The decision to limit mercury provides cover for utilities reluctant to spend on controlling NOx and SO2, while boosting other companies
Electronic Trading: Toward an Hourly Market in Natural Gas
confirmations (clearing) and scheduling (back-office recording) processes.
The communications standards now exist in the data-sets for electronic data interchange already endorsed by the Gas Industry Standards Board. The business rules and flexibility to adapt over time are a necessity. To perform the faster confirmations and scheduling processes will require the adoption, by all interconnected parties, of computer-to-computer EDI-based processes. Doing so will not eliminate the people factor, it will move the people factor to coping with only the exceptions (em the 10 percent to 20 percent that doesn't fit (em rather than having to deal with the whole 100 percent all the time.
The point also is made that requests for hourly fluctuations should be verifiable. Absolutely. Hourly changes should only be made if the transporter can measure flow rate hourly and the upstream or downstream (as applicable) operator agrees that the hourly change is needed to meet demand.
Other necessary conditions to an hourly trading market:
1. Allow no reductions below prorated, scheduled quantities. Once the scheduled gas period has begun, don't permit any reduction that would "unflow" quantities to below what was already scheduled.
2. Bumping should be implemented only once at a cycle between one-third and one-half through the calendar day, giving bumped parties an opportunity to make alternative market or supply arrangements.
3. Daily allocations and imbalance settlement procedures should include trading of similarly situated quantities with a transaction charge levied by the transporters facilitating the trading.
In the end, the ability of the gas producers and capacity providers to garner time-differentiated margins rests on an information infrastructure and exchange system, and associated business rules. This is as important a challenge as the initial restructuring of the gas business that occurred under Order 636. Failing to recognize the challenge and rise to meet it will relegate producers of the gas commodity and transportation providers to a purely wholesale low-value-added role in the energy market. This role is similar to a third world country that exports its raw materials, then repurchases the finished products at a much later stage in the value chain. Harsh words, but likely to be true if the information and communications infrastructure is not upgraded to match the challenges ahead. F
Greg Lander is chair and president of The National Registry of Capacity Rights Inc. and president of TransCapacity Ltd. Partnership, the data-service agent of the registry.
A Day-Part Market: Minimum Requirements
1. Posting of short-term firm transportation service on electronic bulletin boards and in downloadable datasets consistent with existing standards used for posting of capacity release awards.
2. Posting of transportation discounts in downloadable datasets.
3. Postings of real-time operationally available capacity (updated after each scheduling cycle) to show the daily capacity available for the remainder of the gas day at all scheduled locations.
4. Adding the primary points information to the index of customers.
5. Creating, within each pipeline's database, an inventory accessible through electronic data interchange (a capacity exchange) consisting of unsubscribed-available firm rights at points and points that can be added to a capacity release (or short-term FT contract) by any