A.Communications, Coordination, and Information-Sharing
Gas and electric industry representatives participating in the technical conferences described a variety of actions that are being taken to improve communications and information sharing between their industries. However, participants at multiple conferences expressed concern that Commission rules and policies could be impeding further efforts to improve communication between the industries. Industry representatives asked that the Commission provide guidance regarding application of the Standards of Conduct and prohibitions on undue discrimination and preference in the context of gas-electric coordination. After reviewing actions already being taken across the regions, relevant Commission regulations and precedent are discussed and opportunities for further progress are highlighted below.
Groups have been formed in multiple regions to enhance communication and coordination across the gas and electric industries. For example, in the Northeast, ISO-NE, representatives of its stakeholders, the Northeast Gas Association, and pipelines serving the region have formed a working group/steering committee to foster improved communications within the region.29 NYISO formed an Electric Gas Coordination Working Group earlier this year,30 and in August the MISO announced a taskforce to
work on general gas-electric coordination issues.31 In the West, the Northwest Mutual Assistance Agreement aids coordination between utilities during gas-related emergency situations by maintaining updated emergency contact information and conducting semiannual planning meetings.32
Several regions have conducted emergency exercises to test inter-industry coordination and communication. In New York, pipelines, LDCs and generators conducted a “tabletop” reliability exercise under different loss of supply scenarios. Signatories to the Northwest Mutual Assistance Agreement periodically undertake emergency exercises that prepare participants to take timely and effective action when an emergency does occur. One pipeline in the Southwest hosted a mock gas supply emergency exercise in the fall of 2011, and another plans to host a similar mock emergency drill in 2013.
Responding to issues arising from outage coordination, CAISO amended its tariff to enhance communications on gas-related maintenance activities within California.33 The CAISO tariff now specifically authorizes the CAISO to share outage information with natural gas pipelines, with or without notice to the affected market participant. This includes, but is not limited to, the identity of individual natural gas-fired generation resources that are needed to support reliability of the CAISO balancing authority area in the event of a natural gas shortage, natural gas pipeline testing and maintenance, or other curtailment of natural gas supplies. ISO-NE has announced that it is considering revising its policies to allow sharing of real-time operational information with gas pipeline operators.34
At multiple conferences, however, gas and electric industry representatives questioned whether the FERC Standards of Conduct are impeding further efforts to improve communication between the industries. For example, one entity at the West technical conference raised the concern that information-sharing in an emergency situation could be a problem for companies where employees with operational knowledge are also wholesale merchant function employees. Many entities requested that the Commission provide clarity about what types of information can be shared and when.
Some pipelines and RTOs/ISOs also noted at the technical conferences that, although they make significant amounts of operational information publicly available, there is reluctance to share information on a more granular level because of concerns about violating statutory prohibitions against undue preference for any customer or customer class.35 So, for example, in response to one RTO/ISO’s comment that it was not able to interpret a pipeline’s posted outage information in terms of which specific generators would be affected, several pipelines expressed discomfort with going beyond what was publicly posted.36 Pipelines also noted that, in situations where information regarding pipeline capacity limitations has been posted, they typically will be queried on how much interruptible or secondary transportation is available, but they are not required to provide more specific information beyond their public postings.37
At several conferences, pipelines indicated a desire to receive timely information from RTOs/ISOs about the dispatch of the gas-fired generation fleet and the expected impacts after generation forced outages. Some RTOs/ISOs expressed interest in knowing whether the gas-fired units scheduled in the day-ahead market have the necessary gas supply and transportation arrangements in place. While several generators and RTOs/ISOs expressed concern about the market sensitivity of sharing such information, at least one generation operator stated that generation plant operating profiles are regularly communicated to the pipelines to which they are attached, which facilitates those pipelines’ ability to accommodate the generators’ needs for flexible services. Several entities noted that the Commission’s issuance of Order No. 698,38 which requires generators to provide pipelines with hourly gas burn estimates upon request, has improved gas-electric communications for normal operations.
