On April 16, 2015, FERC issued Order No. 809, “Coordination of the Scheduling Processes of Interstate Natural Gas Pipelines and Public Utilities,” in furtherance of its goal to improve the coordination of wholesale natural gas and electricity market scheduling in order to ensure the reliable and efficient operation of the nation’s natural gas pipeline and electric systems.  In issuing Order No. 809, FERC explained that as the nation increasingly relies on natural gas for electric generation, FERC has identified a mounting concern related to this growing gas-electric interdependence and a misalignment between the gas and electric operating days.

Order No. 809 follows a March 20, 2014 Notice of Proposed Rulemaking (“NOPR”) (see March 21, 2014 edition of the WER), which proposed to amend FERC’s rules relating to the scheduling of transportation service on interstate natural gas pipelines in order to (i) better coordinate with the scheduling practices of the electric industry and (ii) provide additional scheduling flexibility to all shippers on interstate natural gas pipelines.  Believing that the natural gas and electricity industries would be best able to work out the details of specifically how to harmonize the scheduling practices across industries, FERC provided the natural gas and electric industries time to work to develop consensus through the North American Energy Standards Board (“NAESB”).

Order No. 809 adopts two proposals submitted by NAESB: 1) to move the Timely Nomination Cycle deadline for scheduling gas transportation from 11:30 a.m. Central Clock Time (“CCT”) to 1 p.m. CCT, and 2) to add a third intraday nomination cycle during the gas operating day to help shippers adjust their scheduling to reflect changes in demand.  Importantly, FERC declined to adopt the NOPR proposal to move the 9 a.m. CCT start of the gas day to 4 a.m. CCT, concluding that the record did not justify changing the start time for the nationwide natural gas day.

Also on April 16, 2015, Commissioner Cheryl LaFleur issued a separate statement regarding Order No. 809, explaining that FERC will continue to work on the intersection of natural gas and electricity, stating that “beyond national issues such as scheduling, regional efforts should continue to address aspects of gas/electric coordination, particularly fuel assurance in competitive electric markets that are heavily or increasingly dependent on natural gas.  In particular, ISO-NE and PJM have undertaken market reforms to promote fuel assurance in their respective footprints, some of which are still pending before the Commission, and efforts are underway in New England to assess and address regional needs for natural gas infrastructure.  I will be closely following these efforts as they go forward.”

The Final Rule takes effect 75 days after publication in the Federal Register.  Further, 90 days after such publication, each ISO and RTO is required to proposes “tariff revisions to coordinate its day-ahead market with the natural gas pipeline scheduling changes adopted in the Final Rule, or to show cause why its existing scheduling practices need not be changed.”

A copy of the final rule is available here.