FERC Takes Three Actions to Harmonize Gas and Electric Coordination

FERC today took several steps to address the growing interdependence between natural gas and electricity. Citing the Southwest Cold Weather Event in 2011 and the Polar Vortex and sustained cold weather this past winter, FERC issued a Notice of Proposed Rulemaking that would help to harmonize the natural gas and electric industry schedules. The Proposed Rulemaking would:

  1. begin the natural gas operating day five hours earlier to ensure no shortage of gas supply in the mornings;
  2. move the first day-ahead gas nomination opportunity an hour and a half later so that electric utilities can finalize their schedules before gas-fired generators have to make gas purchase arrangements; and
  3. add two more nomination cycles per day (for a total of four) to increase flexibility for all pipeline shippers.

FERC ordered the natural gas and electric industries to work through the North American Energy Standards Board (NAESB) to develop draft new requirements within six months after the proposed rule appears in the Federal Register. FERC will then take public comments for 60 days thereafter on the draft requirements.

FERC also issued two related orders that would work in tandem with the new rulemaking. In the first order, FERC began investigations into the day-ahead scheduling practices of RTOs and ISOs. The second order requires all interstate natural gas pipelines to revise their tariffs so that offers can be made to purchase excess pipeline capacity.

Referring to all of these actions, Commissioner John Norris essentially cautioned against a rush to build new pipeline capacity, saying, “these orders promote a more efficient use of our existing pipeline infrastructure by looking first to how pipelines and electric generators are operating before investing additional funds in new infrastructure.”

Written by Joe Marren