Understanding NAESB and the FERC Version 3.1 Notice of Proposed Rule Making (NOPR)
As you may already be aware, FERC has proposed to adopt Version 3.1 of the NAESB Standards. Today we will provide an overview of the upcoming North American Energy Standards Board (NAESB) Version 3.1 Standards which have been proposed for adoption by the Federal Energy Regulatory Commission (FERC). Our organization has been involved with NAESB since its inception in 2002, and with the Gas Industry Standards Board (GISB), the precursor to NAESB, before that.
The changes in Version 3.1 are not nearly as dramatic as those in Version 3.0 which is the current standard. There are no new nomination cycles and no new or expanded gas-electric coordination measures. Many of the changes are data-centric – that is, they incorporate changes or additions to current NAESB data that appears on Customer Activities web sites and in EDI transactions. And many of these changes are “Business Conditional”, which means that they only are applicable if you, or your trading partners, decide to employ them. But before we dig into the technology and data changes and nomination paths, let’s look at the timing of NAESB Version 3.1.
FERC’s NAESB Version 3.1 Notice of Proposed Rule-Making (NOPR) was published September 1, 2018. This starts a 30-day public comment period, which ended on September 30, 2018. After the comment period has expired, the FERC will review any comments and subsequently issue an Order. Based on history, we can expect that the review period will last about five (5) months and the order will likely be issued around March 1, 2019. Implementation of Version 3.1 for all jurisdictional entities will be required four months after issuance of the Order, or about July 1, 2019. Additionally, compliance tariff filings will be due 90 days after the Order, or about June 1, 2019. If you are a FERC-regulated entity, it is best to start your planning now. In the next blog post, we will cover the technology changes in Version 3.1.
Rounding of EPSQ
With the addition of a fifth daily nom cycle in Version 3.0, the math required to calculate partial day flow amounts suddenly got tougher (What’s the decimal representation for 11/24ths?). To standardize the math, Version 3.1 clarifies that 7 decimal places should be used to calculate flow quantities.
Version 3.1 contains four changes to Customer Activities web sites. The first is an expansion of the length of the comment field. The second is an update of the flexibility for on-screen checkboxes and radio buttons. Third is an update to the allowable browser versions. And finally, the version of SSL used to secure Internet transactions has been updated.
NAESB 3.1 Nomination Paths
If you use – and understand – Pathed Nonthreaded nominations (a subject for another post), Version 3.1 changes the requirement to include the Shipper contract with nominations and scheduled quantities. Specifically, the contract is now Business Conditional in the unthreaded segment (it’s still required in the threaded segment). It’s tricky, but the change cleans up an issue that has been “worked around” for decades.
Since the creation of the initial NAESB standards, nominations (and related transactions) have contained only a single party reference – the service requester (read: shipper). Version 3.1 adds the option to include an “agent” field to make clear all the parties to the nomination.
Out of Balance
Shippers that trade pipeline imbalances may now have the option to specify additional info that helps define the trade time period, the quantity, and the contract for offered imbalances. The new standards also reinstate the ability for a counterparty to accept or reject the imbalance trade.
NAESB also added two optional date elements that allow the sender of measurement data to specify “uncorrected” (or initial) data, and add explanatory comments.
Finally, Version 3.1 incorporates an optional addition to capacity release transactions that allows the releasing shipper to waive the bidder’s credit requirements (if the pipeline tariff so allows).