[Federal Register Volume 60, Number 12 (Thursday, January 19, 1995)]
[Proposed Rules]
[Pages 3783-3785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-1295]
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DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Part 284
[Docket No. RM95-5-000]
Release of Firm Capacity on Interstate Natural Gas Pipelines
January 12, 1995.
AGENCY: Federal Energy Regulatory Commission.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Federal Energy Regulatory Commission is proposing to amend
its capacity release regulations to permit firm shippers of natural gas
to negotiate prearranged releases of capacity for a full calendar month
without compliance with the Commission's advance posting and bidding
requirements. The amendment would make it easier to negotiate short-
term capacity release transactions and would ease the reporting burden
on industry.
DATES: Comments are due February 21, 1995.
ADDRESSES: An original and 14 copies of comments must be filed and
refer to Docket No. RM95-5-000. Comments should be addressed to: Office
of the Secretary, Federal Energy Regulatory Commission, 825 North
Capitol Street NE., Washington, DC 20426.
FOR FURTHER INFORMATION CONTACT:
Michael Goldenberg, Federal Energy Regulatory Commission, 825 North
Capitol Street NE., Washington, DC 20426, (202) 208-2294
Joseph Vasapoli, Federal Energy Regulatory Commission, 825 North
Capitol Street NE., Washington, DC 20426, (202) 208-0620.
SUPPLEMENTARY INFORMATION: In addition to publishing the full text of
this document in the Federal Register, the Commission also provides all
interested persons an opportunity to inspect or copy the contents of
this document during normal business hours in Room 3104, 941 North
Capitol Street NE., Washington DC 20426.
The Commission Issuance Posting System (CIPS), an electronic
bulletin board service, provides access to the texts of formal
documents issued by the Commission. CIPS is available at no charge to
the user and may be accessed using a personal computer with a modem by
dialing (202) 208-1397. To access CIPS, set your communications
software to 19200, 14400, 12000, 9600, 7200, 4800, 2400, 1200 or
300bps, full duplex, no parity, 8 data bits, and 1 stop bit. The full
text of this document will be available on CIPS for 60 days from the
date of issuance in ASCII and WordPerfect 5.1 format. After 60 days the
document will be archived, but still accessible. The complete text on
diskette in WordPerfect format may also be purchased from the
Commission's copy contractor, La Dorn Systems Corporation, also located
in Room 3104, 941 North Capitol Street NE., Washington DC 20426.
Notice of Proposed Rulemaking
January 12, 1995.
In Order No. 636,\1\ the Federal Energy Regulatory Commission
(Commission) established a mechanism under which firm holders of
capacity could release unneeded capacity they held on interstate
pipelines to other shippers needing that capacity. The Commission is
proposing to amend one provision of its capacity release regulations,
Sec. 284.243(h), to extend to one month the time period for which
shippers can release firm capacity without having to comply with the
Commission's advance posting and bidding requirements. The current
regulations restrict this ability to less than one calendar month.
\1\Pipeline Service Obligations and Revisions to Regulations
Governing Self-Implementing Transportation; and Regulation of
Natural Gas Pipelines After Partial Wellhead Decontrol, 57 FR 13267
(Apr. 16, 1992), III FERC Stats. & Regs. Preambles para. 30,939
(Apr. 8, 1992), order on reh'g, Order No. 636-A, 57 FR 36128 (Aug.
12, 1992), III FERC Stats. & Regs. Preambles para. 30,950 (Aug. 3,
1992), order on reh'g, Order No. 636-B, 57 FR 57911 (Dec. 8, 1992),
61 FERC para. 61,272 (1992), appeal re-docketed sub nom., Atlanta
Gas Light Company and Chattanooga Gas Company, et al. v. FERC, No.
94-1171 (D.C. Cir. May 27, 1994).
