Regional Transmission Organizations (RTOs), a gridinterconnection policy and FERC’s merger-review policy are issuesthat have captured the interest of the electric industry, butCommissioner William Massey says natural gas companies should beequally as curious since the measures are likely to favorablyinfluence demand.

“Number one, we believe that RTO formation will stimulate entryfor new gas-fired generation. Why is that? Gas-fired generators mayoften be merchant facilities,” which “need large vibrant electricmarkets to sell their power.” The creation of such markets is oneof the “stated policy goals of RTOs,” which would amalgamate thebulk power market into large regions.

“RTOs I believe, because they will spur new gas-firedgeneration, will stimulate pipeline expansion in order to achievethis 30-35 Tcf market” that the gas industry forecasts for 2015, hesaid at the winter meeting of the National Association ofRegulatory Utility Commissioners (NARUC) in Washington D.C. lastTuesday.

“The RTOs, I believe, will also facilitate efficient pipelineoperation. There will be a load-leveling effect of gas-firedgeneration, much of which [will] peak in the summer” rather than inthe winter, as occurs in traditional gas markets. Furthermore RTOs”will reinforce the need for transactional transparency in gasmarkets.”

“First and foremost, we need to eliminate whatever barriersthere are to electric generation interconnect…..An independentgenerator needs the same right to interconnect to the grid thatutility generation has. That should be a feature of our policy, andarguably already is as a matter of fact under Order 888,” he noted.

Likewise, parties shouldn’t be required to subscribe tolong-term transmission capacity as a condition to interconnectingwith the electric transmission grid. Massey said the energyindustry or the Commission should propose a “uniform agreement” forinterconnections. “I believe that gas-fired generation and theentire gas industry will benefit from such a policy.”

As for FERC’s merger-review policy, Massey noted that “to theextent the Commission ensures that anti-competitive effects ofmergers are mitigated, we are essentially promoting markets” forelectricity, and gas also.

In the vertical Dominion-Consolidated Natural Gas merger, forexample, “we took our basic Order 497 rules [regarding marketingaffiliates]…..and we applied those rules more broadly, so thatthe upstream natural gas pipeline could not use its access tosensitive information in a way that would favor its newly acquireddownstream 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 theInternet, are communicating over larger areas with one another, andare 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 constructioneither in a crowded urban area or [in] a new area,” which “presentsus with more issues on our plate to deal with,” Breathitt noted. “Ithink we are entering into an era…..that raises a lot of newissues for the Commission, and those are landowners’ concerns.”

Asked what the Commission’s plans in the wake of Order 637, shesaid it will include discussions with stakeholders “about suchissues as whether we need to make regulatory changes to accommodatethe convergence of energy markets, whether we need to furtherstandardize terms and conditions of service and what rate designchanges may be appropriate for the future.”

Susan Parker

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