Even as FERC continues to take steps to smooth natural gas-power coordination, significant issues remain, requiring both industries to work diligently together as the nation transitions from coal toward more natural gas in the power sector, a FirstEnergy executive said Wednesday.

“The retirements of some of these legacy [coal] units and the build-out of these gas assets don’t necessarily happen together,” FirstEnergy Corp.’s Donald Moul, senior vice president of fossil operations and the environment, told a packed crowd at the Marcellus Shale Coalition’s (MSC) Shale Insight conference in Pittsburgh. “The market can’t align that. The result is that the retirement of these legacy assets is causing the need for transmission build to maintain reliability for our customers and those costs get passed on. The market is not good at timing these retirements and capacity additions.”

As natural gas prices have remained low, wholesale energy prices have been driven down, challenging the economics of coal-fired and nuclear power assets. Moul said more than 100,000 MW of coal-fired power have been retired across the country since 2010, while up to 20 nuclear plants are at risk of prematurely shutting down over the next decade.

More than two dozen gas-fired power plants are either under construction or have been approved or proposed in Ohio, West Virginia and Pennsylvania (see Daily GPI, May 13). Texas, Florida and other Mid-Atlantic states also are seeing significant gas generation additions, according to the Energy Information Administration (EIA) (see Daily GPI, May 19).

Moul cautioned that so much gas generation coming online has its disadvantages and creates considerable challenges for both the power and gas sectors, adding that no power source is a silver bullet for the nation’s energy demands. Going forward, pipeline infrastructure is expected to be crucial to the reliability of gas-fired power.

“More gas-fired generation puts a little more stress on the infrastructure to deliver that gas in the quantities needed,” Moul said. “Unlike coal and nuclear facilities, that have their fuel on site, natural gas does rely on adjusted-time delivery and there are local heating uses for natural gas in the winter. Some gas generators rely on interruptible supply and during the winter time that can lead to shortages.

“As gas-fired capacity evolves, it really is all about infrastructure and maintaining reliability,” he added. “We need to make sure we have firm supply contracts and the right infrastructure as we manage the transition.”

Akron, OH-based FirstEnergy has 10 electric utilities and six million customers across six states in the Midwest and Mid-Atlantic. It generates only 6% of its electricity with gas, leaning mostly on legacy coal and nuclear assets to serve its customers. In April, the Federal Energy Regulatory Commission blocked controversial power purchase agreements approved by Ohio regulators that would have guaranteed cost recovery for American Electric Power Co. and FirstEnergy power produced at uneconomic coal and nuclear generating units in the state (see Daily GPI, April 28).

But Moul noted the portfolio is bound to shift. The EIA said last month electricity generated using gas reached a record high in July (see Daily GPI,Aug. 10). The agency expects gas to fuel 34% of generation this year, compared with 33% in 2015. Coal is expected to be used for 30% of power generation, down from 33% from last year.

“There are coordination issues in these markets between gas and electric,” Moul said. “Natural gas pipelines are built on firm contracts and not on interruptible service. The gas and electric sectors have very different resource adequacy definitions…There are more interruptible loads and nonessential loads that can be curtailed during high-demand times on a natural gas system.”

For example, the winter of 2013-2014 was one of the nation’s coldest in decades, and demand for gas set records and pushed prices up. Power generators also scrambled for gas. Moul said about 30% of the plant outages across the country in January 2014 were linked to a lack of gas supply.

Last year, FERC issued Order No. 809, adopting two proposals to revise the interstate gas nomination timeline (see Daily GPI, April 16, 2015). The order moved the Timely Nomination Cycle deadline for scheduling gas transportation from 11:30 a.m. CCT to 1 p.m. CCT and added a third intraday nomination cycle during the gas operating day to help shippers adjust scheduling to reflect changes in demand and better coordinate the gas and power markets.

Despite the order, coordination issues remain. For instance, Moul said gas and electric sectors have different maintenance schedules. Power generators typically take outages in the spring and fall when demand is lower, while maintenance on gas systems usually takes place in the summer when generators see peak demand cycles.

“Different generating technologies provide different environmental and economic trade-offs,” he said. “There is no one perfect generation solution. If we move too quickly to a supply that’s heavy on natural gas…it can be challenged by its adjusted-time delivery, the market is much more volatile in pricing and the infrastructure can be tasked by greater demand.

“As we have more and more natural gas on the supply stack to serve customers on the electric grid, we need to manage the transition. We need to continue to build the gas infrastructure to support the same level of reliability that our customers expect.”

MSC President David Spigelmyer said this year’s sixth annual conference is to focus more on infrastructure and end-use markets. MSC is hosting it with the Ohio Oil and Gas Association and the West Virginia Oil and Natural Gas Association. The organizers expect up to 1,500 through Thursday, matching attendance in years past.

Republican presidential candidate Donald Trump and his energy adviser, Continental Resources Inc. CEO Harold Hamm, are scheduled to speak.

“This isn’t a partisan conference,” Spigelmyer said in response to a question about Democratic candidate Hillary Clinton’s absence. “We invited both candidates to participate. We asked Secretary Clinton to participate in our keynote luncheon [Wednesday]. She respectfully declined. We’re disappointed in that, but by no means are we focused on Republican and Democratic ideals here. We’re talking about affordable and abundant energy for consumers across this basin, across America, and frankly, across the globe.”