FERC orders more conferences on gas-power convergence issues

As part of an ongoing review of issues related to the availability of natural gas at a time of increasing use of gas for power generation, the Federal Energy Regulatory Commission on Nov. 15 ordered two more technical conferences on the issue, on top of five held last August.

“In addition, the Commission directs each regional transmission organization (RTO) and independent system operator (ISO) to appear before the Commission on May 16, 2013, and October 17, 2013, to share their experiences from the winter and spring, and summer and fall, respectively,” said the commission. Commission staff  was also directed to provide a report to the commission at least once each quarter for 2013 and 2014.

Many of the technical conference participants raised concerns related to natural gas and electric scheduling and pipeline capacity release. Some of these concerns relate to whether establishing a standard energy day for both industries is warranted, whether and how utilities can most effectively match their scheduling times with the nationwide natural gas scheduling timeline, whether additional nomination opportunities for natural gas can be provided and, if so, under what conditions, FERC noted.

Current regulations and policies already provide a certain degree of flexibility in the near-term for utilities to address coordinated scheduling issues on a regional basis and for pipelines to provide enhanced scheduling opportunities, the commission wrote in the Nov. 15 decision. These efforts are improving coordination across the natural gas and electric industries within individual regions. “They do not, however, address broader questions of whether industry-wide changes to scheduling practices and service offerings are necessary or appropriate to achieve long-term gas-electric harmonization, address seams issues across regional markets, or promote a more efficient utilization of existing pipeline capacity,” FERC noted.

It added: “Questions were raised at the conferences as to whether scheduling practices and capacity release rules may need to be modified to accommodate more flexible use of pipeline capacity and improve the efficient utilization of pipeline capacity. These questions are of sufficient importance that we believe they warrant a separate technical conference that will focus on the details relating to scheduling, and whether and how natural gas and electric industry schedules could be harmonized in order to achieve the most efficient scheduling systems for both industries.”

RTOs and ISOs already working hard on the issue

Several RTOs and ISOs are developing or implementing refinements to existing practices and in some instances interstate natural gas pipelines have, as necessary, modified services and nomination cycles to meet customer needs, the commission wrote.

“Furthermore, we note that regional stakeholder processes have been initiated in some regions with engagement of electric and natural gas market participants and state regulators to look at both industries’ future needs,” it added. “Notwithstanding, there was considerable discussion during several of the technical conferences as to whether electric generators participating in the organized wholesale electric markets administered by RTOs and ISOs have sufficient market incentives to deliver firm energy, whether from natural gas pipelines or other means. There was also discussion of other features of the day-to-day operation of organized wholesale electric markets, such as the reliability unit commitment process which did not necessarily align well with natural gas markets. Logistical issues also were raised, given that market reforms and infrastructure development take time and ideally should inform one another.”

Over the past several years there has been growing concern regarding natural gas-electric interdependencies and in particular whether the gas and electric industries are prepared to work together seamlessly in an environment of increasing reliance on the use of natural gas as a fuel for electric generation.

“Each industry on its own is complex, and each has its own unique rules, terms, and practices,” the commission pointed out. “Going forward they face the potential for common challenges and opportunities. The February 2011 Southwest cold weather event brought to the forefront the close relationship between the natural gas and electric industries and highlighted certain challenges. It is with this backdrop and the desire to ensure that these industries have the necessary practices and tools in place that the Commission opened a proceeding to consider issues related to natural gas-electric interdependencies.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.