A notice of proposed rulemaking (NOPR) issued by FERC last week that would, among other things, start the gas day at 4 a.m. central clock time (CCT) instead of the current 9 a.m. has quickly become a 'lightning rod," but changes to the current system are inevitable, and the earlier start time isn't non-negotiable, according to Acting Chairman Cheryl LaFleur.
LaFleur spoke at the Natural Gas Roundtable in Washington, DC, Thursday, one week after the Federal Energy Regulatory Commission issued the NOPR and established proceedings under the Federal Power Act and Natural Gas Act in an effort to better coordinate the nation's interstate pipelines and gas-fired power plants (see Daily GPI, March 20).
"By far the one that seems to have been the lightning rod so far is the proposed change in the gas day to 4 a.m. central clock time," LaFleur said. Most of the questions she's fielded since the FERC meeting, she said, have to do with the choice of 4 a.m. CCT.
"What we were trying to get was about as late as you could optimize, we thought, the needs of the natural gas industry, and still keep the electric morning ramp in one gas day, rather than having it split between two gas days...we also tried to take into account the fact that there are four different time zones in the country.
“A lot of the issues have been in the East, but we also have issues in the Southwest...obviously, a standard time hits [the four time zones] all differently and affects their electric bidding differently, and we tried to come up with a sweet spot that these proposals put out there.
"We definitely recognized -- and recognize, present tense -- that this was just a proposal. All notices of proposed rulemaking are proposals, and if you're not going to take the comments that you get in and look at whether you should change your proposal, why do you spend so much time doing this process? We recognize that the people in the best position to find out what the optimal time is are the people in this room and your counterparts in the electric industry as well, on the other side of this issue. So what we said was, 'Hey, we want to get a proposal out on the table; here it is. We're giving industry six months to come up with something better, or another proposal through the NAESB [North American Energy Standards Board] combined process."
Different facets of the NOPR, including the proposed change to the start of the gas day, could be revised by the time a final rule is adopted, LaFleur said.
"I think if the industry, including some of the transmission operators and generators in the Northeast who've been so vocal on the other side of this, came to a consensus agreement, we would be hard put not to give that serious consideration. I think that, of course, the hardest of all will be if the industry comes to multiple consensus agreements...the more consensus is, the better, because this is something that's going to require change, and change is hard...
"We're asking a lot of people to make this change, so we want to make it worthwhile. It may not be that 4 a.m. is the most worthwhile, and that's what we're waiting to hear. But we don't want to be here in two years saying, 'Well, that was great, but can you move it another two hours?' Because that's a lot of work for everyone."
In late January, LaFleur said, FERC was keeping its eyes on infrastructure and on the markets, but she said natural gas and electricity price spikes brought on by record cold were a sign that the markets were actually working (see Daily GPI, Jan. 28). Last month the Commission agreed to hold a technical conference on Tuesday (April 1) to evaluate the U.S. electric grid's performance and review interaction between the natural gas and electricity markets (see Daily GPI, Feb. 20).
"It really has not been a good winter, unless you like Arctic cold, for much of the country, and that winter has really stressed both the electric and gas systems in the country," LaFleur said at the roundtable. "Fortunately, as I said, they bent but did not break, but at times prices, particularly spot gas prices in regions that have a heavy reliance on natural gas, were very, very high indeed."
The most important thing to come out of the technical conference will be lessons learned that can be put in practice in the next winter, she said. "It will give us insight into how the markets are operating [and] some of the potential reliability issues that are caused by how tightly the system was run," which could shed light on FERC's future natural gas/electricity work.