INGAA filed comments in association with the Commission’s “Notice Assigning Docket No. and Requesting Comments,” Docket No. AD12-12, on the coordination of natural gas and electricity markets. INGAA stated that it appreciates FERC’s recognition of the importance of the interface between the natural gas and electric power markets as electric power generators and their customers increase their reliance on natural gas as a fuel source. As the electric industry transitions to greater use of natural gas over the next five to ten years, interstate pipelines stand ready to meet demand by continuing to provide reliable service, by building new infrastructure and, where needed, by offering new, tailored services. The interstate pipeline industry has a proven track record of building infrastructure and providing services in response to increased demand from the market. Assuming there is economic support, in the form of firm contracts, for the required services and infrastructure, there are no operational reasons that pipelines cannot serve electric generators reliably.
In its comments, INGAA urged the Commission to convene a series of timely and focused regional technical conferences – open to all stakeholders, starting in New England, over the next several months – to identify and address how the increased demand for natural gas for electric power generation may affect the reliability of the electric bulk power grid. Specifically, the technical conferences should attempt to resolve the following questions:
(1) To what degree will natural gas-fired generation be relied upon to ensure the reliability of the electric bulk power grid?
(2) How much and what type of firm pipeline capacity (or some other reliable back up fuel source) will be required, given other generating resources in the market, to ensure the reliability of the bulk power grid?
(3) Who should be responsible for holding the necessary pipeline capacity (or some other reliable back up fuel source)?
(4) How will the cost of holding that capacity be recovered?
(5) What type of tailored pipeline services could be provided to better serve natural-gas fired generators?
INGAA stated that the Commission should actively participate in these regional conferences and appoint a lead commissioner to each regional technical conference. FERC also should seek active state regulatory agency (state public service commissions and state public utility commissions) participation in these regional conferences. Each region should be directed to report back to the Commission on its findings and recommended solutions, for its particular region, by December 2012. With strong FERC leadership and with appropriate input from state regulatory agencies, the electric power industry can ensure a continued high level of electric reliability at reasonable cost to customers.
INGAA stated that FERC should direct the North American Electric Reliability Corporation (NERC), the ISOs/RTOs and other Planning Authorities to participate in this “bottom up” market participant process to determine whether certain electric generators or groups of electric generators hold sufficient quantities of firm natural gas transportation capacity to ensure electric reliability and, if not, how much additional firm transportation capacity is required. This stakeholder process should be open to both gas and electric industry participants including natural gas pipelines.