The board of the National Association of Regulatory Utility Commissioners (NARUC) is slated to consider a resolution addressing the issue of coordinating U.S. natural gas and electricity grids at its next national meeting.
Timothy Alan Simon, a member of the California Public Utilities Commission (CPUC) and the NARUC natural gas committee head, said he was taking the resolution to the state regulators organization after being involved in new studies and workshops on the issue by the National Petroleum Council (NPC) and the Federal Energy Regulatory Commission.
Earlier in September, FERC Commissioner Philip Moeller said a formal rulemaking may be required to resolve the inconsistencies in scheduling between natural gas pipelines and power generators (see Daily GPI, Sept. 19). This is opposite of the opinion held by Chairman Jon Wellinghoff, who earlier this month suggested that a rulemaking was not the way to go (see Daily GPI, Sept. 6).
The dispute is not new. Earlier this year the Natural Gas Supply Association (NGSA) listed some of the coordination issues, including: the differences between gas and electric day scheduling; the operational and cost impacts of generation on existing pipeline shippers; gas and power communications; as well as electric reliability concerns associated with pipeline contracting practices and power market rate structures.
"Electric utilities want to look out the window and see the gas counterpart of a 'coal pile,' assuring them that natural gas will be there. A firm contract for natural gas transportation is the equivalent of the coal pipeline. Unfortunately, existing power market rules do not send the kind of price signals needed to secure firm pipeline services," the group said (i.e. power generators refuse to pay for firm service to ensure deliveries. (see Daily GPI, April 2).
As NARUC gas committee chair and a member of various gas-electric harmonization groups in the industry, Simon told his colleagues at the CPUC during a business meeting Thursday that California needs to pay more attention to the growing issue, which he cited as being touched on in the most recent NPC reports on the burgeoning growth of oil and gas reserves throughout North America (see Daily GPI, Sept. 16, 2011).
Simon noted that panel discussions on the "harmonization" issue have been held at the last two national meetings NARUC holds quarterly. "Largely the interest in this issue has come from the unfortunate outage that occurred in 2011 in the Southwest," Simon said (see Daily GPI, Feb. 7, 2011). "This really brought this issue to everybody's attention, and I think this is critical to California.
"As we increase our renewable portfolio standard (RPS) from 20% to 33%, we're going to see an increased dependency on natural gas for firming and shaping of those renewable loads."
Simon added that a large part of California's overall electricity supplies come from two major municipal utilities, some of which have large portfolios of coal-fired generation. "Now that fuel is switching as well, so even more of the load is coming to rely on gas," he said.
"This is a discussion going on nationally that is very relevant to California."
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