Pipeline Interconnect Forum Minutes
October 22, 2001
PG&E Offices
San Francisco, CA
Participants
Cheryl Snyder, PG&E California Gas Transmission, facilitator
Todd Hudson, PG&E California Gas Transmission, note taker
Kirk Johnson, PG&E California Gas Transmission, Plan of Reorganization presentation
Judy Hickman, Columbia Gas Transmission
Theresa Hess, Enron Transportation Services
Randy Young, Gulf South Pipeline
Tom Gwilliam, Iroquois Pipeline
Ruth Clark, PG&E Gas Transmission-Northwest
Janette Arreguin, PNM
Cindy Suarez, Reliant Energy
Michelle M.Willis, Reliant Energy
Ken Schubert, TransCanada Pipeline
Lynn Blair, Transwestern Pipeline Company
Charlie Bass, ANR/TGP
Kathryn L. Burch, Duke Energy
Marcy McCain, Duke Energy
Todd White, Iroquois Pipeline
Janie Nielsen, Northwest & Kern Pipelines
Mike Rasmuson, Northwest & Kern Pipelines 
Scott Hansen, Questar Pipeline

Additional Attendees/Observers
Wayman Pon, PG&E California Gas Transmission
Margi Janopaul, PG&E California Gas Transmission
John Breen, PG&E California Gas Transmission
Cathy Paulsen, PG&E California Gas Transmission
Welcome!
Cheryl Snyder, PG&E, welcomed participants to PG&E’s San Francisco offices, provided housekeeping details and read antitrust guidelines.
Introductions
Participants introduced themselves and described their job on the pipeline they represent.
Review of Agenda
Cheryl Snyder explained the items on the agenda.
What is our Purpose?
Cheryl asked the group to think about why we should meet as a group. Here are the reasons the participants gave:
•	Idea sharing on how to implement standards.
•	Discuss process improvements.
•	There is strength in numbers. We should stand up for our rights as a group (FERC, GISB).
•	Identify pitfalls early.
•	Discuss interpretations of GISB standards.  Make sure we agree on interpretations.  Makes for smoother implementations.
•	Not a replacement for GISB meetings.
•	Learn from other’s experiences with implementing standards/services. 
•	Learn about new services offered by other pipelines (share ideas).
•	If the pipeline interconnects don’t work together, the interstate pipeline grid can fall apart.
•	Use this forum to ensure greater flexibility.  It’s better for us to figure things out ourselves before GISB tries to standardize it (less forced standardization).
•	Discuss day-to-day issues (not just GISB issues).
Cheryl asked the group if everyone agrees that we should keep this a pure pipeline meeting. Nobody opposed this idea.
Ken Schubert, TransCanada, asked how frequently should this group meet? Cheryl explained that we delayed the February 2000 meeting until now because people were busy with GISB 1.4 Internet implementations and not enough items were suggested for the agenda. Mike Rasmuson, Northwest and Kern, pointed out that we probably should’ve gotten together after FERC Order 637 came out. A regular schedule may not suffice; 6 months might not suffice. Mike suggested that a major event should be related to the meeting. Lynn Blair, Transwestern, agreed that if we don’t have a purpose to meet, we should skip it since we’re trying to cut down on business travel.
Marcy McCain, Duke Energy, volunteered Duke to hold the next meeting.
Todd Hudson, PG&E, talked about how he saw the forum as a way to bring together people that don’t necessarily attend GISB meetings and as a place where issues outside of standards can be discussed.  Theresa Hess, Enron Transportation Services, pointed out that most of the topics are GISB related.  She expressed that she wouldn’t want anyone to think that this is a replacement for GISB or that we’ll represent your pipeline in the GISB process. We are responsible for representing our own pipelines.
Reliant’s Hourly Service
Cindy Suarez, Reliant Energy Gas Transmission (REGT)
Flexible Hourly Service
•	Implemented February 2001.
•	Available for all services requiring nominations.
•	Customer has ability to submit a revised daily nomination each hour during the Gas Day with one hour's notice.
•	Nominations are processed every hour.
•	Scheduled quantities are posted every hour.
•	REGT must bump lower scheduling priority shipper with at least one hour’s notice of bumping.
•	If bumping effects transactions on multiple interstate pipelines, then bumping shall occur only at the grid-wide synchronization times specified by the GISB standards.
•	All bumping must occur prior to 5:00 p.m. during Gas Day. 
