Standards For Business Practices Of Interstate Natural Gas Pipelines

AGENCY:

Federal Energy Regulatory Commission.

ACTION:

Final rule; Order Granting Clarification.

SUMMARY:

The Federal Energy Regulatory Commission is granting clarification of Order No. 587-L (65 FR 41873), which established November 1, 2000, as the date by which pipelines are required to comply with the regulation requiring them to permit shippers to offset imbalances on different contracts held by the shipper and to trade imbalances. (18 CFR 284.12(c)(2)(ii)). The order clarifies that pipelines on which shippers do not incur imbalances and are not subject to imbalance penalties need not implement imbalance trading on their systems.

DATES:

Pipelines seeking an exemption from the imbalance trading requirement must file within 15 days of the order to show why they should not be required to implement imbalance trading.

ADDRESSES:

Federal Energy Regulatory Commission, 888 First Street, NE., Washington DC 20426.

FOR FURTHER INFORMATION CONTACT:

Michael Goldenberg, Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 208-2294.

Marvin Rosenberg, Office of Markets, Tariffs, and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 208-1283.

Kay Morice, Office of Markets, Tariffs, and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 208-0507.

SUPPLEMENTARY INFORMATION:

Before Commissioners: James J. Hoecker, Chairman; William L. Massey, Linda Breathitt, and Curt Hebert, Jr.

Order Granting Clarification

Issued September 28, 2000.

Iroquois Gas Transmission System, L.P. (Iroquois) and Michigan Gas Storage Company (Michigan) filed requests for clarification or rehearing of Order No. 587-L. Order No. 587-L established November 1, 2000 as the date by which pipelines are required to implement section 284.12(c)(2)(ii) of the Commission's regulations requiring pipelines to implement imbalance netting and trading on their systems. Pipelines are required to file tariff sheets to implement imbalance trading in sufficient time for the tariff changes to become effective November 1, 2000.

Iroquois and Michigan request clarification that pipelines on which shippers do not incur imbalances and are not subject to imbalance penalties are not required to implement imbalance trading on their systems. Iroquois and Michigan state that, in Order No. 637-A, the Commission determined that pipelines without imbalance penalties would not be required to offer imbalance management services, and contend that the same rationale should apply to imbalance trading.

The Commission agrees that pipelines on which shippers do not incur imbalances and are not subject to imbalance penalties need not implement imbalance trading on their systems. The purpose of requiring imbalance trading was to establish a mechanism by which shippers can avoid imbalance charges. If shippers cannot incur imbalances, then shippers do not need to trade imbalances.

However, the Commission cannot make a determination in a generic rulemaking proceeding as to whether the circumstances on an individual pipeline permit an exemption from the requirement to provide imbalance trading. Shippers on the individual systems should be given the opportunity to respond to any request for such an exemption. Accordingly, pipelines that seek an exemption from the imbalance trading requirement must file within 15 days of this order showing why they should not be required to implement imbalance trading on their systems.

The Commission Orders

(A) The requests for clarification are granted, in part, as discussed in the body of the order.

(B) Pipelines seeking an exemption from the imbalance trading requirement are required to file within 15 days of the order to show why they should not be required to implement imbalance trading.