With increasing demand for natural gas by power generators on the horizon and some in the energy industry lamenting a lack of coordination between gas and power interests, the Interstate Natural Gas Association of America (INGAA) has established a board-level task force to tackle issues related to growing power demand for gas.
The task force, led by Gary Sypolt, CEO of Richmond, VA-based Dominion Energy, will engage regulators, power generators and transmission operators, regional and national reliability organizations, the media and the public, gas pipeline trade association INGAA said.
“Forecasts for the increased use of natural gas for the generation of electricity in the U.S. are based on two benefits: low cost and environmental advantages,” Sypolt said. “This is an important development for both the natural gas and electric power industries. Given this enhanced role for natural gas, the industries, regulators and other stakeholders must work together to provide a reliable and cost-effective system for the additional natural gas transmission infrastructure required.”
Earlier this year the Natural Gas Supply Association (NGSA) called on the Federal Energy Regulatory Commission (FERC) to not take a piecemeal approach to resolving coordination issues affecting gas and power markets. NGSA said there are “buckets” of issues to address under the “umbrella of gas-electric integration,” 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 (see Daily GPI, April 2).
FERC has requested comments on the issue of tighter gas-power integration. In February the Commission issued a proposed rule, seeking to improve coordination between the gas and power industries to avoid a repeat of the severe gas service outage that curtailed energy delivery to thousands of customers in the Southwest in February 2011 (see Daily GPI, Aug. 18, 2011). INGAA and the American Gas Association have sought technical conferences on the issue (see Daily GPI, April 3).
INGAA has suggested that the discussion focus on question such as:
“The interstate natural gas system has a long history of financing and constructing the pipeline infrastructure needed to meet its customers’ needs in a timely and cost-effective manner,” said INGAA CEO Don Santa. “I’m confident that the industry will be able to meet the opportunities and challenges of increased natural gas-fired generation. Still, we recognize that the gas pipeline and electric industries need to work together with regulators to address and remove any impediments to greater utilization of natural gas for electricity generation. “
Natural gas pipeline and electricity markets are very different, Santa said. The two industries grew up largely separate from one another and there are significant differences in the commercial, regulatory and operational models under which they do business. Consequently, in designing policies, rules and practices that will facilitate a smooth transition to greater reliance on gas-fired power generation, it will be important to recognize and accommodate these differences, Santa said.
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