July 19, 2013

On July 18, 2013, the Federal Energy Regulatory Commission “FERC” issued a Notice of Proposed Rulemaking “NOPR” in which it proposes to revise its regulations to authorize electric transmission providers and interstate natural gas pipelines (collectively, “transmission operators”) to share non-public, operational information, not just during emergencies, but on a day-to-day basis, with respect to operations, unplanned outages, and scheduled maintenance. The sharing of such information would be voluntary, and each transmission operator would determine what non-public information, if any, it would share with other transmission operators to promote reliability and operational planning. FERC stated that if the voluntary approach proves inadequate, it may revisit the need to require certain communications or information sharing between transmission operators.

This NOPR has its origin in early 2012, when the FERC instituted a proceeding to examine the increasing interdependence between the natural gas and electric industries and the need for improved coordination to ensure the safe and efficient operation of both energy sectors. FERC has recognized that one way to enhance coordination was through better communication and the sharing of operational information. However, some transmission operators expressed reluctance to share information routinely because of concerns that such conduct could violate statutory prohibitions against undue discrimination or preferences, or the FERC’s Standards of Conduct. Some operators asked FERC for guidance on whether the sharing of information among transmission operators was lawful and, if so, what types of information could be shared. This is particularly significant because natural gas is now the largest fuel source for the generation of electricity. Yet, gas-fired generators rely primarily on interruptible transportation for the delivery of this fuel supply. Therefore, better coordination through improved communication would go a long way to addressing the concerns of FERC and the industry about the reliability of gas-fired generators as a source of electric power. 

In the NOPR, FERC concluded that transmission operators are not similarly situated to other customers, and therefore, information sharing is reasonable and not unduly discriminatory or preferential under the Federal Power Act and Natural Gas Act. But FERC acknowledged that some vertically integrated transmission owners may have marketing function employees or affiliates that potentially could use operational transmission information to gain a competitive advantage. Therefore, the proposed regulations include a No-Conduit Rule that would prohibit the disclosure of any shared operational information to any affiliate or third party, as well as to marketing function employees.   

FERC did not propose the specific types of non-public operational information that the proposed rules would allow operators to share. Instead, it has requested comments from interested parties and the public on the scope of the information that may be shared. The Commission also recognized that the proposed revisions apply only to communications and shared information between interstate pipelines and electric transmission operators, and asked parties to comment on whether additional regulations are needed to require gas-fired generators to share necessary information with the electric transmission operators with which they interconnect. Comments are due on or before August 26, 2013. 

Please contact Michael Thompson or David Shaffer or call (202) 393-1200 if you have any questions or would like further information regarding this NOPR, or other natural gas or electric industry regulatory matters.