Massey: RTOs Spell Good News for Gas Generators
Regional Transmission Organizations (RTOs), a grid
interconnection policy and FERC's merger-review policy are issues
that have captured the interest of the electric industry, but
Commissioner William Massey says natural gas companies should be
equally as curious since the measures are likely to favorably
"Number one, we believe that RTO formation will stimulate entry
for new gas-fired generation. Why is that? Gas-fired generators may
often be merchant facilities," which "need large vibrant electric
markets to sell their power." The creation of such markets is one
of the "stated policy goals of RTOs," which would amalgamate the
bulk power market into large regions.
"RTOs I believe, because they will spur new gas-fired
generation, will stimulate pipeline expansion in order to achieve
this 30-35 Tcf market" that the gas industry forecasts for 2015, he
said at the winter meeting of the National Association of
Regulatory Utility Commissioners (NARUC) in Washington D.C. last
"The RTOs, I believe, will also facilitate efficient pipeline
operation. There will be a load-leveling effect of gas-fired
generation, much of which [will] peak in the summer" rather than in
the winter, as occurs in traditional gas markets. Furthermore RTOs
"will reinforce the need for transactional transparency in gas
"First and foremost, we need to eliminate whatever barriers
there are to electric generation interconnect.....An independent
generator needs the same right to interconnect to the grid that
utility generation has. That should be a feature of our policy, and
arguably already is as a matter of fact under Order 888," he noted.
Likewise, parties shouldn't be required to subscribe to
long-term transmission capacity as a condition to interconnecting
with the electric transmission grid. Massey said the energy
industry or the Commission should propose a "uniform agreement" for
interconnections. "I believe that gas-fired generation and the
entire gas industry will benefit from such a policy."
As for FERC's merger-review policy, Massey noted that "to the
extent the Commission ensures that anti-competitive effects of
mergers are mitigated, we are essentially promoting markets" for
electricity, and gas also.
In the vertical Dominion-Consolidated Natural Gas merger, for
example, "we took our basic Order 497 rules [regarding marketing
affiliates].....and we applied those rules more broadly, so that
the upstream natural gas pipeline could not use its access to
sensitive information in a way that would favor its newly acquired
downstream generation resources," he said.
Also speaking at the NARUC meeting, FERC Commissioner Linda K.
Breathitt said there may be an Internet-effect on FERC proceedings.
"....[L]andowners I think, and it may be through the advent of the
Internet, are communicating over larger areas with one another, and
are getting more organized to bring their issues to local forums,
to state forums and to federal forums, such as FERC," she said.
"So they're getting very savvy about new pipeline construction
either in a crowded urban area or [in] a new area," which "presents
us with more issues on our plate to deal with," Breathitt noted. "I
think we are entering into an era.....that raises a lot of new
issues for the Commission, and those are landowners' concerns."
Asked what the Commission's plans in the wake of Order 637, she
said it will include discussions with stakeholders "about such
issues as whether we need to make regulatory changes to accommodate
the convergence of energy markets, whether we need to further
standardize terms and conditions of service and what rate design
changes may be appropriate for the future."