FERC NOPR: Natural gas pipelines and electric utilities may share nonpublic information without ‘undue discrimination’ concerns

FERC on July 18 issued a notice of proposed rulemaking (NOPR) proposing to revise its regulations to authorize interstate natural gas pipelines and electric transmission operators to share nonpublic, operational information with each other for the purpose of promoting reliable service or operational planning on either the electric or natural gas systems.

The NOPR comes after FERC in 2012 held a series of technical conferences seeking information about natural gas-electric system coordination. Natural gas is being used more and more to meet electric needs.

“While entities from both industries have already begun efforts to improve coordination, further sharing of non-public, operational information between transmission operators could enhance system reliability and contingency planning in both industries,” FERC said in the NOPR.

Under the proposed changes, transmission operators would be permitted to share information dealing with “actual, anticipated, or potential effects” on the ability to provide electric and gas service, based on operators’ experience and understanding of the operational capability and customer demands on their respective systems.

In order for that information to be protected, disclosure of nonpublic information would be subject to a “no-conduit” rule that would prohibit subsequent disclosure to an affiliate or third party. FERC included this rule as some entities expressed reluctance to share more granular information for concerns about violating FERC’s prohibition on undue discrimination.

“For example, [the Interstate Natural Gas Association of America (INGAA)] stated that there is some risk that a pipeline could be subject to an allegation of undue discrimination in violation of section 4 of the Natural Gas Act (NGA) if it provides an electric transmission operator with non-public transmission information with respect to any transportation or sale of natural gas without contemporaneously disclosing that information to all other shippers or potential shippers,” FERC said in the NOPA. “MidAmerican and [the American Gas Association] also expressed concerns that the standards of conduct or the commission’s prohibition on ‘undue discrimination’ may present a real or perceived barrier to effective participation in certain table-top reliability exercises or emergency or system planning exercises among regional stakeholders.”

But the commission said sharing nonpublic information between utilities and natural gas pipelines for the purpose of promoting reliable service or operational planning is “reasonable and not unduly discriminatory or preferential.”

“Sharing of operational information between natural gas pipelines and electric transmission operators is akin to the sharing of operational information among interconnected parties,” FERC said. “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. 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.”

FERC therefore structured the proposed regulations to provide flexibility to individual transmission operators to determine what nonpublic operational information would promote reliable service on their systems, without fear of violating its prohibitions on undue discrimination and undue preference or fear of such an exchange being considered an unjust or unreasonable practice, the commission said.

“Notably, the commission is proposing a permissive approach to the sharing of non-public information,” FERC said.

FERC said it may revisit the need to require certain communications or information-sharing between transmission operators in the future, “to the extent this voluntary approach proves inadequate to promote reliable service or operational planning on natural gas pipelines and electric transmission systems.”

The commission is seeking comment on whether additional regulations are needed to require a generator to share information with its electric transmission operator to inform it of the possibility that natural gas service may be disrupted, and on whether the proposed rule should require that, to the extent the nonpublic, operational information exchanged between transmission operators involves customer-specific information (such as information about individual generators), the transmission operators include the customer as part of a three-way communication, FERC said.

The proposed revisions specifically would apply to Parts 38 and 284 of FERC’s regulations.

Comments on the NOPR are due 30 days after its July 18 publication in the Federal Register. 

About Rosy Lum 525 Articles
Rosy Lum, Analyst for TransmissionHub, has been covering the U.S. energy industry since 2007. She began her career in energy journalism at SNL Financial, for which she established a New York news desk. She covered topics ranging from energy finance and renewable policies and incentives, to master limited partnerships and ETFs. Thereafter, she honed her energy and utility focus at the Financial Times' dealReporter, where she covered and broke oil and gas and utility mergers and acquisitions.