 percent of their
entitlements.
    \88\ For example, NAESB could consider whether more frequent
nominations could be accommodated if all parties in the confirmation
chain scheduled electronically.
---------------------------------------------------------------------------

     Intra-Day 1. To accommodate the proposed move of the start
of the Gas Day from 9:00 a.m. CCT to 4:00 a.m. CCT, the proposed Intra-
Day 1 cycle would provide an early morning opportunity for shippers to
nominate gas with nominations submitted by 8:00 a.m. CCT and an
effective time of 12:00 p.m. CCT.
     Intra-Day 2. The proposed Intra-Day 2 cycle would replace
the current Intra-Day 1 mid-morning nomination cycle and would permit
bumping. We propose to move the current deadline for shippers to submit
gas nominations for delivery the same Gas Day from 10:00 a.m. CCT to
10:30 a.m. CCT. In addition, nominations would become effective at 4:00
p.m. CCT, rather than at 5:00 p.m. under the current standards.
     Intra-Day 3. The proposed Intra-Day 3 cycle would provide
an additional bumping opportunity for firm shippers, with nominations
submitted by 4:00 p.m. CCT, notice to bumped shippers would be provided
at 6:00 p.m. CCT, and the nomination would become effective at 7:00
p.m. CCT.
     Intra-Day 4: Intra-Day 4 would replace the current no-bump
cycle. We propose to move the current nomination deadline from 5:00
p.m. CCT to 7:00 p.m. CCT, which will provide interruptible shippers
bumped during the Intra-Day 3 cycle with one hour to reschedule bumped
service. The effective flow time for Intra-Day 4 would be at 9:00 p.m.
CCT.\89\
---------------------------------------------------------------------------

    \89\ The Commission at this time is not proposing specific
deadlines for upstream and downstream pipelines to confirm the
nominations for the revised intra-day timeline, but leaves such
determinations to the industry.
---------------------------------------------------------------------------

    65. The Commission's proposal to modify the current intraday
nomination timeline to provide four intraday nomination cycles, instead
of the existing two, will create additional national nomination
opportunities that would be available to all shippers, not just those
shipping on interstate pipelines that voluntarily allow more flexible
nomination opportunities.

Thus, the proposal would enhance scheduling flexibility for intraday
transactions that require transportation on more than one pipeline.
Further, the addition of standardized nationwide intraday nomination
opportunities should benefit all firm shippers and enhance gas-fired
generators' ability to respond to real time events by providing
additional opportunities for capacity procurement.
    66. The proposed addition of a new Intra-Day 1 early morning cycle
is consistent with the proposed change to the start of the Gas Day from
9:00 a.m. CCT to 4:00 a.m. CCT. Currently, gas flow for Intra-Day 1
starts one-third of the way, or eight hours, into the Gas Day.\90\ We
propose to retain that same time span between the newly proposed start
of the Gas Day and the flow of gas for Intra-Day 1 nominations that
will flow that same day.
---------------------------------------------------------------------------

    \90\ INGAA Comments, Docket No. AD12-12-000, at 6 & n.6 (filed
June 26, 2013).
---------------------------------------------------------------------------

    67. We propose to maintain a mid-morning bumpable intraday
nomination opportunity for shippers that need to respond to forecasted
changes in weather or other events occurring later than the early
morning cycle. We propose to move the nomination deadline one half hour
later from 10:00 a.m. CCT to 10:30 a.m. CCT and to move the effective
or gas flow time one hour earlier from 5:00 p.m. CCT to 4:00 p.m. CCT.
The gas flow time for this proposed Intra-Day 2 Cycle will be half way
through the proposed 4:00 a.m. to 4:00 a.m. Gas Day, and thus confirmed
nominations in our proposed Intra-Day 2 Cycle will flow for 12 hours,
as under the existing Intra-Day 2 Cycle.\91\ We are proposing that
nominations for this intraday cycle be submitted by 10:30 a.m., in
order to give pipelines two and a half hours to confirm those
nominations before the 1:00 p.m. deadline for day-ahead nominations to
be submitted in the Timely Nomination Cycle.
---------------------------------------------------------------------------

