American Gas - August/September 2014 - (Page 40)

In an effort to enhance reliability between the natural gas and electric industries, FERC has initiated several rulemakings and individual proceedings BY LORI TRAWEEK H E A DWAY FERC TAKES THE LEAD: AN APPRAISAL T he continued abundance of domestic natural gas, in combination with relatively low natural gas prices and new environmental regulations, is putting the pressure on electric markets to increasingly rely on natural gas-ﬁred generation. In the national policy space, the Federal Energy Regulatory Commission has taken the lead in examining this from the perspective of boosting gas-electric coordination to improve the reliability of energy delivery. In particular, FERC is looking at how the nation's growing reliance on natural gas to generate electricity may impact electric reliability. In an effort to enhance reliability between the natural gas and electric industries, FERC has issued several orders. In March, FERC issued a notice of proposed rulemaking, identifying three major areas for revision to the natural gas scheduling system: starting the natural gas operating day earlier to ensure reliability during morning electric ramp periods; starting the ﬁrst dayahead timely nomination cycle later to align the most liquid time of the gas schedule with electric nomination requests; and providing additional intraday nomination cycles to provide greater ﬂexibility throughout the gas day. FERC proposed that the natural gas operating day start at 4:00 a.m. Central time, in an effort to increase reliability for electric generators that experience capacity shortages, due to the current mismatch between the gas and electric operating day. Currently, the gas day uniformly begins at 9:00 a.m. Central time, whereas the electric day varies from region to region, but generally begins at midnight local time. In certain regions, if electric generators underestimate the amount of gas needed for an operating day, they risk exhausting their capacity during the early morning ramp period when the gas day is nearly ending. FERC also proposed moving the timely nomination deadline from 11:30 a.m. Central time, to 1:00 p.m. Central time, in order for electric generators to submit bids during the timely nomination cycle. Electric markets generally do not provide dispatch orders to their generators until after the natural gas timely nomination deadline, thus preventing generators from submitting a timely nomination for gas supply. In accordance with moving the timely nomination cycle to a later start time, FERC also proposed that the natural gas schedule include four intraday cycles, with the last intraday becoming no-bump, in 40 AMERICAN GAS AUGUST/SEPTEMBER 2014 order to enhance scheduling ﬂexibility and provide balance between the needs of ﬁrm and interruptible shippers. AGA is working with its memberships to determine the practicality of these proposals. AGA is focused on ensuring that gas utilities have the conﬁdence in acquiring needed supply to meet their obligation to serve customers and that the overall safety, reliability, and affordability that consumers have come to expect is not compromised. FERC believes that a modiﬁed schedule supported by the natural gas and electric industries would be favorable, and therefore recommended that both industries work through the North American Energy Standards Board's Gas Electric Harmonization Forum to reach consensus on the revisions FERC has proposed, or offer an alternate proposal. While the forum has not reached consensus on a complete alternate proposal, NAESB recognized that there was broad support from both industries to modify the intraday scheduling cycles and the day-ahead nomination cycles. In addition to the rulemaking, FERC issued two separate but related orders. FERC issued an order requiring each regional transmission organization and independent system operator to examine its day-ahead scheduling, to ensure it will correlate with the revised natural gas schedule that may be adopted in FERC's ﬁnal rule. FERC also issued an order requiring interstate pipelines to revise tariffs to include the posting of offers to purchase capacity, or otherwise demonstrate compliance. FERC's regulations already require pipelines to provide the posting of offers to purchase capacity in order to increase communication and promote the efﬁcient use of ﬁrm pipeline capacity, but interstate pipelines were not complying. Accordingly, FERC issued the order to require interstate pipelines to be in full compliance with the existing regulations. In April, FERC held a technical conference to assess the impacts of cold weather events on regional transmission organizations and independent system operators. FERC noted that the winter events emphasized the interdependence of the natural gas and electric industries. ISOs and RTOs also recognize the signiﬁcance of gas-electric communication, and are working to develop near-term and long-term agendas to address electric and natural gas operational and planning issues. u Lori Traweek is senior vice president and chief operating ofﬁcer at AGA.

Table of Contents for the Digital Edition of American Gas - August/September 2014

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American Gas - August/September 2014