•	How are Elapsed Pro-Rated Scheduled Quantities (EPSQ) dealt with? If the shipper has a Flexible Hourly nomination scheduled, and an Hourly Firm nomination (see below) bumps the Flexible nomination, Reliant would give one hour's notice to the service requester of the Flexible nomination before they cut the nomination. Reliant would look at what had flowed and take the Flexible nomination down to that amount. 
•	Bumping – REGT must bump lower scheduling priority shipper with at least one hour’s notice. 
Hourly Firm Transportation (HFT)
Service Overview
•	Customer may contract for a minimum term of one hour and a maximum term of 90 days.
•	Service must be contracted for within 30 days of effective date.
•	Service must be contracted for electronically via Internet.
•	Email notification sent to various parties involved in contracting.
•	Contracted volumes stated in hourly terms.
•	Electronic measurement required at delivery point.
•	REGT not obligated to provide HFT to an off-system delivery point if other pipeline does not agree to confirm hourly volumes.
•	Service may be released for a minimum term of one hour.
•	The minimum notice to request service is 1 hour before the shipper wants gas to flow.
•	HFT is scheduled with the same priority as normal firm.  Reliant reserves a block of capacity for HFT.
•	Service may be released for minimum term of one hour.
•	HFT can go to a secondary point, theoretically.
Nominations
Delivery Nominations
•	Must be submitted in hourly quantities.
•	May be submitted in advance.
•	Must be submitted at least one hour prior to gas flow or nomination change.
Receipt Nominations
•	Must be submitted in daily quantities.
•	Revisions to daily nom accepted on intraday or FlexNom basis.
•	Receipt and Delivery nominations must equal on a daily basis.
Imbalances
•	Manually calculated on a daily basis only. 
•	Posted a few times during day.
•	May be offset with imbalances under customer’s other service agreements.
•	Opportunity for in-kind make-up during the month.
•	Cashed out on a monthly basis with daily valuation.
•	Fuel (shrinkage) is allocated between hourly and normal from the same bucket.
•	Shippers can trade imbalances with others with same or different service.
Other Information
•	The pipeline is not fully subscribed.
•	How is MDQ handled or is there an HDQ? 
•	24 hour and hourly nominations are processed separately. 
•	Reliant sells point capacity.
•	Reliant is trying to align the electronic scheduling system with customers’ actual behavior.
•	Most subscribers are power users. Some industrials (7 this winter) are signed up for it.
•	Reliant’s tariff says customers must pull pro-rata during day. Power users use this service because they’ll be penalized if they pull more than they are contracted for on a normal 24-hour contract. 
•	There is no additional charge for hourly services.
•	REGT has about 3.5 storage fields.
•	Rate treatment – 100% for certain level, then refunded.
•	OFOs are issued down to the point/area level.
Hourly Nominations on Tennessee Gas Pipeline
Charlie Bass, Tennessee Gas Pipeline (TGP)
•	Offered since FERC Order 636 in 1993.
•	It is not a service. It is a basic right of the shipper in the tariff to nominate on an hourly basis. 
•	Customers use hourly service whether they tell TGP or not – they pull what they want when they want.
•	Available at any point. 
•	Customer calls TGP to tell them they’re going to pull ahead of time.
•	Customer makes up imbalance next day. 
•	Not very many customers do it because of the administrative work it requires.
•	TGP is a big pipeline. They have lots of line pack to use.
•	TGP proposed service for points where they have flow control. Customers said they already have this service, why should they pay for a system to administer it? TGP responded that the customers don’t have the service and TGP can issue OFOs to limit hourly over-pull.
•	Available at a physical receipt point if there is an OBA.
Benchmarking/Best Practices
Cheryl Snyder asked the group if anyone has done benchmarking on their computer systems.  Mike Rasmuson responded that they had hired a contractor to do benchmarking on their physical system but not on their electronic scheduling system.
Charlie Bass - We meet with other pipelines occasionally to discuss implementations.  Also when we merge with other pipelines we learn about how others do business. Pipelines are different because they all deal with a small group of customers. We’ve developed business practices for those markets or producers. Also, company culture influences how a system is developed. For example, some cultures encourage automation while some are more manual. Size matters – A smaller pipeline does not need to automate. They can handle a certain service or transaction type manually because it is not used frequently on their pipeline whereas a larger pipeline may deal with 1000 transactions of that type per day.
Cheryl provided a brief presentation of her views regarding benchmarking:
Why?
•	Any system in the pipeline that goes down impacts us all.
•	Customer satisfaction is a common goal.
What?
•	Preferred technology, problems and solutions, hardware and software lifecycles, customer tech support, scheduled maintenance windows, etc.
•	Processes (e.g., system changes)
•	Staffing
How?
