PJM Interconnection has signed a memorandum of understanding (MOU) with nine major gas pipeline companies that serve power generators in its footprint to work together to improve operational planning and address the growing interdependence of the electricity and gas markets.
The pipelines -- Columbia Gas Transmission, Dominion Cove Point LNG, Dominion Transmission, National Fuel Gas Supply Corp., Natural Gas Pipeline Co. of America, Tennessee Gas Pipeline Co., Texas Eastern Transmission, Texas Gas Transmission and Transcontinental Gas Pipe Line Co. -- "currently serve certain gas-fired power generators within the PJM footprint, generators who often do not hold primary firm contracts for services rendered to these generators," according to the MOU.
With the execution of firm contracts, the pipelines would be "willing to firm up such services where appropriate and to serve additional generators as conversions and construction of new plants takes place." In many cases, the pipelines would require additional facilities to provide the flexible services sought by generators, they said.
"The intent of the agreement is to provide a better understanding of the needs of gas-fired generators and work toward providing reliable and flexible solutions that promote adequate natural gas pipeline capacity."
PJM and the pipeline companies plan to share certain non-public information to promote reliable service and improved operational planning, as permitted by FERC Order No. 787. Assuming Federal Energy Regulatory Commission approval of PJM's Capacity Performance filing, the grid operator would establish and share with the pipelines generally uniform performance characteristics for gas-fired generators that bid into the PJM capacity market.
The performance factors would be unit-specific, but would include demonstration of capability to access firm gas flows at the peak hours of the Electric Day, and hourly flexibility such that PJM would not be asked to compensate generators for costs incurred due to inability to procure gas outside the normal scheduling window.
The pipelines would provide PJM with descriptions of services available to be requested by generators that would satisfy PJM's Capacity Performance proposal, and high level availability and feasibility of those services. In addition, if requested by PJM, pipelines would provide PJM summaries of services that have been requested by generators to be evaluated, and the status of the evaluations.
"This agreement sets the stage for greater coordination between electric generators and the natural gas pipeline industry," said Mike Kormos, PJM COO. "As electricity-generating facilities increasingly turn to natural gas, it is important that we all communicate clearly to assure reliable service."
The initial effort outlined in the MOU will continue through June 2016, and will be evaluated for next steps, the companies said.
The MOU comes just three weeks after six participating planning authorities of the Eastern Interconnection Planning Collaborative, including PJM, completed a natural gas-electric system interface study as part of a planning effort funded by the U.S. Department of Energy (see Daily GPI, July 9). PJM coordinates wholesale electricity for 13 states and District of Columbia.
Natural gas-electric coordination has also been a hot topic for federal regulators (see Daily GPI, July 21; June 23; April 29).
In a roundtable meeting at FERC headquarters in Washington, DC, electric generators and grid operators, including PJM, said they wanted natural gas markets and infrastructure altered to meet their peak demand needs (see Daily GPI, Sept. 19, 2014). Gas pipelines and producers who rallied to defend their market made it very clear that they don't think it needs radical changes.
In March 2014, FERC issued a notice of proposed rulemaking that would have revamped the gas day, moving its start time to 4 a.m. central clock time instead of the current 9 a.m, to give power generators in every time zone an opportunity to enter the morning demand ramp-up period with fresh gas nominations (see Daily GPI, March 20, 2014). Power generators were enthusiastic, but the gas industry argued against the changes (see Daily GPI, Dec. 3, 2014). In the end, FERC approved a final rule that revised the interstate natural gas nomination timeline, but did not move the start of the gas day (see Daily GPI, April 16).