A major interstate natural gas pipeline group and gas utility association have called on FERC to conduct regional technical conferences to address coordination issues between the gas and electricity markets, while a group of New York Transmission Owners (NYTO) recommended that independent system operators/regional transmission organizations (ISOs/RTOs) be required to submit compliance filings identifying how they plan to respond to coordination problems.
The Interstate Natural Gas Association of America (INGAA) urged the Federal Energy Regulatory Commission (FERC) to convene a series of "timely and tightly focused regional technical conferences, starting in New England, over the next several months, to identify and address any current and emerging issues regarding how the increased reliance on natural gas for electric power generation may affect the reliability of the electric bulk power grid."
Likewise the American Gas Association, which represents gas utilities, asked the Commission to quickly convene a series of technical conferences at both the regional and national levels to identify general policy goals and address specific regional concerns, as well as expedite the approval of pending pipeline projects to enhance system reliability.
The Commission should lead the initiative, with aid from state regulators, the North American Electric Reliability Corporation, ISOs/RTOs and other planning authorities, INGAA said. The Independent Petroleum Association of America agreed that FERC should be the lead agency on coordinating issues, saying that "while FERC can and should work with the North American Electric Reliability Corporation...only FERC can propose and adopt policy as to how that coordination should be implemented."
The pipeline group further suggested that the Commission appoint a commissioner to lead each regional technical conference, and report the findings (and solutions) back to FERC for the particular region by December [AD 12-12].
The comments were in response to a proposed rule, which the FERC issued in early February, seeking to improve the coordination between the natural gas and electricity industries to avoid a repeat of the severe gas service outage that curtailed energy delivery to thousands of customers in the Southwest last winter.
Consumption of natural gas in the power sector was 7.4 Tcf in 2010, up from 5 Tcf a decade earlier. And the development of shale gas will continue to feed the sector's gas appetite.
"Given the timeline of many coal-fired plant retirements, the time to commence...a focused, dedicated dialogue [between the two markets] is now," INGAA said.
The NYTO said electric and gas scheduling procedures should be coordinated, as much as possible, to reduce the potential for unexpected surges in gas usage by gas-fired generators to affect the reliability of gas transportation. The NYTO members include Long Island Power Authority, Rochester Gas and Electric Corp., New York State Electric & Gas Corp., New York Power Authority and Niagara Mohawk Power Corp.
"ISOs/RTOs should examine whether pipelines would need to offer power generators additional nomination cycles. Alternatively, organized electricity markets could adjust their timelines so that power generators work within pipelines' nominating cycles," the transmission owners said.
Moreover, they called on the two industries to work together to ensure that "discretionary [planned] outages" are properly coordinated so that economic and reliability impacts are minimized, the NYTO noted. And the two should be prepared for the repercussions of unexpected outages.
An example of potential repercussions: "When a generator trips off-line, gas-fired generation serving as operating reserves may be called upon to quickly ramp up output by the electric system operator. This can cause a sudden increase in the demand for gas from the gas transportation provider and potentially affect gas system reliability. Similarly a sudden loss of gas transportation capacity could result in reductions in the gas available for electric generators," NYTO said.
NYTO said the ability of generators to recover any mandatory fuel-related costs, such as firm pipeline capacity costs or dual fuel costs, should be discussed as well. "Where firm gas transportation, dual fuel capability or other specialized pipeline services, such as no-notice service, are necessary to maintain reliability generators should be given reasonable assurance that they will be able to recover the costs of such services."
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