Responding to concerns that it heard during five regional conferences in August, FERC Thursday called for more conferences aimed at improving the coordination between natural gas pipelines and power generators.

The draft order, issued by the Federal Energy Regulatory Commission (FERC), was in response to information that the agency gathered at the five regional conferences on gas-power coordination issues in the Mid-Atlantic, New England, Southeast, West and Midwest regions (see Daily GPI, Aug. 31; Aug. 29; Aug. 21; Aug. 24). The Commission Thursday published the “Staff Report on Gas-Electric Coordination Technical Conferences” [AD12-12-000].

In the draft order, the Commission has directed staff to convene two technical conferences to focus on issues that arose in nearly every regional conference. It directs regional transmission organizations (RTO) and independent system operators (ISO) to report progress on their gas-power coordination efforts to FERC, and it directs FERC staff to report on the coordination efforts of regional markets. FERC has not scheduled dates for the technical conferences.

In the meantime ISO-NE, concerned about its increased reliance on gas-fired power, asked the Commission earlier in the week to install interim rules for real-time communication with pipelines within the next month to help New England power producers get through the winter. In a filing at FERC, ISO-NE warned of “significant reliability concerns regarding generator performance that may be exacerbated during the upcoming winter” [ER13-356]. ISO-NE proposed that its “Pipeline Information-Sharing Changes” become effective Dec. 7 on an interim basis (see Daily GPI, Nov. 15).

The ISO is particularly concerned because the region is relying increasingly on gas-fired resources. And, in fact, the Commission staff, in its “Winter Outlook” report presented last week, voiced concerns about possible supply shortfalls in New England.

“In the event of a colder-than-normal winter, or extended cold spells, New England could experience some tightening of supply,” Ryan Jett, from FERC’s Office of Enforcement, told Commissioners. “In particular, New England could see high winter power burn, which adds to winter peak demand from non-power sectors. Combined with the likelihood of lower LNG imports compared to last year and high utilization of pipelines bringing Gulf Coast and Marcellus gas into the region, this could lead to price spikes (see Daily GPI, Nov. 16).”

In issuing its order for more regional conferences, FERC said that during the conferences last August, several recommendations were made by power generators and pipelines to improve reliability and coordination between the two markets: eliminating the no-bump rule for interruptible transportation capacity on interstate gas pipelines; changing the clearing deadline for the day-ahead market; and upgrading gas infrastructure.

The new technical conferences will explore two issues: the barriers to effective communication between the natural gas and electricity industries, and scheduling between the natural gas and electric markets. “The harmonization of the gas and electric days; pipeline capacity release; efficient utilization of existing pipeline capacity and other matters were brought up in almost every region during the August conferences,” a FERC staff member said. A second conference is warranted to focus on these matters.

The draft order also directs each RTO and ISO to appear before the Commission on May 16 to report their market experiences during the winter and early spring, and again to appear on Oct. 17 to detail their efforts and progress in improving coordination between the gas and power markets.

In addition, FERC has called on staff to report on the gas-power coordination activities at least once each quarter in 2013 and 2014.

In order to meet the power industry’s demand for gas, Commissioner John Norris said “we [should] maximize our existing resources first…with the recognition that we’re going to need some new pipelines.” However, “let’s not build until we know that’s a necessary investment for consumers to bear.”

“The trend lines are pretty clear. We’re going to be using more gas to make electricity,” said Commissioner Philip Moeller, who has led the effort at FERC to improve the coordination of the gas and power markets. “Some people have concerns about the price volatility aspects of that. I’m less concerned about price impacts but more about reliability impacts.”

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