American Gas - March 2014 - (Page 23)

ProPoSED rEvISED GaS DaY (all TImES cT) 9:00 a.m. gas day CyCle NomiNatioN DeaDliNe CoNfirmatioN SCheDule iSSueD Start of GaS flow timely 1:00 p.m. 4:30 p.m. 5:00 p.m. 9:00 a.m. n/a evening 6:30 p.m. 9:00 p.m. 9:30 p.m. 9:00 a.m. Bumpable intraday 1 9:00 a.m. 11:30 a.m. 12:00 p.m. 3:00 p.m. 3/4 (18 hours) Bumpable intraday 2 2:00 p.m. 4:00 p.m. 4:30 p.m. 9:00 p.m. 1/2 (12 hours) Bumpable intraday 3 9:00 p.m. 11:00 p.m. 11:30 p.m. 12:00 a.m. 3/8 (9 hours) No bump generation and firm customers in New England has followed, the transportation infrastructure hasn't kept pace. As a result, on most cold winter days pipelines are unavailable for anything but the primary firm contracts used by local distribution companies transporting supply and storage withdrawals to firm gas customers. On the coldest days, LDCs also use on-system LNG plants for peaking. The electric industry doesn't hold firm capacity and is suffering the consequences of reduced gas availability at higher prices when available. This electric industry contracting practice for gas capacity is the result of electric market design per the ISO-New England organized market, and the results are raising serious concerns. Structural differences hinder infrastructure development. Gas pipelines require firm, long-term contracts to justify enormous investments in new pipe. But the electric industry's short-term-oriented markets and fuel- supply planning neglect a long-term view that would support gas infrastructure build-out, even if it would increase reliability and reduce net cost. Although the issues are complicated and controversial, another problem is the electric industry's slow process of decision making, involving numerous formal committees and wide-ranging competing interests. What might finally change those realities is cold weather. In capacityconstrained areas like New England, as temperatures fall, the availability of nonfirm secondary gas decreases and its price rises dramatically. When gas is needed and available, it costs up to $80 per decatherm (January 2014 averaged $25/dth), and results in increased use of coal and oil, all translating to higher electric wholesale prices. It will require leadership to navigate the complexities of electric market change and to drive infrastructure development remaiNiNG GaS Day firm BumpiNG riGhtS forward. The New England Gas-Electric Focus Group is a regional forum where the gas and electric industries, regulators, and other stakeholders discuss challenges and explore solutions. The regional gas industry jointly has proposed at least 20 creative and flexible solutions to assist the electric industry in its desire to use more gas. One idea that may be gaining traction is that LDCs could contract for new firm gas capacity for electric generation, funded by an electric pass-through mechanism. In addition, in a recent FERC filing, ISO-NE proposed a pay-for-performance model for power generators designed to incentivize electric generators to make investments that would improve performance. This intriguing idea raises key long-term issues for debate-and hopefully will prompt resolution at FERC. These solutions largely remain ideas for now. But we're gaining momentum. It's time to move forward and build what's needed, quickly. march 2014 AmericAn GAs 23

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American Gas - March 2014