Subsequent to the August conferences, staff conducted additional outreach to solicit more specific feedback from pipelines, RTOs/ISOs and generators about concerns with information sharing. Pipelines and RTOs/ISOs would like to exchange information that allows each to operate their systems more efficiently and reliably. Generally, this would include information about pipeline capacity scheduled (for generation) and available, individual generator’s expected burn rates, quick notice of significant changes in capacity or operations, and coordination of maintenance planning and scheduling.
One RTO suggested some form of a “one call” system so that it could quickly and efficiently inform all relevant gas industry participants supplying a particular generator (or a specific group of generators) of an unexpected change in electric system operations.39 Some natural gas-fired electric generators would like assistance in perfecting nominations for gas flow, especially later in the day after earlier nominations were rejected due to insufficient available pipeline capacity. Some generators are
concerned that information exchanged between a pipeline and an RTO/ISO may lead to unilateral action by either the pipeline or the RTO/ISO which could cause competitive harm to the generator, or may act as a conduit for third parties to gain access to information about a specific generator causing competitive harm to the generator in the marketplace.
In response to concerns expressed by industry representatives at the technical conferences and in subsequent outreach, staff takes this opportunity to provide its views regarding application of the Commission’s Standards of Conduct and statutory restrictions on undue preference or discrimination.40 The discussion of these issues at the conference was general in nature and, therefore, so is staff’s response. To the extent a natural gas pipeline or electric transmission operator has questions regarding the application of Commission rules or regulations in specific circumstances, it should seek appropriate guidance from the Commission or staff.41
Standards of Conduct
The Standards of Conduct govern communications between interstate natural gas pipelines and their affiliates that engage in marketing functions, and public utilities that own or operate electric transmission facilities and their affiliates that engage in marketing functions.42 In other words, the Standards of Conduct apply to communications only within the same organization (i.e., between the affiliated entities of a single corporate family). The Standards of Conduct do not apply to communications between two different natural gas and electric transmission organizations. By their terms, then, the Standards of Conduct do not limit communications between natural gas pipelines and electric transmission operators. Moreover, under section 358.1(c) of the Commission’s regulations, the Standards of Conduct do not apply to Commission-approved RTOs or ISOs.43
In those situations where the Standards of Conduct govern the disclosure of non-public transmission information between the transmission function and marketing function of an organization, the Commission’s regulations already permit communications during “emergency circumstances,” such as hurricanes or earthquakes, when information is needed to comply with reliability standards or to maintain/restore system operations.44 Two sections of the Standards of Conduct specifically authorize communications that may be necessary to address emergency conditions: (1) section 358.7(g)(2) authorizes transmission providers to suspend posting requirements in an emergency; and (2) section 358.7(h)(2) permits communication among employees needed to comply with reliability standards, restore system operations and provide for generation dispatch.45 These sections provide relief from the Standards of Conduct rules, including the Independent Functioning Rule, the No-Conduit Rule, and the Transparency Rule.46
Given that the Standards of Conduct do not govern communications or coordination between a natural gas pipeline and an electric transmission operator, and that exceptions to the Standards of Conduct already are provided to allow communications between the merchant function and transmission function of the same organization during emergencies, staff believes that further discussion with industry is necessary to address the continuing perception that the Standards of Conduct can act as a barrier to effective coordination of the gas and electric industries. In addition, Staff encourages industry representatives to contact staff with specific questions regarding application of the Standards of Conduct in the context of gas-electric coordination.
