FERC Approves ISO-NE Information Sharing with Pipelines on Interim Basis

On Wednesday, January 23, 2013, FERC conditionally accepted ISO New England Inc.’s (“ISO-NE”) proposed revisions to its Information Policy, which allows ISO-NE to share confidential, generator-specific data with certain interstate natural gas pipeline operators. Notably, FERC ordered that the Information Policy is only effective from January 24, 2013 through April 30, 2013. Additionally, FERC required that ISO-NE submit a compliance filing within thirty days of the order, to reflect the following limitations regarding the Information Policy:

  • Information regarding specific generators will only be shared in instances when ISO-NE’s staff has determined it is operationally necessary;
  • Information regarding specific generators will only be shared with the pipelines that serve that generator directly, or that serve a local distribution company that serves the specific generator; and
  • ISO-NE must provide a summary of any disclosed confidential information to the affected generators within forty-eight hours of disclosure.

ISO-NE originally submitted proposed revisions to its Information Policy in November of last year. In its original filing, ISO-NE added provisions that would allow ISO-NE to share forecasted schedules, as well as the real-time output, of specific gas-fired generators with the operating personnel of interstate natural gas pipeline companies serving New England. ISO-NE stated that the additional information would assist FERC’s goal of increased coordination between natural gas and electricity markets and would enhance both reliability and market efficiency.

In addition, ISO-NE’s proposed revisions included a pro forma Non-Disclosure Agreement (“NDA”) that provided confidential protections for the shared data. However, ISO-NE also included a “No Third-Party Beneficiaries” clause in the NDA, which states “The Parties do not confer any rights or remedies upon any person other than the Parties to this Agreement and their respective successors and permitted assigns.” Inclusion of such a clause was a major point of contention among generators who sought third party beneficiary status in order to be able to enforce the NDA against a pipeline for improperly sharing information. According to FERC’s order, ISO-NE stated that providing generators with third-party beneficiary status would “expose pipelines to unlimited liability” and the NDA as drafted provided adequate protection of the generators’ information.

On December 7, 2012, FERC issued an order accepting the changes, with a five month suspension period, and setting the matter for settlement procedures. According to FERC’s order, the settlement proceedings were quickly terminated when it became clear that the parties would be unable to reach agreement on the matter. Days later, ISO-NE filed a request for rehearing and clarification of the December 2012 order, and sought expedited review in order to begin sharing the proposed information without delay. ISO-NE cited heightened, emergency reliability-related concerns this winter, including potential reduced capability from certain liquefied natural gas (“LNG”) facilities.

In response, FERC issued its most recent order, denying rehearing of the December 2012 order, clarifying that under its regulations, exchanges of critical information are permitted, and stating that “in light of the unique facts and circumstances before us, including ISO-NE’s statements concerning LNG supplies to New England, we will accept the Information Policy Changes on an interim basis,” subject to the limitations described above. FERC further explained that, “[o]ur action here is intended to address the immediate reliability-related concerns for this winter, while providing further opportunity for review of the Information Policy and the NDA accepted on a temporary basis here.”

To view a copy of the order, click here.