Regulator Makes Case for Gas Lines Over New Power Transmission
Gas pipeline industry lobbyists are missing an excellent
opportunity to promote greater expansion of the pipeline network,
Commissioner Brent Alderfer of the Colorado Public Utilities
Commission said at the annual conference of the Colorado Oil and
Gas Association earlier this month. The power industry apparently
has overlooked the relative ease and economic advantage of building
new gas pipelines and distributed generation to constrained areas
compared to constructing remote generation and new power
transmission lines, said Alderfer.
The role of gas pipelines in serving the generation market
should be viewed in a new light as the power industry and those
that regulate it struggle to understand recent reliability problems
and price spikes, he noted. The focus in the power industry has
been on building new transmission, opening up the power grid and
installing ISOs. But in many cases, that either won't solve
existing constraint problems, or in the case of building more
transmission, is politically and environmentally difficult.
"The national debate on electric markets, market power,
reliability and Independent System Operators needs to include
pipeline additions and distributed generation as competitive
alternatives to exclusive service with new electric transmission
lines," said Alderfer.
According to his calculations there is a clear cost advantage in
building gas lines to gas-fired power plants rather than new power
line from remote plants. Under one example, which he cited, a
company would have a choice of two construction scenarios: 1) build
a remotely located 400-MW combined cycle gas-fired power plant at
cost of $600 per kilowatt ($240 million), a $4 million switchyard,
a new 300-mile (345KV) transmission line at $333 k/mile (or $100
million); or 2) build a 300-mile 24-inch diameter gas line (250
MMcf/d or the equivalent of 3,200 MW) with compression at a cost of
$500,000/mile ($176 million), and build 4.5 new 400 MW
combined-cycle gas-fired power plants and switchyards at the end of
the pipe located near the demand center. The first scenario would
result in a delivered power rate of 3.35 cents/kWh at $2/MMBtu for
gas supply. But the second scenario would be 0.51 cents/kWh cheaper
with a power rate of 2.84 cents/kWh.
"If you compare the cost efficiencies, uses and community appeal
of natural gas pipelines versus electric transmission, [gas wins
hands down]," Alderfer said.
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