    \91\ Consistent with INGAA's comments, the Commission proposes
to adjust the Intra-Day 1 and Intra-Day 2 nomination cycles so that
they remain eight and twelve hours after the start of the proposed
gas flow day. See INGAA Comments, Docket No. AD12-12-000, at 5
(filed June 26, 2013).
---------------------------------------------------------------------------

    68. The new proposed late-afternoon Intra-Day 3 cycle that permits
bumping will provide firm shippers, including gas-fired generators,
with greater ability to use the reserved firm service for which they
are paying. Under the Commission's current regulations, pipelines must
give scheduling priority to an intraday nomination submitted by a firm
shipper over nominated and scheduled volumes for interruptible
shippers.\92\ The ability of firm shippers to make the most use of the
service for which they pay a monthly reservation charge is compromised
by their inability to bump interruptible service after the current
Intra-Day 1 nomination cycle. Over the last fifteen years, pipelines
have increasingly held firm shippers to much stricter tolerances on gas
flow, so that firm shippers may need additional intraday nomination
opportunities to maintain flow rates.\93\ Pipelines also have
increasingly held gas-fired generators' natural gas transportation
nominations to much stricter tolerances.\94\ In light of these changes,
the additional bumping nomination opportunity will help gas-fired
generators with firm service, and other firm shippers, realign their
nominations in accord with weather or other operational changes within
the Gas Day. West Coast shippers, in particular, are unable under the
current standards to use their firm service to adjust to system
conditions and load changes by making an intraday nomination after 8:00
a.m. Pacific Time if such nomination would bump scheduled interruptible
service. The proposed new Intra-Day 3 cycle, which is a 4:00 p.m. CCT
late-afternoon bump cycle, should provide firm shippers, even those on
the West Coast, with sufficient time to react to revised weather
forecasts and other demand changes and schedule needed quantities.
Under this proposal, pipelines would provide notice of bumping to
affected shippers at 6:00 p.m. CCT, and the nominations would become
effective at 7:00 p.m. CCT.
---------------------------------------------------------------------------

    \92\ 18 CFR 284.12(b)(1)(i)(A) (2013). Because we are proposing
to include in the regulations the standard nomination cycles which
specify when interruptible shippers' scheduled quantities can and
cannot be reduced, the first sentence of section 284.12(b)(1)(i)(A)
to which the text refers is no longer necessary and we propose to
remove it.
    \93\ See El Paso Natural Gas Co., 114 FERC ] 61,305, at P 29
(2006).
    \94\ See, e.g., Trailblazer Pipeline Co. LLC, 143 FERC ] 61,084
(2013) (Commission approved enhanced nomination service requiring
electronic flow measurement and flow control facilities). See also
Texas Gas Transmission Corp., Docket No. CP82-407-000, 2002 Annual
Report of Blanket Certificate Activities, http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=10463248.
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    69. The proposed Intra-Day 4 cycle will provide interruptible
shippers with an opportunity to reschedule bumped volumes after notice
of bumping in the new proposed Intra-Day 3 cycle.\95\ The deadline for
submitting nominations in the Intra-Day 4 cycle would be at 7:00 p.m.
CCT, one hour after notice of bumping in the Intra-Day 3 cycle. As NGSA
maintains, and as the Commission has previously recognized,
interruptible shippers need some stability in the nomination system. In
Order No. 587-G, the Commission accepted a consensus of the gas
industry, including both firm and interruptible shippers, and accepted
standards that provide that the last intraday nomination opportunity
would not permit bumping of interruptible service. In adopting this
standard, the Commission recognized that making the last intraday
nomination opportunity no-bump would provide stability to the
nomination system.\96\ We continue to recognize that such stability is
needed, and the proposed intraday nomination schedule we outline here
is intended to provide a reasonable balance between the interests of
firm and interruptible shippers. Maintaining the No-Bump Rule during
the proposed Intra-Day 4 cycle will provide such assurances for
interruptible shippers, while allowing bumping during the proposed new
Intra-Day 3 cycle will permit firm shippers to utilize the higher
priority service for which they are paying.
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    \95\ See Texas Gas Transmission, LLC, 137 FERC ] 61,093 (2011),
order on compliance, 138 FERC ] 61,176 (2012) (Texas Gas) (accepting
one hour advance notice to bumped interruptible shippers).
    \96\ Standards for Business Practices of Interstate Natural Gas
Pipelines, Order No. 587-G, (Apr. 23, 1998), FERC Stats. & Regs.,
Regulations Preambles July 1996-December 2000 ] 31,062 (1998), order
on rehg, Order No. 587-I, 63 FR 53565, 53569 (Oct. 6, 1998), FERC
Stats. & Regs., Regulations Preambles July 1996-December 2000 ]
31,067 (1998).
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    70. In summary, given the proposed 4:00 a.m. start of the Gas Day,
our proposed schedule for four intraday nomination opportunities
appears to provide a reasonable balance between the interests of firm
and interruptible shippers. The 4:00 p.m. CCT late-afternoon bump cycle
should provide firm shippers, even those on the West Coast, with
sufficient time to react to revised weather forecasts and other demand
changes. Interruptible shippers will be provided with advance notice
and an opportunity to reschedule bumped volumes, as is the case under
the current standards.\97\ However, as indicated above, the industry
should consider these proposals and determine if they can reach
consensus on revisions that they believe better fit the business
practices of the industries.
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    \97\ See Texas Gas, 138 FERC ] 61,176 (accepting one hour
advance notice to bumped interruptible shippers).
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E. Clarification Regarding the ``No-Bump'' Rule for Pipelines With
Enhanced Nomination Services

