North American Energy Standards Board

Policy February 15, 2007

The North American Energy Standards Board (NAESB) succeeded the Gas Industry Standards Board in 2001 with a widened scope to include both retail and wholesale sectors of the gas and electric industries. NAESB standards are voluntary; however, the Federal Energy Regulatory Commission (FERC) has traditionally mandated industry adoption of the wholesale market standards.

AGA Viewpoint

Because many AGA members have a stake in the outcome of NAESB deliberations, AGA monitors NAESB activities to mitigate adverse effects on the business and operations of local distribution companies (LDCs) and their approaches in their efforts in front of regulatory bodies. Where there is consensus, AGA presents the position of LDCs to NAESB. NAESB currently is developing standards to address gas and electric market coordination, energy efficiency and demand response programs evaluation, and electronic tariff filings by pipelines to FERC.

Gas and Electric Coordination: In Order No. 698, FERC accords greater capacity procurement flexibility to pipeline shippers in order to assist gas-fired generators in aligning gas supply and electric generation schedules. The Order 1) references the possibility of modifying the NAESB Gas Nomination Schedule to provide more opportunities for shippers to nominate gas to flow within the same gas day (also known as intraday nominations; the NAESB Gas Day starts at 9:00 a.m. Central and ends the next calendar day at 8:59 a.m. Central); 2) grants shippers the right to price secondary market capacity based on natural gas prices indexes while not exceeding the pipeline s maximum tariff rate; and 3) allows shippers to redirect gas supplies away from pipeline constraint points by choosing alternate receipt and delivery points.

NAESB is reviewing a proposal by the end-user industry segment to revise the existing NAESB gas nomination timeline by changing existing deadlines and adding two more opportunities to submit new/revised pipeline capacity requests for the same gas flow day, leading to four intraday nomination opportunities within the NAESB Gas Day. While the LDCs do not oppose the concept of revising the NAESB nomination timeline, they disagree with specific proposed deadlines, foremost of which is the postponement in the gas flow day of the deadline for shippers in a capacity constrained environment to use their right to displace lower service priority level capacity contracted by other shippers. The five-hour delay of the bumping allowance deadline could adversely impact some LDCs ability to restore displaced scheduled quantities in time for the morning peak demand period, which would not only impact service reliability, but also could incur imbalance penalties assessed by pipeline. At a minimum, such a change could require after-hour and perhaps additional staffing for many LDCs.

NAESB is considering an LDC-initiated set of proposed standards that implements index-based capacity release pricing. The proposed standards address applicable capacity release pricing formulas and bid evaluation methodologies; pipeline and shipper responsibilities regarding price index utilization, pricing calculations, communications and reporting obligations and timelines; and specific index-based release scenarios, such as volumetric and monthly reservation releases, bids at the maximum tariff rates and default capacity release rates. NAESB has also been discussing capacity-release invoicing standards.

NAESB has reached consensus on an LDC-promoted proposal to allow pipeline shippers to change delivery and receipt points along the scheduled gas transmission path in order to avoid pipeline points of constraint. The proposal includes provisions that protect the service priority rights of shippers that request diverted gas flow, thus safeguarding the reliability of gas distribution service.

Energy Efficiency and Demand-Side Management: To address a request by Advanced Energy (a nonprofit corporation founded by the North Carolina Utilities Commission to investigate and implement energy efficiency programs), NAESB is developing standards for quantifying energy savings and peak demand reduction from demand-side management, demand response, and energy efficiency programs in the wholesale electric and retail energy markets.

This initiative has been split into two phases: First, to develop voluntary standards for evaluating energy savings and peak-demand reduction in the wholesale electric and retail energy markets; and second, to focus on methods for evaluating the costs and benefits of such programs. Although segments of the electric industry have driven this effort (with focus directed toward the electric market), it is also a part of the NAESB annual plan for the retail gas quadrant. However, in response to advice from NARUC urging NAESB to carefully consider complexities in the retail energy market before attempting to develop retail energy efficiency program standards, NAESB has redirected its work toward wholesale electric demand response program evaluation. Work on retail energy efficiency and demand-side management programs has been deferred until late 2008 or early 2009.

Recognizing energy efficiency as an important and growing area that will shape the range of environments in which gas utilities will continue to operate in years to come, AGA staff will monitor future NAESB energy efficiency deliberations affecting the retail gas market to 1) ensure that the organization does not duplicate comparable efforts nor interfere with existing or developing local programs, and 2) encourage an integration of a full energy efficiency metric in order to retain recognition of the inherent efficiency derived from the direct use of natural gas.

E-Tariff: NAESB, in compliance with a request by FERC, is in the final stages of developing standards for electronic tariff filing submittals by both interstate and intrastate pipelines. Commission staff will assemble the transmitted records into a searchable, public database, and it will maintain the FERC eLibrary as the repository for the official tariff record. NAESB has agreed to pursue a web portal approach for transmitting documents and has crafted a technical implementation guide for this purpose and related business practice standards. The work product incorporates feedback provided by the LDC segment to address the needs of the LDC community.

Additional Info: North American Energy Standards Board (

AGA Contact: Mariam Arnaout, (202) 824-7127,