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I. Reporting Requirements
The proposed rule affects the information required to be maintained
on pipeline electronic bulletin boards (EBBs). The public reporting
burden for EBBs is contained in the information requirement FERC-
549(B), ``Gas Pipeline Rates: Capacity Release Information.'' If
adopted, the proposed rule would eliminate the need for the industry to
continue the current practice of using two capacity release postings (a
less-than-one month release coupled with a one-day release) to complete
a full month release transaction. Under the proposed rule, full month
releases could be accomplished with only one such posting. The
Commission estimates that approximately 1,500 paired release
transactions occur per year. At an average burden of one hour per
posting, the annual reduction in burden as a result of this rule is
approximately 1,500 hours.
A copy of this proposed rule is being provided to the Office of
Management and Budget (OMB). Interested persons may send comments
regarding the burden estimates or any other aspect of this collection
of information, including suggestions for further reductions of this
burden, to the Federal Energy Regulatory Commission, 941 North Capitol
Street, N.E., Washington, D.C. 20426 [Attention: Michael Miller,
Information Services Division, (202) 208-1415, FAX (202) 208-2425].
Comments on the requirements of this proposed rule may also be sent to
the Office of Information and Regulatory Affairs of OMB, Washington,
D.C. 20503 [Attention: Desk Officer for Federal Energy Regulatory
Commission (202) 395-6880, FAX (202) 395-5167].
II. Background
Under the regulations promulgated in Order No. 636, holders of firm
capacity on pipelines could reassign that capacity in two ways. The
releasing shipper could choose to have the pipeline post the notice of
release on the pipeline's Electronic Bulletin Board (EBB) so other
shippers could submit bids for that capacity, with the capacity awarded
to the highest bidder. Or, the releasing shipper could enter into a
pre-arranged deal with another shipper (replacement shipper) for the
release of capacity. For a pre-arranged release at less than the
maximum rate, the pipeline had to post the release on its EBB to permit
other shippers to bid for that capacity. If a shipper bid more than the
pre-arranged release rate, the designated replacement shipper was given
the opportunity to match that bid to retain the capacity.
In Order No. 636-A, several petitioners requested an exemption from
the bidding process for short-term pre-arranged release transactions,
contending that the requirements for advance posting and bidding are
too administratively difficult for such transactions and could inhibit
the efficient allocation of capacity.\2\ In response, the Commission
promulgated Sec. 224.243(h), permitting firm shippers to
[[Page 3784]]
release capacity to a designated replacement shipper for a period of
less than one calendar month without having to comply with the advance
posting and bidding requirements. Releases under this provision would
have to be posted no later than 48 hours after the release transaction
begins. In addition, the Commission prohibited parties in transactions
covered by this exception from rolling-over or granting extensions
without complying with the requirements for prior notice and bidding.
\2\Order No. 636-A, III FERC Stats. & Regs. Preambles at 30,553.
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The Commission adopted the less-than-one calendar month exception
to balance two objectives of the capacity release mechanism.\3\ The
exception served to promote a robust secondary market by ensuring that
parties could quickly and efficiently consummate short-term deals in
emergency situations, such as a power plant outage resulting in excess
capacity, without the administrative complications resulting from the
advance posting and bidding requirements. On the other hand, the
restriction to less-than-one calendar month was intended to ensure that
normal monthly transactions would have to comply with the advance
posting and bidding requirements to ensure open and non-discriminatory
access to the capacity release market. The Commission expressed
confidence that the pipelines could design capacity release procedures
to efficiently handle full calendar month transactions.
\3\See Order No. 636-A, III FERC Stats. & Regs. Preambles at
30,554; Order No. 636-B, 61 FERC at 61,994-95.
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The capacity release system has now been in effect for a full year
and the Commission has begun the process of evaluating the system's
operation. In the course of this review, the staff of the Commission
has conducted informal discussions about the operation of the capacity
release system and possible changes or modifications to improve the
system with all major segments of the gas industry, including
pipelines, local distribution companies, marketers, producers, end-
users, and others interested in the capacity release market, such as
companies developing third-party bulletin boards.