    71. As we have stated before, the NAESB nomination timelines
establish only the minimum requirements, and pipelines may propose
additional nomination opportunities that better fit

their own system needs.\98\ Many pipelines have implemented enhanced
nomination services for firm shippers, providing shippers additional
nomination opportunities. Some pipelines specifically developed these
services to provide gas-fired generation with the ability to effectuate
gas deliveries quickly to meet changing demand throughout the Gas Day
while managing such things as weather changes and the variable nature
of renewable supply sources.\99\ Other pipelines provide more than the
current four standard nomination times for all shippers.\100\
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    \98\ Standards for Business Practices for Interstate Natural Gas
Pipelines; Standards for Business Practices for Public Utilities,
Order No. 698, FERC Stats. & Regs. ] 31,251, at P 69 (2007).
    \99\ See Texas Gas, 138 FERC ] 61,176 at P 4.
    \100\ See e.g. Texas Eastern Transmission LP Tariff, 4.1,
Scheduling of Storage and Transportation Services, 1.0.0 (flexible
intraday nominations), Tennessee Gas Pipeline Tariff, Fourth Revised
Sheet No. 313 (hourly nomination changes).
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    72. The current NAESB WGQ Standard 1.3.2 provides that bumping is
not allowed during the Intraday 2 Nomination Cycle. In Texas Gas
Transmission, LLC, the Commission accepted an enhanced nomination
schedule with eleven additional nominations that permits interruptible
shippers to be bumped until the nomination deadline for the Intra-Day 2
cycle (currently 5:00 p.m. CCT), but provided preliminary notice of
bumping prior to 5:00 p.m. and permitted any bumped shipper to
renominate bumped volumes at the 6:00 p.m. CCT enhanced nomination
cycle or any of the subsequent enhanced nomination cycles.\101\
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    \101\ Texas Gas, 137 FERC ] 61,093, order on compliance, 138
FERC ] 61,176; Gulf South Pipeline Co. LP, 141 FERC ] 61,262 (2012).
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    73. Participants at the conferences noted that the interaction of
these enhanced nomination services with the No-Bump Rule was not clear.
We provide clarification below as to how the Commission policy would be
implemented under the proposals in this NOPR. Under the current NAESB
WGQ standards and the Texas Gas policy, pipelines may propose to bump
shippers up to 5:00 p.m. CCT as long as they provide notice and
renomination opportunities similar to those accepted in Texas Gas.
Under the revised intraday nomination timelines proposed here, the
Commission believes that pipelines offering enhanced nomination
services should be permitted to bump interruptible shippers at least
until the time when the bumping notice under the newly proposed Intra-
Day 3 schedule is provided (in the Commission's proposal 6:00 p.m.
CCT). The proposed Intra-Day 4 nomination cycle would guarantee that
any bumped interruptible shipper will have an opportunity to renominate
its bumped volumes at 7:00 p.m. If a pipeline proposes enhanced
nomination services that permit bumping of interruptible services after
6:00 p.m., the Commission will consider the proposal on a case-by-case
basis to determine whether such proposal provides an adequate
subsequent opportunity to renominate any bumped volumes.
    74. In addition, an issue has arisen with respect to the
interaction of enhanced nominations and WGQ Standard 1.3.39, which
provides that bumping affecting transactions on pipelines will occur at
grid-wide synchronization times only.\102\ Some of the pipelines
offering enhanced nomination services would have been unable to offer
such enhanced nomination services if they could not reduce the gas flow
of the bumped interruptible shipper on the same schedule as they
increase flow for the firm shippers.\103\ These proposals conflicted
with Standard 1.3.39 because they would have permitted all
interruptible shippers to be bumped at other than grid-wide nomination
periods. In these circumstances, the Commission accepted proposals (and
granted waivers of Standard 1.3.39) to permit bumping of interruptible
shippers at other than grid-wide nomination times when the pipelines
have proposed alternative opportunities for interruptible shippers to
renominate bumped volumes at the enhanced nomination periods.\104\
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    \102\ Under the current NAESB system, the daily grid-wide
synchronization times for scheduled flow are 9:00 a.m. CCT, 5:00
p.m. CCT, and 9:00 p.m. CCT. Standard 1.3.41.
    \103\ See Texas Gas, 137 FERC ] 61,093, order on compliance, 138
FERC ] 61,176; Gulf South, 141 FERC ] 61,262.
    \104\ See ANR Pipeline Co., 145 FERC ] 61,089 (2013); Gulf
South, 141 FERC ] 61,262 at P 33; Trans-Union Interstate Pipeline
L.P, et al., 141 FERC ] 61,167, at P 41 (2012) (granting waiver to
Texas Gas Transmission LLC).
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    75. The Commission finds the continuation of this approach with
respect to enhanced nomination proposals by pipelines reasonably
balances the interest of firm and interruptible customers by permitting
the firm shippers to utilize the rights for which they pay reservation
charges and by permitting interruptible shippers to renominate bumped
volumes as quickly as possible. NAESB should consider revisions to
Standard 1.3.39 and Standard 1.3.41 to reflect these policies to
alleviate the need for pipelines to seek waiver or make other filings
regarding Standard 1.3.39.\105\
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    \105\ Until such changes are adopted by the Commission,
pipelines intending that firm shippers be able to bump interruptible
service during enhanced nomination periods must include in their
tariff filings a revision to their incorporation by reference of the
NAESB standards indicating that this standard is not incorporated.
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F. Multi-Party Transportation Contracts

