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 should be equally ascurious since the measures are likely to influence demand.

“No. 1, we believe that RTO formation will stimulate entry fornew 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 break the bulkpower market down 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. onTuesday.

“Over the next few years, there will be a 4.5 Tcf demandincrease for gas-fired generators” due in large part to theformation of RTOs, Massey told state utility regulators and energyindustry executives.

“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, he noted.Furthermore, he said RTOs “will reinforce the need fortransactional transparency in gas markets.”

In addition to “large vibrant” markets, gas-fired generators”also need an interconnection policy at the federal level thateases the right for generators to get [an interconnection] into theelectric grid,” Massey said.

“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. “In other words, we need tounbundle access to the grid through interconnection from accessacross the grid.”

Massey said the energy industry or the Commission should proposea “uniform agreement” for interconnections. “I believe thatgas-fired generation and the entire gas industry will benefit fromsuch 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. “The whole focus of our merger policy ispro-competitive.”

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.

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