III. Discussion
The Commission is now proposing to amend Sec. 284.243(h) to extend
the short-term release exception from less than one calendar month to a
full calendar month. The revision would permit firm shippers to
negotiate pre-arranged releases for a full calendar month without
having to comply with the advance posting and bidding requirements.
During the course of staff's review of the capacity release system,
industry participants overwhelmingly recommended that the less-than-one
calendar month exception be modified to a full calendar month. They
argued that the industry generally conducts its gas purchases on a
monthly basis, so that customers requiring capacity need to acquire a
full month's capacity. They further pointed out that most monthly
transactions occur during a very compressed time period known as bid
week and that this time pressure requires that shippers be able to
obtain released capacity quickly with the certainty that the deal will
go through as negotiated.
As a result, the industry has developed a practice of designing so-
called ``29/1 day'' deals to arrive at full month releases. Under this
practice, shippers release capacity under the Sec. 284.243(h) exception
for 29 days (or less than one calendar month) and then post a release
offer for bidding for the remaining day of the month. This practice
ensures that the designated replacement shipper can obtain a full
month's capacity, since rarely do other shippers want to purchase
capacity for one day or the one-day prearranged deal is posted at the
maximum rate. While this procedure does permit full month releases, the
industry participants claimed that posting for one day is
administratively cumbersome. They pointed out that the 29/1 day deals
require two EBB postings, the consummation of a second contract with
the pipelines, and the need for two bills. Pipelines similarly have
sought waivers of the Commission's regulations to change the definition
of short-term prearranged releases to one full calendar month to
eliminate the administrative burdens associated with double release
requests.4
\4\Natural Gas Pipeline Company of America, 67 FERC para. 61,385
at 62,316-17 (1994) (Commission denied the requests because it
wanted to ensure that changes to the capacity release system were
uniform for all pipelines).
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Based on the seeming unanimity of support for extending the short
term exception to one full calendar month, the Commission is proposing
to make this change. This revision should promote a more effective
capacity release market because it will better comport with the
industry's purchasing practices and will provide the speed and
certainty needed for one month transactions, without entailing the
administrative burdens inherent in the 29/1 day deals.
The Commission's original reason for restricting the short-term
exception to less-than-one calendar month deals was to limit the
exception to emergency situations, so as to maximize the open bidding
for capacity. The Commission believed at the time that the pipelines'
posting and bidding procedures could be designed to permit normal one-
month transactions. However, the widespread use of 29/1 day deals
demonstrates that bidding for one month deals is not taking place, and
any attempt to limit or restrict the 29/1 practice in order to further
promote bidding would seem only to create further inefficiencies. On
balance, therefore, the greater speed and efficiency made possible by
the elimination of the less-than-one calendar month restriction appears
to outweigh any potential loss from the elimination of the advance
posting and bidding requirements. The Commission and the industry will
still be able to monitor one month deals for adherence to the
Commission's policies against undue discrimination because all deals
will be posted on the pipelines' EBBs within 48 hours.
Given the apparent broad support for changing the short term
exception, the Commission is proposing to make this one change at this
time so it can be implemented as quickly as possible. This, however, is
not the end of the Commission's inquiry. The Commission still is
considering further adjustments to the capacity release mechanism.
IV. Environmental Analysis
The Commission is required to prepare an Environmental Assessment
or an Environmental Impact Statement for any action that may have a
significant adverse effect on the human environment.5 The
Commission has categorically excluded certain actions from these
requirements as not having a significant effect on the human
environment.6 The action taken here falls within categorical
exclusions provided in the Commission's regulations.7 Therefore,
an environmental assessment is unnecessary and has not been prepared in
this rulemaking.
\5\Order No. 486, Regulations Implementing the National
Environmental Policy Act, 52 FR 47897 (Dec. 17, 1987), FERC Stats. &
Regs. Preambles 1986-1990 para. 30,783 (1987).
\6\18 CFR 380.4.