Undue Discrimination or Preference
Separate questions have been raised by industry representatives regarding whether sharing of certain types of information between natural gas pipelines or electric utilities could be viewed as unduly discriminatory or preferential, triggering questions regarding compliance with NGA section 4 and FPA section 205.47 Staff notes that a number of
communication protocols already have been adopted to facilitate the exchange of information between the industries and additional enhancements are being considered by many regions. For example, typical day-to-day practices within each industry provide for the sharing of transmission information among natural gas pipelines, and among electric transmission operators. Pipelines routinely exchange information with other pipelines and other upstream and downstream entities needed to confirm transportation nomination requests, and to coordinate flows between each other. Transmitting electric utilities routinely share eTag information, scheduled interchanges, and related operational data to ensure the safe and reliable transmission of electric power across a region.
As between industries, natural gas pipelines and electric generators have established protocols for sharing a significant amount of information pursuant to Order No. 698. Under the North American Energy Standards Board (NAESB) Wholesale Gas Quadrant (WGQ) Version 2.0 Business Practice Standard 0.3.12, a generator and its directly connected natural gas pipeline(s) “should establish procedures to communicate material changes in circumstances that may impact hourly flow rates.” These communications can help natural gas pipelines anticipate problems, devise solutions and take timely action to avoid operational problems.48 NAESB WGQ Version 2.0 Business Practice Standard 0.3.14 further provides that a pipeline “should provide Balancing Authorities and Reliability Coordinators” and generators with notification of operational flow orders and other critical notices. NAESB Wholesale Electric Quadrant (WEQ) Version 002.1 Business Practice Standard 11.1.4 states that RTOs and ISOs “should sign up to receive” these pipeline notices. These communications can help electric transmission operators better manage their systems by reallocating resources in response to changing conditions on natural gas pipelines.
As noted above, CAISO has begun sharing with natural gas pipelines information regarding outages of generation or transmission facilities within its footprint. Specifically, CAISO is authorized to provide outage information to natural gas pipelines for their use in managing, coordinating, planning, forecasting, and/or scheduling outages, maintenance, repairs, and/or curtailment of their gas transmission pipeline or storage systems.49 This allows CAISO and natural gas pipelines to coordinate outages and
maintenance of generation and transmission resources necessary to ensure the safe and reliable operation of the natural gas system.50 In recognition that the information exchanged can be sensitive, CAISO requires natural gas pipelines to execute non-disclosure agreements that define the purposes for which information may be used and affirms the pipeline’s commitments to follow the Commission’s Standards of Conduct with regard to further communication of the information.
Industry participants at multiple technical conferences expressed a desire for inter-industry communication of the sort currently engaged in by CAISO and natural gas pipelines. The CAISO tariff provisions and non-disclosure agreement serve as an example to other electric transmission operators seeking to implement communication protocols with natural gas pipelines. Other types of information may be useful for natural gas pipelines to share with electric transmission operators. For example, information regarding generators’ scheduled natural gas flow, alternatives where available pipeline capacity would allow deliveries to flow to natural gas-fired generators not yet scheduled, and future available capacity alternatives may assist electric transmission operators respond to changing system conditions more efficiently and maintain reliability of the electric transmission grid. A natural gas pipeline wishing to exchange non-public capacity-related information with electric transmission system operators without subjecting itself to possible future complaints of undue discrimination or preference might also look to the CAISO outage management model, with its non-disclosure agreement and reliance on the Commission’s Standards of Conduct to ensure that any information shared is appropriately used and protected.