•	E-Mail surveys
•	Site visits
Cheryl solicited interest from pipeline representatives to engage in benchmarking.  Information will be shared with the forum participants.
Balancing Solutions
Lynn Blair, Transwestern Pipeline
Lynn introduced the topic of imbalances caused by timing differences in the Intraday 2 Cycle. She said that Enron pipes are trying to minimize paper imbalances. She asked the group, how do you take care of those imbalances and keep it off the shipper’s imbalance? She explained that she’s not talking about physical imbalances between pipelines that can be taken care of by OBAs.  She gave an example of a paper imbalance. Say the shipper has a supply of 10,000 on pipe 1. During ID2, the supply drops to 8,000. If both pipes schedule at the same time, pipe 2 has 10,000 and pipe 1 has 8,000. What do you do?
Randy Young, Gulf South Pipeline: We had similar problems when we added the ID2 cycle. The problem occurred when other pipelines don’t strictly enforce the EPSQ rule. If gas flows, we keep it at EPSQ, if the flow is below, we go down. 
Ruth Clark, PG&E Gas Transmission-Northwest: We’re a straight shot. If we get a market cut, we have to push it to the upstream pipeline.
Mike Rasmuson, Northwest and Kern Pipelines: Northwest’s upstream pipe is Canadian and they didn’t have to follow GISB timelines. We went to FERC to see if we could pass the imbalances to the downstream pipelines. FERC said no. The ID2 is the last time to cut. NW had 100s of imbalances on system. Northwest now runs 3 runs per GISB cycle as follows:
1.	Match pools. LDCs and supply operators must confirm at nomination deadline (except major interconnects). 
2.	30 minutes before confirmation deadline, interconnects come in to confirm. Run the process. Send that imbalance to upstream supply.
3.	Just in case, run process again after confirmation deadline to make sure you got every reduction.  Any further reductions go to shipper. 
Northwest will accept confirmations up to deadline but they will create a shipper imbalance. Shipper works off imbalance by end of month.
Information can be gathered from LDCs before the nomination deadline because they are shippers on Northwest pipeline. They submit nominations and NW builds confirmations (Autoconfirm on Kern) for them.
Lynn Blair: Northwest’s solution helped Transwestern with imbalances but left us less flexibility time for scheduling. We can automatically confirm for operators. TW passes imbalances through to El Paso or other downstream pipeline. 
Wayman Pon, PG&E California Gas Transmission: We have a manual process to handle shipper imbalances.
According to Theresa Hess, Enron Transportation Services, the topic was addressed by GISB but it was dropped. Pipelines didn’t want GISB to insert more timelines in between the nomination and the confirmation deadlines.
Charlie Bass, TGP: The people in the pipeline community want to create business practices for their business needs. Some people confirm before they schedule.
Lynn Blair: ID2’s original purpose was to true up between pipelines, assuming that volumes wouldn’t change after ID1.  Now shippers are using ID2 for as much business as they do the other cycles. We work with shippers to let them know if operator will not take imbalance. 
Mike Rasmuson: Customers were dissatisfied with us creating shipper imbalances. We had to take it as far as FERC to get a settlement. 
Lunch
PG&E’s Proposed Plan of Reorganization
Kirk Johnson, Director of Gas System Operations, PG&E California Gas Transmission, provided the following presentation.
