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FERC's Bay Urges Improved Gas-Electric Coordination, Get Tough on Cybersecurity

FERC Chairman Norman Bay said while these were "exciting times" for the natural gas industry as a whole, it was imperative for the industry to improve its coordination with the power generation sector, while also getting serious about cybersecurity challenges and improving its outreach efforts to communities impacted by ever-growing infrastructure.

"While progress has been made in gas-electric coordination, I hope that the gas and electric industries continue to talk, and I hope that they continue to look for additional efficiencies," Bay said during his keynote speech at the Natural Gas Roundtable session in Washington on Tuesday. "Perhaps innovative market-based solutions for products or services can be developed that provide greater flexibility to shippers and generators."

Last April, due to the increasing reliance on natural gas for power generation, the Federal Energy Regulatory Commission issued Order No. 809, which calls for revising regulations to better coordinate the wholesale natural gas and electricity markets and to give shippers on interstate gas pipelines additional scheduling flexibility.

Bay said he would like to see the natural gas and power generation sectors work with the North American Energy Standards Board (NAESB) "to explore the potential for faster computerized scheduling, in which shippers and confirming parties all submit electronic nominations and confirmations, including a streamlined confirmation process, if necessary.

"I understand that the NAESB recently voted to delay work on the commission's request until next year, but this issue remains an important one, and I will be following it closely."

With the increasing importance of natural gas for power generation, Bay said it was urgent for natural gas pipelines to adopt best practices to combat cybersecurity threats.

"In the absence of robust cyber defenses, not only is infrastructure potentially at risk, but so is everyone who depends upon the essential services provided by that infrastructure -- LDCs, industrial users, generators and the public," Bay said. "Here let me say that FERC is committed to information sharing, with industry and with state regulators.

"We're committed to working with the ONG-ISAC [Oil and Natural Gas Information Sharing and Analysis Center] and the ONG SCC [Oil & Natural Gas Sector Coordinating Council] and sharing our expertise with you."

Bay said he knew that everyone in the room appreciated the value of infrastructure.

"Without prejudging any particular project that could come before FERC, I continue to believe that there is an important need for additional infrastructure in different parts of the United States," Bay said. "These are boom times for many of the people in this room. But unfortunately, the siting of infrastructure, as you know, has become increasingly contentious. Here you can help yourselves, and FERC, by engaging in proactive outreach with stakeholders."

Bay said FERC staff had been working on a best practices manual with regard to infrastructure issues, and it would be issued within the next few weeks.

"The goal of an effective outreach program should be to create meaningful two-way communication, and the development of mutually beneficial relationships," Bay said. "Among other things, such an effort would include a management commitment, internal collaboration, training, stakeholder engagement and education, and documentation of outreach to facilitate transparency and communication.

"As one gas pipeline CEO explained to me recently, while you certainly want to receive a certificate from FERC, you also want to earn a social license from the communities along the path of the pipeline. Your pipeline will provide service for decades to come. It is truly a long-term investment. And so is your relationship with the key stakeholders. It is in your interest to be a good neighbor from the start."

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