As with concerns related to the Commission’s Standards of Conduct, staff appreciates that representatives from both the natural gas and electric industries seek additional comfort that enhanced communication and coordination practices will not violate statutory prohibitions on undue discrimination or preference. Staff believes that further discussion with industry is necessary to identify and address concerns in this area. Conference participants described a number of initiatives to improve inter-industry communication and coordination, including:
Gas and electric industry representatives participating in the technical conferences described a variety of actions that are being taken to improve communications and information sharing between their industries. However, participants at multiple conferences expressed concern that Commission rules and policies could be impeding further efforts to improve communication between the industries. Industry representatives asked that the Commission provide guidance regarding application of the Standards of Conduct and prohibitions on undue discrimination and preference in the context of gas-electric coordination. After reviewing actions already being taken across the regions, relevant Commission regulations and precedent are discussed and opportunities for further progress are highlighted below.Groups have been formed in multiple regions to enhance communication and coordination across the gas and electric industries. For example, in the Northeast, ISO-NE, representatives of its stakeholders, the Northeast Gas Association, and pipelines serving the region have formed a working group/steering committee to foster improved communications within the region.29 NYISO formed an Electric Gas Coordination Working Group earlier this year,30 and in August the MISO announced a taskforce to
work on general gas-electric coordination issues.31 In the West, the Northwest Mutual Assistance Agreement aids coordination between utilities during gas-related emergency situations by maintaining updated emergency contact information and conducting semiannual planning meetings.32
Several regions have conducted emergency exercises to test inter-industry coordination and communication. In New York, pipelines, LDCs and generators conducted a “tabletop” reliability exercise under different loss of supply scenarios. Signatories to the Northwest Mutual Assistance Agreement periodically undertake emergency exercises that prepare participants to take timely and effective action when an emergency does occur. One pipeline in the Southwest hosted a mock gas supply emergency exercise in the fall of 2011, and another plans to host a similar mock emergency drill in 2013.
Responding to issues arising from outage coordination, CAISO amended its tariff to enhance communications on gas-related maintenance activities within California.33 The CAISO tariff now specifically authorizes the CAISO to share outage information with natural gas pipelines, with or without notice to the affected market participant. This includes, but is not limited to, the identity of individual natural gas-fired generation resources that are needed to support reliability of the CAISO balancing authority area in the event of a natural gas shortage, natural gas pipeline testing and maintenance, or other curtailment of natural gas supplies. ISO-NE has announced that it is considering revising its policies to allow sharing of real-time operational information with gas pipeline operators.34
At multiple conferences, however, gas and electric industry representatives questioned whether the FERC Standards of Conduct are impeding further efforts to improve communication between the industries. For example, one entity at the West technical conference raised the concern that information-sharing in an emergency situation could be a problem for companies where employees with operational knowledge are also wholesale merchant function employees. Many entities requested that the Commission provide clarity about what types of information can be shared and when.
Some pipelines and RTOs/ISOs also noted at the technical conferences that, although they make significant amounts of operational information publicly available, there is reluctance to share information on a more granular level because of concerns about violating statutory prohibitions against undue preference for any customer or customer class.35 So, for example, in response to one RTO/ISO’s comment that it was not able to interpret a pipeline’s posted outage information in terms of which specific generators would be affected, several pipelines expressed discomfort with going beyond what was publicly posted.36 Pipelines also noted that, in situations where information regarding pipeline capacity limitations has been posted, they typically will be queried on how much interruptible or secondary transportation is available, but they are not required to provide more specific information beyond their public postings.37
At several conferences, pipelines indicated a desire to receive timely information from RTOs/ISOs about the dispatch of the gas-fired generation fleet and the expected impacts after generation forced outages. Some RTOs/ISOs expressed interest in knowing whether the gas-fired units scheduled in the day-ahead market have the necessary gas supply and transportation arrangements in place. While several generators and RTOs/ISOs expressed concern about the market sensitivity of sharing such information, at least one generation operator stated that generation plant operating profiles are regularly communicated to the pipelines to which they are attached, which facilitates those pipelines’ ability to accommodate the generators’ needs for flexible services. Several entities noted that the Commission’s issuance of Order No. 698,38 which requires generators to provide pipelines with hourly gas burn estimates upon request, has improved gas-electric communications for normal operations.
Subsequent to the August conferences, staff conducted additional outreach to solicit more specific feedback from pipelines, RTOs/ISOs and generators about concerns with information sharing. Pipelines and RTOs/ISOs would like to exchange information that allows each to operate their systems more efficiently and reliably. Generally, this would include information about pipeline capacity scheduled (for generation) and available, individual generator’s expected burn rates, quick notice of significant changes in capacity or operations, and coordination of maintenance planning and scheduling.
