FERC Seeks Comments on Whether to Require Intrastate and Hinshaw Pipelines that Provide Interstate Services to Post Details of Transportation Transactions

On November 20, the Federal Energy Regulatory Commission (Commission) issued a Notice of Inquiry (NOI) to explore whether intrastate pipelines and Hinshaw pipelines providing interstate transportation and storage services should be required to post details of their transactions with shippers in a manner comparable to the posting requirements of interstate pipelines.  Comments are due 60 days after the NOI is published in the Federal Register.

Background

Intrastate pipelines are authorized to provide transportation and storage services in interstate commerce pursuant to Section 311 of the Natural Gas Policy Act (NGPA).  Hinshaw pipelines may provide similar interstate transportation services pursuant to blanket certificates issued under the Natural Gas Act.  Intrastate and Hinshaw pipelines providing such services must provide them on an open access, nondiscriminatory basis, but are not subject to the same reporting and posting requirements applicable to interstate pipelines providing open access transportation service under Part 284 of the Commission’s regulations.  For example, under Part 284, interstate pipelines are required to publicly post on their Internet websites basic information about their transactions with individual shippers.  Intrastate and Hinshaw pipelines providing interstate services are not subject to this requirement, but they must file semi-annual reports of their storage injection and withdrawal activity.

Recently, SG Resources Mississippi, L.L.C. (SGRM), an interstate storage provider with market-based rates, filed a request for waiver of Section 284.13(b)’s requirement that interstate pipelines post the rates charged in firm and interruptible transactions.  SGRM argued that the posting required the disclosure of commercially sensitive pricing information that gives prospective customers and competitors, such as intrastate pipelines providing Section 311 service and Hinshaw pipelines, an unfair competitive advantage.  Alternatively, SGRM requested that the Commission institute a rulemaking proceeding to address the potential elimination of these posting requirements insofar as they apply to interstate pipelines and storage providers with market-based rates.

The Commission’s Notice of Inquiry

The Commission denied the request for waiver and alternative petition for a rulemaking proceeding.  Instead, the Commission instituted the NOI to consider “(1) whether the differences in reporting requirements between interstate pipelines, and intrastate pipelines operating under NGPA Section 311 and Hinshaw pipelines have an adverse competitive effect on interstate pipelines, and (2) if so, whether the Commission should modify the posting requirements for Section 311 intrastate pipelines and Hinshaw pipelines in order to make them more comparable to the § 284.13(b) posting requirements for interstate pipelines.”

Specifically, the Commission requests comments on the following questions:

• What are the competitive impacts of the current differences in reporting requirements applicable to interstate pipelines and Section 311 and Hinshaw pipelines?  Are the competitive effects greater where the competing pipelines have market-based rates rather than cost-based rates?  Does competition between interstate pipelines and Section 311 and Hinshaw pipelines occur primarily in the context of storage services, or is there significant competition for transportation services?
• Should reporting requirements for interstate pipelines in § 284.13 be extended to all Section 311 and Hinshaw pipelines, or should they be required only for those with market-based rate authority?
• To what extent would market transparency be enhanced by extending § 284.13 reporting requirements to Section 311 and Hinshaw pipelines?
• Should reporting requirements applicable to interstate pipelines be extended only to larger Section 311 and Hinshaw pipelines, and if so, what measurements should be used to distinguish larger pipelines from smaller providers?
• Should all of the § 284.13 reporting requirements be imposed on Hinshaw and Section 311 pipelines?  If only some of them should be imposed, which ones are necessary to avoid adverse competitive effects and promote transparency?
• Would imposing reporting requirements on Section 311 and Hinshaw pipelines materially affect the amount of intrastate transportation and storage capacity available in the interstate market?
• Would a periodic report filed more frequently than semi-annually, but short of a daily posting requirement, provide the necessary level of price transparency to address the issues raised by SGRM and other storage developers?
• Should Section 311 and Hinshaw pipelines be prohibited from submitting their annual transportation and storage reports subject to a request for privileged treatment?  If so, does that provide the necessary level of price transparency to address the issues raised by SGRM?