    76. The Commission is also proposing to revise its regulations to
require pipelines to offer multi-party transportation contracts, under
which multiple shippers can share interstate natural gas pipeline
capacity under a single service agreement. While some pipelines already
offer this option, the Commission does not currently require pipelines
to do so. Companies have indicated that providing more flexibility to
shippers to use their capacity, such as by allowing multiple parties to
share transportation service, might permit more efficient and effective
use of transportation capacity.
    77. The Commission's regulations require that all transfers of firm
pipeline capacity from one shipper to another shipper take place
pursuant to the capacity release program in section 284.8 of our
regulations to assure that such capacity transfers are transparent and
not unduly discriminatory.\106\ Utilizing capacity release to
effectuate sharing of capacity between entities makes sharing of
capacity less efficient due to the need to comply with the capacity
release posting and bidding requirements as well as the need for the
replacement shipper to enter into a contract with the pipeline for each
release. In recent years, however, the Commission has accepted several
pipeline proposals to offer multiple shippers the option of entering
into a single contract for transportation service, with a single agent
or asset manager managing the capacity under the contract.\107\ As
approved by the

Commission, this option permits several shippers to share the subject
capacity without the need to use the capacity release program to
transfer the capacity among themselves. In order to satisfy the
Commission's shipper-must-have-title policy, the pipelines proposed,
and the Commission accepted, tariff provisions ensuring that each
shipper under a multi-party service agreement agree to be jointly and
severally liable for all obligations of all shippers and the agent
under the single service agreement.\108\ The Commission has permitted
multi-party transactions even when the shippers under such an agreement
are not affiliated with one another.\109\
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    \106\ See Pipeline Service Obligations and Revisions to
Regulations Governing Self-Implementing Transportation and
Regulation of Natural Gas Pipeline After Partial Wellhead Decontrol,
Order No. 636, FERC Stats. & Regs. ] 30,939, at 30,416-20, order on
reh'g, Order No. 636-A, FERC Stats. & Regs. ] 30,950, at 30,554
(1992). See also Regulation of Short-Term Natural Gas Transportation
Services and Regulation of Interstate Natural Gas Transportation
Services, Order No. 637, FERC Stats. & Regs. ] 31,091, at 31,300
(2000).
    \107\ Southern Natural Gas Co., 124 FERC ] 61,145 (2008)
(pipeline modified Rate Schedule FT to allow a single contract
option for multiple shippers affiliated with a single agent or asset
manager); Florida Gas Transmission Co., LLC, 128 FERC ] 61,284
(2009), order on compliance filing, Docket No. RP09-922-001 (Nov.
17, 2009) (pipeline modified provisions of Rate Schedules FT and IT
to allow a single contract option for multiple shippers that have
designated a single agent on their behalf); Transcontinental Gas
Pipe Line Corp., Docket No. RP10-1099-000 (Sept. 14, 2010)
(delegated letter order) (pipeline modified provisions of Rate
Schedules IT, PAL and Pooling, and ICTS to allow a single contract
option for multiple shippers that have designated a single agent on
their behalf); Tennessee Gas Pipeline Co., L.L.C., 142 FERC ] 61,200
(2013) (pipeline modified provisions of Rate Schedules FT, IT and
