A final rule approved by FERC Thursday revises the interstate natural gas nomination timeline, but it does not move the 9 a.m. Central Clock Time (CCT) start of the gas day to 4 a.m. CCT, a controversial proposal that had been sharply criticized by the gas industry.
The final rule, which the Federal Energy Regulatory Commission approved by a 5-0 vote, adopts two proposals submitted by the North American Energy Standards Board to revise the interstate natural gas nomination timeline and make conforming changes to their standards [RM-14-2]. It moves the Timely Nomination Cycle deadline for scheduling gas transportation from 11:30 a.m. CCT to 1 p.m. CCT and adds a third intraday nomination cycle during the gas operating day to help shippers adjust their scheduling to reflect changes in demand.
But the proposal to move the start of the gas day to 4 a.m. CCT was not included in the final rule. "The Commission concluded that, while certain efficiencies could be achieved through a better alignment of the natural gas and electric operating days, the record in this proceeding does not justify changing the start time for the nationwide natural gas day," FERC said. "The final rule recognizes that several regional efforts continue to address the misalignment between the gas day and the regional electric days."
Dozens of companies, practically everyone that matters in the U.S. businesses of natural gas production, pipeline transportation, gas distribution, gas storage, gas procurement for core residential and commercial customers, organizations representing industrial customers, and competitive retail electric and gas service businesses, told FERC they didn't want their gas day to start at 4 a.m. CCT (see Daily GPI, Dec. 3, 2014). The main supporters of the proposal were the main power grid operators and some power generators that were afraid there may be instances where they might not have enough gas left over from the night before to cover the morning ramp-up (see Daily GPI, Dec. 2, 2014; Nov. 26, 2014).
The final rule, and especially the abandonment of the proposed change to the start of the gas day, was quickly endorsed by a host of energy industry groups.
"We appreciate FERC's attention to the coordination between gas and electric systems, and believe this is a critical issue that needs attention, but changing the gas day was not a step that would have ultimately improved this coordination," said American Gas Association CEO Dave McCurdy.
"We applaud the Commission for listening to the voices of the entire natural gas industry and keeping the current Gas Day start time of 9 a.m. Central rather than making sweeping, national changes to address limited issues occurring in regional power markets," said Pat Jagtiani, executive vice president of the Natural Gas Supply Association.
ISO-New England (ISO-NE), on the other hand, said it was "very disappointed" by FERC's decision not to change the start of the gas day.
"We continue to believe it would have been a material improvement to reliability; without the change, obtaining fuel in order to meet their obligations will be more challenging for generators during upcoming winters," an ISO-NE spokesman told NGI. "We are supportive of the change to the timely nomination cycle, which will help incrementally by enabling owners of gas-fired generators to timely nominate and schedule gas supply."
PJM Interconnection said it was pleased by FERC's adoption of the two NAESB proposals. "These changes will enable PJM to adapt our market timing to better coordinate scheduling between wholesale gas and electricity markets. While it was disappointing that FERC declined to approve changes to the gas trading day, we believe that, on balance, FERC's ruling will enable better coordination between both industries."
The final rule is scheduled to take effect 75 days after publication in the Federal Register.
"This order illustrates how the Commission can engage with industry and stakeholders in a collaborative process to offer real improvements in our natural gas and electricity markets," said Commissioner Cheryl LaFleur. "I believe that the final rule strikes the appropriate balance by offering more flexibility to all shippers on interstate pipelines, changing the nationwide Timely Nomination Cycle nomination deadline, and adding an additional intraday nomination cycle." While FERC had proposed to change the start time for the gas day in a notice of proposed rulemaking issued last year, LaFleur said she "was persuaded that there was simply insufficient justification for making that change at this time...
"Today's order is not the end of the Commission's work on these issues. The [regional transmission organizations and independent system operators] are now required to file tariff revisions to coordinate their markets with the changes adopted in this final rule, or show cause why such changes to existing scheduling practices are not needed." And regional efforts to address aspects of gas and electric coordination should continue, LaFleur said.
In February, PJM Interconnection LLC upgraded its cost schedule functionality so natural gas-fueled power generators can better know their costs when offering power to the system (see Daily GPI, Feb. 20). Those changes are in step with efforts under way at other system operators, such as ISO New England and New York ISO, and primarily will benefit generators. However, natural gas marketers and pipelines will enjoy improved visibility of gas commodity and pipeline capacity demand, according to PJM.
Thursday's meeting was the first to be chaired by Bay, who was formerly director of FERC's Office of Enforcement and had been a commissioner since last August (see Daily GPI, April 15). In opening the meeting, he offered kind words and gifts from the Commission to LaFleur, who had served as acting chairman and chairman for the past 18 months, but he was repeatedly interrupted by the shouts of protesters. As they have at several open meetings in recent months, the protesters stood chanting "stop construction at Cove Point," a liquefied natural gas export project previously approved by FERC (see Daily GPI, March 19; Dec. 30, 2014).
Last month, FERC adopted a rule, based on language already in use by other federal agencies, specifying "the roles available to the public at the Commission's open meetings" (see Daily GPI, March 11). The rule clarifies "that the term 'observe' does not include disruptive behavior."
"I just want to say one thing for the protesters out there," Bay said after multiple interruptions Thursday morning. "We respect your First Amendment rights, but just like congress, the courts and every other federal agency, we have rules relating to the decorum of our proceedings. FERC believes in process; we welcome your views; we want to hear your views, but there are ways you can do that -- you can do that by simply making submissions in our docketed proceedings. But interrupting these open meetings does not help your cause, and it's not even helpful in trying to get information to us because they actually, technically represent ex parte contacts."