Troutman Sanders LLP: FERC Allows Non-public Information Sharing Between Gas Pipelines, Electric Utilities

Troutman Sanders LLP: FERC Allows Non-public Information Sharing Between Gas Pipelines, Electric Utilities

By Troutman Sanders LLP

On November 15, 2013, FERC issued Order No. 787, authorizing interstate natural gas pipelines and electric transmission operators to voluntarily share non-public, operational information with each other to promote grid reliability and operational planning.  In doing so, FERC stated that “[w]ith the increasing reliance on natural gas as a fuel for electric generation, ensuring robust communications between transmission operators in the electric and natural gas industries will help both systems operate reliably and effectively.”   

FERC initially proposed the authorizations accepted in Order No. 787 in order to provide significant flexibility to individual transmission operators to determine what non-public information would promote reliable service on their systems, without fear of violating FERC rules.  Specifically, FERC’s order permits information sharing for day-to-day operations, planned outages and scheduled maintenance when such information is provided for the purpose of promoting reliable service or operational planning.  If an electric transmission operator or a pipeline has a tariff provision prohibiting communications authorized by Order No. 787, the tariff provision will govern until a filing at FERC revising the tariff to permit those communications is made.

In order to ensure that such information remains confidential and is shared among transmission operators in a manner consistent with FERC’s rules against undue discrimination, FERC also adopted a “No-Conduit Rule.”  The No-Conduit Rule prohibits interstate pipelines and public utilities – as well as their employees, contractors, consultants, or agents – from subsequently disclosing the non-public information to a marketing function employee or third party.  FERC noted that the No-Conduit Rule would not be expanded to include non-marketing function employees, such as gas purchasing employees or employees that market transportation capacity. 

While Order No. 787 authorizes certain communications between transmission operators, FERC declined to require generators to communicate potential service disruptions to transmission operators.  FERC also declined to extend Order No. 787’s information-sharing provisions to local distribution companies (“LDCs”), intrastate pipelines, or gathering pipelines. However, FERC concluded that transmission operators may file tariff provisions pursuant to Federal Power Act Section 205 requiring generators to disclose information that the transmission operator needs to maintain reliable service, such as service disruptions.  Similarly, FERC agreed to evaluate whether electric transmission operators may incorporate tariff provisions allowing the sharing of non-public, operational information received from pipelines with LDCs on a case-by-case basis. 

FERC will revise Parts 38 and 284 of its regulations in order to incorporate FERC’s findings from Order No. 787, which will become effective 30 days after publication in the Federal Register. 

A copy of Order No. 787 is available here.

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Troutman Sanders is an international law firm with offices in North America, Europe and Asia. Founded in 1897, the firm’s heritage of extensive experience, exceptional responsiveness and an unwavering commitment to service has garnered strong, long-standing relationships with clients across the globe. These clients range from multinational corporations to individual entrepreneurs, federal and state agencies to foreign governments, and non-profit organizations to businesses representing virtually every sector and industry.

Troutman Sanders lawyers provide counsel and advice in practically every aspect of civil and commercial law related to the firm’s core practice areas: Corporate, Finance, Litigation, Public Law and Real Estate. With more than 50 practice groups focused on specific aspects of these areas, the firm is defined by its considerable knowledge base and proactive approach to addressing legal and business challenges.

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