PAL to allow a single contract option for multiple shippers that
have designated a single agent on their behalf).
    \108\ See, e.g., Southern, 124 FERC ] 61,145 at P 12. As the
Commission explained, multi-party agreements must include joint and
several liability to comply with the Commission's shipper-must-have-
title policy. Without joint and several liability, shippers under
the multi-party agreement that are not liable for the total charges
under the agreement would be in violation of the Commission's
shipper-must-have-title policy to the extent they used capacity in
excess of that for which they were liable to pay.
    \109\ See, e.g., Florida Gas Transmission Co., LLC, 126 FERC ]
61,055 (2009).
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    78. This contracting flexibility has been utilized by entities to
meet their collective load obligations in a more efficient manner. For
example, certain affiliated utilities of Southern Company, which have
long operated as an integrated public utility electric system through
the joint commitment and economic dispatch of their gas-fired
generating resources, have entered into a single interstate natural gas
pipeline transportation service agreement, with Southern Company
Services (their affiliated agent) arranging for the gas supplies used
in their generating facilities.\110\ Under this single transportation
service agreement, on any given day Southern Company Services can use
up to its overall contractual entitlement under the service agreement
to provide service to any one of its affiliated utilities.
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    \110\ See, e.g., Southern Natural Gas Co., Transmittal, Docket
No. RP01-205-016 (May 14, 2009); Southern, 124 FERC ] 61,145. The
affiliates were Alabama Power Company, Georgia Power Company, Gulf
Power Company, Mississippi Power Company, Savannah Electric and
Power Company and Southern Power Company.
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    79. The use of shared capacity can make the purchase of firm
pipeline capacity more affordable, including for gas-fired generators.
For example, a gas-fired generator could decide to defray its pipeline
capacity costs by sharing capacity among a number of generators or by
sharing capacity with a LDC that has differing peak needs for natural
gas transportation service. Similarly, an industrial plant, which has a
relatively constant need for gas when its plant is operating but which
has the flexibility to reduce its operations and gas usage on
relatively short notice, could arrange to share its capacity with
another shipper, such as a gas-fired generator, which only needs gas
during short intervals and which has less control over when it runs.
Permitting such entities to enter into a single contract with the
pipeline gives those entities the flexibility to choose contracting
partners with complementary needs for pipeline capacity and to enter
into an ongoing contractual relationship concerning how they will share
the capacity.
    80. In order to provide this contracting flexibility to shippers on
all interstate pipelines, the Commission proposes to revise Part 284 of
its regulations to require interstate natural gas pipelines that offer
firm transportation service under subpart B or G of Part 284 to allow
multiple shippers associated with a designated agent or asset manager
to be jointly and severally liable under a single firm transportation
service agreement, subject to reasonable terms and conditions.
Consistent with the multi-party contract tariff provisions the