Understanding No-Notice Agreements: The Hidden Safety Net of Natural Gas Delivery

At the point where an interstate transmission pipeline connects to a Local Distribution Company (LDC), the amount of gas that actually flows almost never matches what was nominated.

This creates a difficult problem. At the city gate, gas is flowing from two different streams at the same time — the LDC’s own supply gas and gas belonging to many different third-party marketing companies. When the actual volume taken doesn’t match the nominated volume, it’s nearly impossible to determine in real time which customers — from which stream — caused the imbalance. There are simply too many delivery points behind the city gate.

To solve this issue, most LDCs have a No-Notice Agreement with the interstate pipeline.

A No-Notice Agreement allows the LDC to take more or less gas than they nominated without immediate penalty. Rather than trying to assign responsibility for the delta in real time, the LDC agrees to keep the pipeline whole by using its storage. If too much gas was taken, the LDC pulls the difference from storage. If too little gas was taken, the LDC injects the excess back into storage.

This arrangement gives the LDC time to later analyze all the meter readings from thousands of delivery points, determine which customers caused the imbalance, and reconcile with the third-party marketers after the fact.

Because LDCs carry the ultimate responsibility for public safety, they willingly take on this balancing responsibility — backed by large storage positions — to ensure the system remains balanced every single day.

In the Ascend course, we explain exactly how No-Notice Agreements work and why they are essential for managing the daily realities at the city gate.