One RTO suggested some form of a “one call” system so that it could quickly and efficiently inform all relevant gas industry participants supplying a particular generator (or a specific group of generators) of an unexpected change in electric system operations.39 Some natural gas-fired electric generators would like assistance in perfecting nominations for gas flow, especially later in the day after earlier nominations were rejected due to insufficient available pipeline capacity. Some generators are
concerned that information exchanged between a pipeline and an RTO/ISO may lead to unilateral action by either the pipeline or the RTO/ISO which could cause competitive harm to the generator, or may act as a conduit for third parties to gain access to information about a specific generator causing competitive harm to the generator in the marketplace.
In response to concerns expressed by industry representatives at the technical conferences and in subsequent outreach, staff takes this opportunity to provide its views regarding application of the Commission’s Standards of Conduct and statutory restrictions on undue preference or discrimination.40 The discussion of these issues at the conference was general in nature and, therefore, so is staff’s response. To the extent a natural gas pipeline or electric transmission operator has questions regarding the application of Commission rules or regulations in specific circumstances, it should seek appropriate guidance from the Commission or staff.41
Standards of Conduct
The Standards of Conduct govern communications between interstate natural gas pipelines and their affiliates that engage in marketing functions, and public utilities that own or operate electric transmission facilities and their affiliates that engage in marketing functions.42 In other words, the Standards of Conduct apply to communications only within the same organization (i.e., between the affiliated entities of a single corporate family). The Standards of Conduct do not apply to communications between two different natural gas and electric transmission organizations. By their terms, then, the Standards of Conduct do not limit communications between natural gas pipelines and electric transmission operators. Moreover, under section 358.1(c) of the Commission’s regulations, the Standards of Conduct do not apply to Commission-approved RTOs or ISOs.43
In those situations where the Standards of Conduct govern the disclosure of non-public transmission information between the transmission function and marketing function of an organization, the Commission’s regulations already permit communications during “emergency circumstances,” such as hurricanes or earthquakes, when information is needed to comply with reliability standards or to maintain/restore system operations.44 Two sections of the Standards of Conduct specifically authorize communications that may be necessary to address emergency conditions: (1) section 358.7(g)(2) authorizes transmission providers to suspend posting requirements in an emergency; and (2) section 358.7(h)(2) permits communication among employees needed to comply with reliability standards, restore system operations and provide for generation dispatch.45 These sections provide relief from the Standards of Conduct rules, including the Independent Functioning Rule, the No-Conduit Rule, and the Transparency Rule.46
Given that the Standards of Conduct do not govern communications or coordination between a natural gas pipeline and an electric transmission operator, and that exceptions to the Standards of Conduct already are provided to allow communications between the merchant function and transmission function of the same organization during emergencies, staff believes that further discussion with industry is necessary to address the continuing perception that the Standards of Conduct can act as a barrier to effective coordination of the gas and electric industries. In addition, Staff encourages industry representatives to contact staff with specific questions regarding application of the Standards of Conduct in the context of gas-electric coordination.
Undue Discrimination or Preference
Separate questions have been raised by industry representatives regarding whether sharing of certain types of information between natural gas pipelines or electric utilities could be viewed as unduly discriminatory or preferential, triggering questions regarding compliance with NGA section 4 and FPA section 205.47 Staff notes that a number of
communication protocols already have been adopted to facilitate the exchange of information between the industries and additional enhancements are being considered by many regions. For example, typical day-to-day practices within each industry provide for the sharing of transmission information among natural gas pipelines, and among electric transmission operators. Pipelines routinely exchange information with other pipelines and other upstream and downstream entities needed to confirm transportation nomination requests, and to coordinate flows between each other. Transmitting electric utilities routinely share eTag information, scheduled interchanges, and related operational data to ensure the safe and reliable transmission of electric power across a region.
