American Gas - November 2013 - (Page 36)

An update on FERC's progress in improving coordination between the gas and electricity industries By Andrew K. soto h e a dway ThE GAs-ElECTRiCiTy NExus F or more than two years now, the Federal Energy Regulatory Committee has focused its attention on the interdependence between the natural gas and electricity systems. For some in the agency, the nation's growing reliance on natural gas to generate electricity poses a potential electric reliability problem. FERC continues to make improving coordination between the natural gas and electricity markets a top priority. It is focusing its efforts in three areas: information sharing among system operators; scheduling and nomination procedures for natural gas and electricity; and the investment environment for building infrastructure. FERC is considering actions in several rulemaking and individual proceedings to address these issues. After a series of regional technical conferences, FERC staff issued a report in November of last year outlining the issues and providing recommendations. Based on the report, FERC directed staff to convene further technical conferences to address the ability of each industry to share information consistent with FERC's restrictions on undue discrimination and scheduling discontinuities between the gas and electric industries. FERC held a technical conference in February and proposed rules authorizing the exchange of non-public, operational information between electric transmission operators and interstate natural gas pipelines for the purpose of promoting reliable service or operational planning-not just during emergencies, but also for day-to-day operations, planned outages, and scheduled maintenance. FERC also proposed prohibiting recipients of the information from disclosing or being a conduit for the disclosure of the information to its marketing employees or any other entity. Most comments on the proposal were supportive. However, some were concerned about the potential for improper informationsharing, while others doubted that the new rules would do much to improve reliability. FERC is expected to finalize the rules before the end of this year. FERC held a technical conference on scheduling discontinuities between the gas and electric industries in April and is expected to open a rulemaking docket on the issue by the end of the year. Several themes emerged at the conference that may form the basis for FERC action. The deadline for scheduling natural gas in the timely nomination cycle is 11:30 a.m. Central clock time the day before gas flow. However, some electric markets do not provide dispatch 36 AmericAn GAs november 2013 orders to their generators until later, thus preventing the generators from submitting a timely nomination for the gas they may need. Also, the gas day begins at 9 a.m. Central clock time, whereas electric utilities operate on a midnight-to-midnight day. Consequently, generators that might have underestimated the amount of gas they will need during a gas day may be unable to run in the early morning hours just when the electric system is beginning to ramp up. Further, the gas day provides at least three opportunities after the timely nomination cycle for shippers to change their nominations, and at the last opportunity gas that is flowing cannot be bumped, even by a shipper with a higher priority. Generators, especially those holding firm capacity contracts, would like additional intraday scheduling opportunities and the ability to bump shippers with lower priorities even at the last cycle. The Natural Gas Council is examining changes to the gas day and gas nomination cycles that may address these issues. The NGC hopes to come to consensus on recommendations before the end of the year. Some have argued, however, that the key to improving reliability lies in having adequate natural gas infrastructure. For the parts of the country where the gas infrastructure is robust and can support the gas-fired generation in the region, these issues are not a priority. Conversely, gas-electric coordination is a priority in those regions, e.g., New England, with insufficient pipeline infrastructure to meet the needs of generators,. How electricity markets in regions with constrained pipeline systems should support investment in natural gas infrastructure is the fundamental question. FERC's technical conference in September examined how the centralized capacity markets operated by the regional transmission operators and independent system operators are supporting the procurement and retention of the natural gas infrastructure resources needed to meet reliability and operational needs. In addition, FERC is taking up the issue through individual tariff filings by the RTOs, ISOs, and others. For example, in June, FERC ordered ISO-New England to provide a mechanism for generators to better recover their actual fuel costs. ISO-New England has also proposed a number of changes to its energy and reserve markets to more accurately reflect actual fuel costs incurred by generators. These filings are pending. u Andrew K. Soto is senior managing counsel for Regulatory Affairs at AGA.

Table of Contents for the Digital Edition of American Gas - November 2013

American Gas - November 2013
President’s Message
Subject Index
Head Start: On Energy Education
By the Numbers
Need to Know
The Wheels on the Bus...
New Jersey
Long Island
Fueling the Future
U.S. Secretary of Energy Ernest Moniz
A Tight Ship
Expanding the Reach of the Gas Infrastructure
Company Profiles

American Gas - November 2013