posted on Friday, January 26, 2007 5:15 PM by Andrea Kells

FERC Proposes to Trim Applicability of Standards of Conduct to Both Electric Utility and Natural Gas Pipeline Energy Affiliates

In response to the court remand of FERC's Order No. 2004 standards of conduct as they apply to natural gas pipelines, a proposed rule to revise the standards of conduct has quickly followed FERC's interim rule on the subject, issued earlier this month.  The proposed rule would make permanent the interim rule.  The interim rule exempted from the standards of conduct restrictions on energy affiliates of natural gas pipelines. 

Application of the standards of conduct to energy affiliates of electric utilities was not challenged on appeal of Order No. 2004.  The proposed rule, however, suggests following the court's natural gas pipeline ruling and eliminating application to the energy affiliates of electric utilities as well as natural gas pipelines.  In the rulemaking proceeding, FERC will consider whether evidence of abuse or the potential for abuse involving electric utilities' energy affiliates justifies retaining the standards applicability to electric utility energy affiliates.  If FERC decides that this justification exists, then the standards will apply more broadly to electric utility operations than to natural gas pipelines. 

The proposed rule would make permanent provisions contained in the interim rule regarding other issues challenged on appeal but not addressed by the court.  These provisions include allowing risk management employees and lawyers to be shared between natural gas pipelines and their marketing affiliates, and requiring natural gas providers to post only those "discretionary acts" that waive adherence to tariff provisions.   

Finally, in an extension of FERC's Order 2004 policy that employees involved only in "bundled retail sales" were not considered "marketing affiliates" and thus not subject to the standards of conduct, the proposed rule would relax the standards of conduct as to public utilities' "planning" and "competitive solicitation" employees so that these employees can access non-public transmission information in connection with implementing state-mandated integrated resource planning and competitive solicitations.  The main focus of this proposal is on the electric transmission grid and issues of reliability and accurate long-term planning.