\7\See 18 CFR 380.4(a)(2)(ii), 380.4(a)(5).
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V. Regulatory Flexibility Act Certification
The Regulatory Flexibility Act of 1980 (RFA)8 generally
requires a description
[[Page 3785]]
and analysis of final rules that will have significant economic impact
on a substantial number of small entities. Since the proposed
regulations do not increase the burdens on any companies or entities,
they will not have a significant impact on small entities. Pursuant to
section 605(b) of the RFA, the Commission hereby certifies that the
regulations proposed herein will not have a significant impact on a
substantial number of small entities.
\8\5 U.S.C. 601-612.
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VI. Information Collection Requirement
OMB regulations require approval of certain information collection
requirements imposed by agency rules.9 The information
requirements affected by this proposed rule are in FERC-549B, ``Gas
Pipeline Rates: Capacity Release Information'' (1902-0169). The
Commission is issuing the proposed rulemaking including the information
requirements to carry out its regulatory responsibilities under the
Natural Gas Act (NGA) and Natural Gas Policy Act (NGPA) to promote a
more effective capacity release market as instituted by the
Commission's Order No. 636. The Commission's Office of Pipeline
Regulation uses the data to review/monitor capacity release
transactions as well as firm and interruptible capacity made available
by pipelines and to take appropriate action, where and when necessary.
The collection of information is intended to be the minimum needed for
posting on EBBs to provide information about the availability of
service on interstate pipelines.
\9\5 CFR 1320.13.
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The Commission is submitting to the Office of Management and the
Budget a notification of the proposed revision to the collection of
information. Interested persons may obtain information on these
reporting requirements by contacting the Federal Energy Regulatory
Commission, 941 North Capitol Street NE., Washington, DC 20426
[Attention: Michael Miller, Information Services Division, (202) 208-
1415], FAX (202) 208-2425. Comments on the requirements of this rule
can be sent to OMB's Office of Information and Regulatory Affairs,
Washington, DC 20503 [Attention: Desk Officer for Federal Energy
Regulatory Commission (202) 395-6880, FAX (202) 395-5167].
VII. Comment Procedures
The Commission invites interested persons to submit written
comments on the matters proposed in this notice, including any related
matters or alternative proposals that commenters may wish to discuss.
An original and 14 copies of comments to this notice must be filed with
the Commission no later than February 21, 1995. Comments should be
submitted to the Office of the Secretary, Federal Energy Regulatory
Commission, 825 North Capitol Street NE., Washington, DC 20426, and
should refer to Docket No. RM95-5-000.
All written comments will be placed in the Commission's public
files and will be available for inspection in the Commission's Public
Reference Room at 941 North Capitol Street NE., Washington, DC 20426,
during regular business hours.
List of Subjects in 18 CFR Part 284
Continental shelf, Natural gas, Reporting and recordkeeping
requirements.
By direction of the Commission.
Lois D. Cashell,
Secretary.
In consideration of the foregoing, the Commission proposes to amend
Part 284, Chapter I, Title 18, Code of Federal Regulations, as set
forth below.
PART 284--CERTAIN SALES AND TRANSPORTATION OF NATURAL GAS UNDER THE
NATURAL GAS POLICY ACT OF 1978 AND RELATED AUTHORITIES
1. The authority citation for Part 284 continues to read as
follows:
Authority: 15 U.S.C. 717-717w, 3301-3432; 42 U.S.C 7101-7532; 43
U.S.C 1331-1356.
2. In Sec. 284.243, the first sentence of paragraph (h)(1) is
revised to read as follows:
Sec. 284.243 Release of firm capacity on interstate pipelines.
* * * * *
(h)(1) A release of capacity by a firm shipper to a replacement
shipper for a period of one calendar month or less need not comply with
the notification and bidding requirements of paragraphs (c) through (e)
of this section. * * *
* * * * *
[FR Doc. 95-1295 Filed 1-18-95; 8:45 am]
BILLING CODE 6717-01-P