Gas and Electric Industries Seek a Happy Codependence, Part II

by Bill Malcolm, guest author

In last week’s post we introduced the discussion on how the gas and electric industries are153187634 seeking ways to better coordinate the way the two industries operate. This is especially important as gas-fired electric generation is on the rise.

So what’s been done to enhance such coordination, and what’s the position of those involved?

In an effort to provide certainty to the industry and remove barriers to the sharing of non-public operational information, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking (NOPR), Communication of Operational Information between Natural Gas Pipelines and Electric Transmission Operators, in Docket No. RM13-17-000 on July 18, 2013.

The NOPR proposes to revise FERC regulations to authorize the exchange of non-public, operational information between electric transmission operators and interstate natural gas pipelines. The NOPR also proposes to adopt a “no-conduit rule” to prohibit recipients of the non-public operational information from subsequently disclosing, or being a “conduit” for, the information to another entity. The NOPR was opened after numerous FERC workshops on the issue were held.

Comments filed on the FERC proposal include:

  • Interstate Natural Gas Association of America (INGAA)
    INGAA encouraged the ISOs/RTOs to continue examining long-term changes to amend the restructured wholesale electric power market rules which fail to compensate generators for the cost of subscribing to services necessary to ensure electric reliability, regardless of the fuel needed to generate electric power. INGAA says that it wants to work with stakeholders to explore changes to the gas day and nomination schedule that meet the needs of the growing electric power market and historic firm customers and consider the operational requirements of the producers. At the same time, INGAA says that the organized electric markets must work to review their electric day and dispatch schedules to ensure that generators are able to make timely nominations on pipelines. INGAA also supports studying the modification of wholesale electric market rules to compensate generators for holding long-term pipeline transportation contracts and supporting infrastructure expansions.
  • American Public Power Association (APPA)
    APPA believes that the Commission should encourage voluntary information sharing between generators and their electric transmission system operators. (APPA noted at a recent EISPC meeting the inability of shorter term “eastern style” capacity markets to support the signing of long-term firm gas transportation agreements to support new gas-fired generation.)
  • Electric Power Supply Association (EPSA)
    EPSA requests that the Commission amend the language in the proposed rule to require generators to share information with transmission operators in the event of a “material possibility that the generator’s natural gas service may be disrupted.” This change would clarify that such a requirement would apply only in the event of a high probability of imminent failure of the generator’s natural gas service.
  • American Gas Association (AGA)
    AGA says that communication improvements should not be seen as the only way of addressing natural gas and electric system interdependencies. Communications can supplement, but are no substitute for, the timely planning and construction of adequate natural gas infrastructure to meet growing power sector demands.

In another development, FERC recently ruled on an ISO New England proposal. In a dispute with the power generators, FERC agreed with ISO-NE in its proposal to impose performance obligation on capacity resources (barring economic outages based on decisions not to procure fuel or transportation). 

However, FERC also found that a demonstrated inability to procure fuel or transportation may legitimately affect whether a capacity resource is physically available and therefore may excuse nonperformance. 

What may happen next?
Numerous discussions and initiatives are ongoing around the country[1]. What will come out of these discussions is unclear. We will continue to watch this situation to see what, if any, actual changes move to implementation.

References:

[1] For more details on these discussion and initiatives see State of Natural Gas and Electric Interdependency
http://www. energycentral.com/ generationstorage/ fossilandbiomass/articles/ 2736/?utm_source=2013_10_01& utm_medium=eNL&utm_content= 65370&utm_campaign=PULSE_ WEEKLY and FERC’s Gas-Electric Coordination Quarterly Report http://www.ferc.gov/ legal/staff-reports/2013/A-4- report.pdf

About the Author
Bill Malcolm is a 37-year energy industry veteran who has worked for Seattle City Light, Pacific Power, PG&E, ANR Pipeline (now owned by TransCanada), and MISO. He currently is a freelance energy reporter and has a column in The Cruthirds Report (a Houston energy newsletter) on RTO and PSC matters. He holds a M.A. in economics from the University of Washington and a B.A. in economics from UC Santa Cruz. He also is a columnist in the Broad Ripple Gazette and has organized a new group, Hoosiers for Passenger Rail, in an attempt to save the daily Amtrak service from Indianapolis to Chicago.

About Enerdynamics

Enerdynamics was formed in 1995 to meet the growing demand for timely, dynamic and effective business training in the gas and electric industries. Our comprehensive education programs are focused on teaching you and your employees the business of energy. And because we have a firm grasp of what's happening in our industry on both a national and international scale, we can help you make sense of a world that often makes no sense at all.
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