Proposed Plan of Reorganization
•	PG&E filed for Bankruptcy April 6, 2001
•	Plan of Reorganization filed September 20
•	Many steps to take and approvals needed before implementation
Plan of Reorganization Meets Objectives
•	Does not ask the Bankruptcy Court for a rate increase
•	Is not a rescue or bailout from the State
•	Pays all valid creditor claims in full, with interest, by using the value of Pacific Gas and Electric Company’s assets
•	Creates strong, sustainable businesses with strong long-term growth prospects
Plan of Reorganization - Five-Step Description
1)	Reorganizes existing operations into four separate businesses: 
•	Electric and Gas Distribution - Pacific Gas and Electric Company
•	Generation - Gen
•	Electric Transmission - ETrans
•	Gas Transmission - GTrans
2)	Pacific Gas and Electric Company spun off 
•	Stand-alone, publicly traded company 
•	No affiliation with PG&E Corporation
•	CPUC regulated
3) 	Gen, ETrans, and GTrans 
•	Separate companies under PG&E Corporation
•	FERC regulated
4)	New businesses refinanced based on projected cash flows and debt capacity
5)	All valid claims paid in full, with interest, using cash and notes
Proposed Corporate Structure
Pacific Gas and Electric Company
•	Independent, publicly traded company
•	Remains regulated by the California Public Utilities Commission (CPUC)
PG&E Corporation
•	Gen, ETrans, and GTrans move under PG&E Corporation – FERC regulated
•	PG&E National Energy Group remains part of PG&E Corporation
Proposal Does Not Change National Energy Group
•	Gas Transmission-Northwest
•	Energy Trading
•	Generating
GTrans
•	Backbone, storage and local transmission
•	$1.2 billion net plant 
•	1.8 BCF/day Canadian gas capacity
1.1 BCF/day Southwest gas capacity
50 BCF gas storage capacity
•	650 - 750 employees
•	Revenues and rates set under FERC jurisdiction
•	Contract with Pacific Gas and Electric Company retail Core Procurement
•	GTrans will own California Gas Transmission’s Current Assets
California Regulation Update
•	California Gas Transmission (CGT) Open Season Suspended August 13
•	PG&E asked to withdraw open season August 16
•	CPUC Decision September 6
o	Granted open season withdrawal - terminating the CGT Open Season
o	Ordered Gas Accord II filing in 30 days
•	Gas Accord II Filing October 9 asks to extend current Gas Accord structure through 2004
o	2002 rates frozen for two years if CPUC adopts simple two-year extension
o	Best solution considering Plan of Reorganization (POR) and market uncertainty
o	Proposed POR would make future open seasons FERC jurisdictional
Charlie Bass asked if any expansions are planned? No. PG&E is in limbo on any future expansions.  
Theresa Hess asked if the California Public Utilities Commission (CPUC) could prevent PG&E from implementing this POR? They can try to prevent us. 
Charlie Bass asked if the CPUC is allowed to talk to FERC staff behind the scenes? Yes they are allowed to, unlike pipelines. 
Tom Gwilliam asked if California would allow PG&E to increase the 50% cap on debt/equity ratio? PG&E believes California will allow us to go up. Utility will have 55% d/e ratio.
Recent FERC NOPR (Docket No. RM01-10-000)
http://cips.ferc.fed.us/rules/rm/rm01-10.000.txt

Note: The Commission issued a notice of extension of time for RM01-10-000. The deadline to file comments is now December 20, 2001. The notice granting an extension of time is here: http://cips.ferc.fed.us/rules/rm/rm01-10.00b.txt.
Marcy McCain, Duke Energy
In a FERC Notice of Proposed Rulemaking issued September 17, 2001, the Commission is proposing new standards of conduct regulations that would apply uniformly to natural gas pipelines and transmitting public utilities (jointly referred to as transmission providers). The notice broadens the definition of what an affiliate would be. The notice proposes to “define an energy affiliate as any entity affiliated with a transmission provider (gas or electric) that engages in or is involved in transmission transactions or manages or controls transmission capacity or buys, sells, trades or administers natural gas or electric energy or engages in financial transactions relating to the sale or transmission of natural gas or electric energy.” According to Marcy, this may mean than an affiliate is anybody under the corporate umbrella. LDCs and producers would be included. The NOPR does not address multiple pipelines under the same corporate umbrella. 

There are a couple of things FERC wanted to address:
•	Current standards don’t cover LDCs, asset managers, producers and gatherers.
•	Employees involved in commodity sales should operate independently from those in transmission services.
•	Cycling employees between affiliates. You would have to post on your website when employees transfer between affiliates. In electric standards, you can use employees of affiliates under emergency situations. You have to provide notice to customers within 24 hours after they were used.
Some other highlights of the NOPR:
•	Gas pipelines would have to file standards of conduct with FERC and tell how you are going to implement the standards.
•	Pipelines must post any offer of a discount to anybody at the time of the offer no matter when it is effective. There was discussion as to what an offer is. If I offer you ten cents, do I have to post that whether you accept or not?
•	The notice addressed whether or not an affiliate could build generation connected to the mainline of another affiliate.
Following a merger, Dominion was required to follow standards similar to those contained in the NOPR.
Scott Hansen, Questar Pipeline, was not sure how state commissions would feel about this. This prevents some efficiency associated with having the same people operate the different functions.
Todd White, Iroquois Pipeline, said it sounds like the NOPR only addresses how affiliates who are already split up address each other. Marcy commented that that’s a gray area.
Charlie Bass said that the notice creates a double standard. It may allow a producer to wield market power over anybody. 
EISB Update
Theresa Hess, Enron Transportation Services
The Energy Industries Standards Board formed in 1999 when CUBR, the Coalition for Uniform Business Rules wanted GISB to look at retail gas and electric transactions. The CUBR was mostly made up of marketers. GISB had two options – add electric to the GISB scope or end GISB and start a whole new organization. Since GISB was already established as a non-profit and we’ve just become an ANSI standard developer, it made more sense to keep GISB and add electric to the scope.
