With electricity generation becoming ever more dependent on natural gas, coordination between the two markets will continue to be a top priority and a series of other issues need to be resolved, according to panelists at the Energy Bar Association (EBA) Mid-Year conference in Washington, DC, Friday.
Communication between power generators and pipelines has been the subject of discussions over the past year, said Georgia Carter, senior vice president rates and regulatory affairs at NiSource Gas Transmission & Storage, but there are still many unanswered questions.
“We’re not supposed to favor one group of customers over the other. So…can we discuss whether a particular power plant can run? Can we give that power plant information that’s not public? What about if an RTO [regional transmission organization] wants to know if we think a power plant will run? It’s not clear that we can have those discussions, and it’s also not clear that we want to.”
The list of things to consider as the two industries work ever more closely includes clarifying permissible communications and protocols, and addressing disconnects between the gas and electric ends of the market, Carter said. But along with those business flow issues comes a more nuts and bolts problem which must also be addressed, she said. “We also need to encourage new and needed infrastructure. We’re not going to be able to handle these new loads without that infrastructure. The hard thing is that we need to address the disconnect between gas and electric, but addressing just those disconnects and communications is not going to solve infrastructure issues from a pipeline perspective.”
The Federal Energy Regulatory Commission (FERC) in August held five regional conferences on gas-power coordination issues in the Mid-Atlantic, New England, Southeast, West and Midwest regions (see Daily GPI, Aug. 31; Aug. 29; Aug. 21; Aug. 24). Last week the Commission published the “Staff Report on Gas-Electric Coordination Technical Conferences” [AD12-12-000] and called for more conferences aimed at improving the coordination between natural gas pipelines and power generators (see Daily GPI, Nov. 19).
Last month ISO-NE, concerned about its increased reliance on gas-fired power, asked the Commission to install interim rules for real-time communication with pipelines within the next month to help New England power producers get through the winter. In a filing at FERC, ISO-NE warned of “significant reliability concerns regarding generator performance that may be exacerbated during the upcoming winter” [ER13-356] (see Daily GPI, Nov. 15).
The ISO is particularly concerned because the region is relying increasingly on gas-fired resources. And, in fact, the Commission staff, in its recent “Winter Outlook” report, voiced concerns about possible supply shortfalls in New England.
At the EBA conference, Pete Brandien, vice president system operations at ISO-NE, said New England gets anywhere from 50-70% of its energy from gas-fired units depending on conditions each day. Because the region doesn’t have the massive natural gas storage facilities available to some other regions, it is uniquely dependent on natural gas pipelines for its electricity generation.
“I don’t have a lot of flexibility with the existing fleet that I have in New England,” Brandien said. “I really rely on those gas units and if they’re not flexible, if I don’t understand the flexibility that the pipeline can provide, it puts me in a very difficult situation trying to maintain the reliability of the system.” And a recent strategic planning initiative made clear to ISO-NE that “growing dependence on natural gas is the highest priority strategic risk for the region,” he said.
The gas and electric markets aren’t aligned and there are market problems — including the difference between the length of the gas day and the electric day — that will have to be resolved, but, like Carter, Brandien believes the natural gas pipeline system must be revamped if the two markets are going to work together most efficiently. “The existing pipeline system is incapable of doing what we’re asking it to do,” he said.
Calpine Corp., which is one of the largest consumers of natural gas for power generation in the country, disagrees with some of the worries about natural gas service for electricity generation. During FERC’s technical conferences, “there were a lot of statements about natural gas generators that we took exception to — things like ‘natural gas generation is not reliable,’ ‘natural gas generators only serve interruptible products, they’re not a firm provider of electricity,’ ‘there’s not enough natural gas pipeline capacity to serve natural gas generators,’ ‘natural gas generators should have mandatory firm contracts to serve all of their gas generation.’ These were wrong statements that caused us a lot of concern,” said Sarah Novosel, senior vice president government affairs at Calpine. The company’s experience with gas has been very different, she said.
“The gas industry has proven to be very reliable and it’s resilient. The gas industry works great. We were concerned…that maybe people wanted to change the gas industry in ways that could actually make it less reliable or less dependable. We want to caution people — let’s not do anything to the gas industry that’s going to effect the success that it’s had so far.”
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