FERC Commissioner Philip Moeller Tuesday said a formal rulemaking may be required to resolve the inconsistencies in scheduling so that natural gas pipelines can better serve power generation markets. This is opposite of the opinion held by Chairman Jon Wellinghoff, who earlier this month suggested that a rulemaking was not the way to go (see Daily GPI, Sept.6).
A rulemaking would be a significant procedural step, but it may be necessary to help harmonize the two energy sectors during a period of expanding gas demand by the power sector. The issue of working out the different schedules for the two markets “needs the full attention of the Commission” to ensure momentum for a solution, Moeller said during a Platts Energy Podium event in Washington, DC. Such a rulemaking effort could take between two and three years, he said.
But because each region has its unique set of gas-power coordination issues, Wellinghoff doesn’t believe a rulemaking is the right way to tackle the problem. “To get a rule, it would have to be something that was uniform across the country. I’m not sure that there is a uniform problem across the country,” he told reporters earlier this month (see Daily GPI, Sept. 6). “What struck me in the regional conferences I attended…is the differences between each region in the way that they operated, and because of those differences I’m not sure that it’s amenable to a rulemaking.”
In August FERC sponsored five technical conferences to explore coordination issues in the gas and power markets in the Mid-Atlantic, New England, Southeast, West and Midwest regions (see Daily GPI, Aug. 31; Aug. 29; Aug. 21; Aug. 24).
“If we go down this path [whether with a rulemaking or some other procedure], we need FERC invested in this process so that it’s not a waste of time,” Moeller said. In the meantime and before the upcoming heating season, FERC must facilitate full communications between pipelines and generators, said Moeller, a Republican on the Democrat-dominated, five-member Commission.
While the Commission considers whether a market scheduling rule is needed, it is also looking at updating its code of business practices “to make sure that the right people are talking to each other” during a gas shortage for generators. The legal analysis that would be required to make changes is under way at FERC, Moeller said.
The warm 2011-2012 winter in the eastern U.S. “may have masked” the significant challenges posed by gas-electric coordination, he said.
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