Effective January 1, 2002, the GISB certificate will include wholesale gas, retail gas, wholesale electric and retail electric (4 quadrants). Each quadrant’s activity will depend on the commitment of that industry sector to participate. Each quadrant may be made up of multiple segments. Within GISB, there are 5 segments (producers, pipelines, LDCs, etc).
GISB standards only cover wholesale gas. GISB gas business will go on business as usual. Who are the drivers of the other 3 quadrants? AGA said they would drive retail gas. The North American Electric Reliability Council (NERC) drives wholesale electric. However, NERC announced in a press release on October 11, 2001, (http://www.nerc.com) that they want to write standards for wholesale electric and will ask FERC for the authority to write the standards. Their proposal is an alternative to the EISB proposal.
The GISB certificate of incorporation has been updated to include electric. GISB is now working on updating the bylaws to include electric. The Strawman 2.1 (posted on the GISB website) provides a foundation to update the bylaws. Redlined bylaws are published on the web. The Strawman 2.1 and the bylaws can be accessed here: http://www.gisb.org/eisb.htm.
GISB Items
Randy Young, Gulf South Pipeline
Current Business
What’s GISB working on right now? Other than 637, GISB’s work has slowed down. The Publication Process Committee is outlining what the current process is. Theresa Hess said that good things would come out of this committee. You will be able to track your request for standards more easily.
The Information Requirements committee has finished FERC Order 637 transactional reporting standards. The Technical committee will need 6 months to develop 3 new datasets for transactional reporting standards.
GISB 1.5 Standards
There were two main areas of concern for pipelines in the GISB 1.5 standards: Title Transfer Tracking (TTT) and Imbalance Trading.  The TTT standards may be used for pipelines or third party who want to implement TTT in different ways. The Imbalance Trading standards are more specific. There was a discussion as to whether or not the Imbalance Trading standards apply strictly to shippers. Janie Nielsen, Northwest & Kern Pipelines said that it seems like pipelines could use standards to trade operational imbalances. Theresa Hess commented that term “service requester” is used everywhere in the standards. Most operators don’t like be referred to as service requesters.
Standard 5.3.2 Question
Kathy Royal, El Paso, submitted a capacity release question related to GISB standard 5.3.2.
Here is the example:
Shipper A schedules his total contract MDQ (50,000 Dth) on his firm contract ABCD during the Timely Cycle.  Before the Intraday 1 Cycle, he releases 25,000 Dth on that contract. Before the next cycle, Shipper B acquires the 25,000 that Shipper A released and submits a nomination. How are you planning to treat the two conflicting transactions? 
A.	Schedule 25,000 on contract ABCD as overrun, which has a lower priority and is subject to capacity allocation.
B.	Reduce ABCD to 25,000 since he no longer has this capacity and he did not originally nominate it as overrun.
C.	Reduce WXYZ because the capacity has already been scheduled. 
D.	Do not allow Shipper A to release capacity for this delivery date since he has already scheduled his full MDQ.
E.	Other - please explain.
Charlie Bass thought that all the options would work.
Scott Hansen asked if our scheduling systems are smart enough to handle this situation?
Mike Rasmuson said that his system would choose option B. He also asked, how will we incorporate EPSQ?
Charlie Bass - We validate total quantity (TQ) on each contract at every cycle. We would lower to the EPSQ. The volumes will be billed to whoever was delivered gas. The demand charge goes to whoever has capacity at the end of the day. In our rate case, we only bill for daily rates. We assume that in the offer price between the shippers that they adjusted for EPSQ when they released the capacity.
Mike Rasmuson said that Northwest lets shippers release 16/24 of their gas before ID1.
No final decision was made on how to handle the 5.3.2 question.
GISB EDI Changes
Theresa Hess reminded the group that some EDI datasets have changed names.  For example, the Nomination G850NMST is now the G873NMST. Charlie Bass reminded everyone that GISB 1.5 changed EDI mapping for Nomination Standard drastically.  Everyone should look at this.
Meeting Conclusion
Cheryl Snyder thanked everyone for attending the meeting, wished everyone a safe trip home, and committed to contacting interested benchmarking parties.  The next meeting will be hosted by Duke Energy (Kathryn Burch and Marcy McCain), and the following meeting by Questar Pipeline (Scott Hansen).  The intent is to, at a minimum, check in with forum participants for agenda items every six months.