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August 05, 2013
Proposed data exchange for utilities and pipelines

The explosive growth of natural gas in the generation of electricity underlies a proposal from the Federal Energy Regulatory Commission (FERC) to amend rules to promote the exchange of more nonpublic, operational information between interstate pipeline operators and electric transmission operators.  The proposed changes address the concern that provision of information to transmission operators by pipeline operators would discriminate against other customers.  The proposal would also prohibit the recipient of the information from sharing it with third parties.

In May 2013, the North American Electric Reliability Corporation reported that over the past decade, natural gas-fired generation rose from 17 percent to 25 percent of U.S. power generation and is now the largest fuel source for generation capacity.  Moreover, 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.  Gas and electric utility sectors have begun to improve coordination to ensure that both systems operate safely and effectively for the benefit of their customers.  The FERC adds that further sharing of nonpublic, operational information could enhance system reliability and contingency planning in both industries.

Statutory prohibitions

Based on extensive discussions with members of the two sectors, the FERC found that the natural gas industry is concerned that provision of nonpublic information to transmission operators about the transportation or sale of natural gas without providing the same information to all other shippers or potential shippers may violate the prohibition in the Natural Gas Act against undue discrimination.  The possibility has also been raised that information sharing of the type contemplated by the FERC would violate similar prohibitions contained in the Federal Power Act. 

The FERC notes that the nondiscriminatory prohibitions are intended to ensure that similarly situated customers are not subject to disparate rates or terms and conditions of service.  According to the FERC, transmission operators are not similarly situated to other customers because they require access to nonpublic scheduling and other types of information from a variety of sources to help them ensure the reliability and integrity of the transportation and transmission systems.  In addition, natural gas pipelines are generally not customers of electric transmission operators.

“Both the natural gas pipelines and the electric transmission operators need to know whether scheduled transactions on their respective systems will be honored by the other,” says the FERC.  “This sharing of information is crucial to the effective operations of both systems and is not the type of private sharing of information with select customers at which the undue discrimination provisions of the respective statutes were targeted.”

Third parties

Regarding the potential use of nonpublic, operational data for purposes that do not address safety and reliability, the proposal includes a no-conduit requirement that prohibits all public utilities and natural gas pipelines, as well as their employees, contractors, consultants, or agents, from disclosing, or using anyone as a conduit for the disclosure of, nonpublic, operational information they receive to a third party; the prohibition would extend to the entity’s own “marketing function employees.”

Information examples
According to the FERC, types of information that would be shared include real-time and anticipated system conditions that impact natural gas transportation by changing near-term gas flows; actual and anticipated electric service interruptions to gas compressor locations; verification that there is sufficient pipeline operational capability available at a specific delivery point to change the quantity of natural gas delivered to the generator as identified by the electric transmission operator; actual and projected gas transportation restrictions to electric generators; and scheduled dates and duration of generator, pipeline, and transmission maintenance and planned outages.

The FERC is accepting comments on its proposal until August 26, 2013.

The proposal was published in the July 25, 2013, FR.

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