Natural gas and electric market participants – especially gas-fired generators, utilities, and pipelines – now have a valuable opportunity to help shape national energy policy addressing the interconnectedness of electricity and natural gas markets, particularly for ensuring the reliability of each during extreme weather events that impact both industries. Comments are due to the Federal Energy Regulatory Commission (FERC) on or before 30 March 2012.
On 15 February 2012, FERC issued a notice requesting comments on the interdependence between the gas and electric industries as a follow-up to a prior request made by Commissioner Philip Moeller. Due to the increased focus on the importance of ensuring reliable natural gas supply for electricity generation, Commissioner Moeller issued a request for comments regarding the role FERC and other regulators should play in promoting better coordination between the electricity and natural gas markets on 3 February 2012. Commissioner Moeller’s request is part of an on-going effort stemming from the Southwest Outages of February 2011, which involved interconnected gas and power outages during a cold snap in Texas. As noted in an August 2011 joint report by the staffs of FERC and the North American Electric Reliability Corporation (NERC), the unusually low temperatures from during the first week of February 2011 caused generator equipment to freeze, resulting in power outages, as well as well freeze-offs and other issues resulting in gas curtailments. The joint staff report also identified instances where outages/curtailments in one industry lead to service disruptions in the other. For example, the joint staff report found that roughly one quarter of the natural gas shortfalls in the Permian and Forth Worth Basins during the Southwest Outages were attributable to rolling blackouts or customer curtailments affecting producers.
Moeller sought comments on a range of questions including:
- What role FERC should play in overseeing better coordination?
- What duties, if any, should be delegated to NERC or other entities?
- To what extent should FERC defer to various regions of the country in addressing these challenges?
- Should FERC view organized electricity markets differently from bilateral electricity markets?
- Does FERC need to address how the expanded use of natural gas for electricity generation is likely to change the flows on the natural gas pipeline system?
- How should FERC help to harmonize the differences between the gas and electricity trading markets?
- •To what extent should FERC consider modifying existing Standards of Conduct with regulated utilities — either on an emergency basis or in a more fundamental manner — to ensure greater coordination between these industries?