As between industries, natural gas pipelines and electric generators have established protocols for sharing a significant amount of information pursuant to Order No. 698. Under the North American Energy Standards Board (NAESB) Wholesale Gas Quadrant (WGQ) Version 2.0 Business Practice Standard 0.3.12, a generator and its directly connected natural gas pipeline(s) “should establish procedures to communicate material changes in circumstances that may impact hourly flow rates.” These communications can help natural gas pipelines anticipate problems, devise solutions and take timely action to avoid operational problems.48 NAESB WGQ Version 2.0 Business Practice Standard 0.3.14 further provides that a pipeline “should provide Balancing Authorities and Reliability Coordinators” and generators with notification of operational flow orders and other critical notices. NAESB Wholesale Electric Quadrant (WEQ) Version 002.1 Business Practice Standard 11.1.4 states that RTOs and ISOs “should sign up to receive” these pipeline notices. These communications can help electric transmission operators better manage their systems by reallocating resources in response to changing conditions on natural gas pipelines.
As noted above, CAISO has begun sharing with natural gas pipelines information regarding outages of generation or transmission facilities within its footprint. Specifically, CAISO is authorized to provide outage information to natural gas pipelines for their use in managing, coordinating, planning, forecasting, and/or scheduling outages, maintenance, repairs, and/or curtailment of their gas transmission pipeline or storage systems.49 This allows CAISO and natural gas pipelines to coordinate outages and
maintenance of generation and transmission resources necessary to ensure the safe and reliable operation of the natural gas system.50 In recognition that the information exchanged can be sensitive, CAISO requires natural gas pipelines to execute non-disclosure agreements that define the purposes for which information may be used and affirms the pipeline’s commitments to follow the Commission’s Standards of Conduct with regard to further communication of the information.
Industry participants at multiple technical conferences expressed a desire for inter-industry communication of the sort currently engaged in by CAISO and natural gas pipelines. The CAISO tariff provisions and non-disclosure agreement serve as an example to other electric transmission operators seeking to implement communication protocols with natural gas pipelines. Other types of information may be useful for natural gas pipelines to share with electric transmission operators. For example, information regarding generators’ scheduled natural gas flow, alternatives where available pipeline capacity would allow deliveries to flow to natural gas-fired generators not yet scheduled, and future available capacity alternatives may assist electric transmission operators respond to changing system conditions more efficiently and maintain reliability of the electric transmission grid. A natural gas pipeline wishing to exchange non-public capacity-related information with electric transmission system operators without subjecting itself to possible future complaints of undue discrimination or preference might also look to the CAISO outage management model, with its non-disclosure agreement and reliance on the Commission’s Standards of Conduct to ensure that any information shared is appropriately used and protected.
As with concerns related to the Commission’s Standards of Conduct, staff appreciates that representatives from both the natural gas and electric industries seek additional comfort that enhanced communication and coordination practices will not violate statutory prohibitions on undue discrimination or preference. Staff believes that further discussion with industry is necessary to identify and address concerns in this area. Conference participants described a number of initiatives to improve inter-industry communication and coordination, including:
- Development of communication protocols governing gas and electric maintenance-related outage coordination, suggested by MISO and pipeline and LDC members of the Northeast Gas Association;
- ISO-NE’s consideration of revised policies to allow sharing of real-time operational information with gas pipeline operators;
- The possibility of brief exchanges of pipeline and electric transmission provider control room operators, for cross-training purposes, as noted by PJM and a Mid-Atlantic pipeline;
- The development of a “one call” system to allow an RTO/ISO to inform relevant gas industry participants of unexpected changes in electric system operations;
- Enhancement of inter-industry communication and coordination during normal operating conditions under the Northwest Mutual Assistance Agreement; and,
- The use of tabletop exercises in multiple regions to examine different scenarios based on loss of supply.Staff will monitor progress being made on these and other initiatives, and provide guidance where possible to ensure that concerns regarding Commission rules and policies do not hinder industry progress.
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