A.Northeast Region
Several participants in the Northeast Region conference stated their views that the region is in need of additional pipeline infrastructure. It was noted that New England historically has had strong fuel diversity and dual-fuel capability,5 and that this region will depend on dispatching generators with alternate fuel sources out of economic order to protect reliability in the face of possible natural gas delivery concerns.
Several pipeline participants reported that their systems within the Northeast are consistently running near their design capacities. According to statements made at the conference, some of the major existing pipelines serving the New England region are
nearly fully subscribed or constrained at specific points on their respective systems. The lack of available capacity may limit regional pipeline flexibility, and frequently results in flow restrictions and strict balance requirements. Both gas and electric industry participants stated that relatively little gas-fired generation in New England is backed by primary firm pipeline transportation contracts. Instead, participants stated that generators typically rely on released secondary firm or, to a much lesser extent, on interruptible transportation (IT) pipeline capacity. Some participants also discussed the roles of marketers in procuring both pipeline transportation service and gas supplies.
Conference participants reported that under the current market structure, generators have few incentives to obtain long-term primary firm pipeline service, invest in alternate fuel capabilities, or take other steps to ensure fuel availability. A representative of ISO-NE reported that several proposed revisions to its forward wholesale electric capacity market are being developed. ISO-NE’s representative and other conference participants also discussed a proposal to allow hourly re-offers in the real-time energy market, and revisions to ISO-NE’s price mitigation rules to allow bids to be adjusted to reflect actual fuel costs.6
Several conference participants indicated that options are limited for addressing the natural gas pipeline infrastructure issue in the near term. A representative of ISO-NE discussed its intentions to review generators’ plans for the winter and determine whether individual generating units would be able to continue operating during a cold snap similar to that of January 2004. Pipelines stated their focus for the upcoming winter would be to maximize utilization of existing pipeline capacity to ensure reliability.
In the intermediate term, an ISO-NE representative noted ISO-NE’s plans to propose adjustments to the electric market day-ahead scheduling and resource adequacy assessment process. Under its proposal, day-ahead awards may be released as early as 30 hours prior to the start of the electric day, and well in advance of the North American Energy Standards Board (NAESB) timely nomination deadline for gas pipeline capacity. ISO-NE stated its belief that the current timeline leaves it with too little time to mitigate generation supply risks before the start of the operating day. Some conference participants voiced support for such a change, while others stated that it would reduce, but not eliminate, the risk exposure of the generators.
Some electric utility and gas local distribution company (LDC) participants suggested that further, coordinated studies of regional gas and electric infrastructure are needed. A few electric industry participants offered the idea of a regional gas infrastructure planning effort, similar to how the region already performs regional electric infrastructure planning. Gas industry participants did not express support for this idea.
Commentary of participants suggested that they are generally comfortable with the quality of communications between the pipelines, generators, and ISO-NE. Some observed that the communications currently occur on a largely ad hoc basis, and suggested that efforts to further formalize the communications procedures could be beneficial.
Northeast Regional Initiatives
Many technical conference participants supported the idea of forming a steering committee to address concerns about gas-electric coordination in the Northeast. The steering group would consider changes to the electric day, maximizing assets in the region through maintenance planning, and changes to ISO-NE’s market rules, scenario planning, and funding mechanisms.
Participants at the conference discussed the need for improved coordination of maintenance outages among electric and natural gas industry participants. Representatives of pipelines and LDCs offered that the Northeast Gas Association is willing to lead the efforts to develop communication protocols governing gas and electric maintenance-related outage coordination.
As noted above, and according to the ISO-NE participants at the conference, ISO-NE is considering several potential modifications to its tariff, some to take place sooner than others. In the near-term, ISO-NE is considering a plan to conduct a supplemental procurement for natural gas, liquefied natural gas, or back up oil supplies to ensure adequate supplies over 2013 and 2014. Longer-term, ISO-NE plans to develop certain tariff revisions to move up the timeline for day-ahead unit commitment and the resource adequacy assessment process in an effort to provide additional time to ensure that gas-fired generators may procure gas supplies and delivery services so that adequate generation capacity is available in real time.7 Further, ISO-NE is considering several
changes to the market rules to allow energy and capacity prices to better reflect the risk of generator interruptible vs. firm gas procurement, including changes to the capacity product definition, changes to the resource adequacy assessment process, and a review of the consequences of generator non-delivery. ISO-NE is also considering a proposal to modify the real-time energy market and bid mitigation rules to allow generators to update bids to reflect changes in natural gas prices.
Several participants in the Northeast Region conference stated their views that the region is in need of additional pipeline infrastructure. It was noted that New England historically has had strong fuel diversity and dual-fuel capability,5 and that this region will depend on dispatching generators with alternate fuel sources out of economic order to protect reliability in the face of possible natural gas delivery concerns.
Several pipeline participants reported that their systems within the Northeast are consistently running near their design capacities. According to statements made at the conference, some of the major existing pipelines serving the New England region arenearly fully subscribed or constrained at specific points on their respective systems. The lack of available capacity may limit regional pipeline flexibility, and frequently results in flow restrictions and strict balance requirements. Both gas and electric industry participants stated that relatively little gas-fired generation in New England is backed by primary firm pipeline transportation contracts. Instead, participants stated that generators typically rely on released secondary firm or, to a much lesser extent, on interruptible transportation (IT) pipeline capacity. Some participants also discussed the roles of marketers in procuring both pipeline transportation service and gas supplies.
Conference participants reported that under the current market structure, generators have few incentives to obtain long-term primary firm pipeline service, invest in alternate fuel capabilities, or take other steps to ensure fuel availability. A representative of ISO-NE reported that several proposed revisions to its forward wholesale electric capacity market are being developed. ISO-NE’s representative and other conference participants also discussed a proposal to allow hourly re-offers in the real-time energy market, and revisions to ISO-NE’s price mitigation rules to allow bids to be adjusted to reflect actual fuel costs.6
Several conference participants indicated that options are limited for addressing the natural gas pipeline infrastructure issue in the near term. A representative of ISO-NE discussed its intentions to review generators’ plans for the winter and determine whether individual generating units would be able to continue operating during a cold snap similar to that of January 2004. Pipelines stated their focus for the upcoming winter would be to maximize utilization of existing pipeline capacity to ensure reliability.
In the intermediate term, an ISO-NE representative noted ISO-NE’s plans to propose adjustments to the electric market day-ahead scheduling and resource adequacy assessment process. Under its proposal, day-ahead awards may be released as early as 30 hours prior to the start of the electric day, and well in advance of the North American Energy Standards Board (NAESB) timely nomination deadline for gas pipeline capacity. ISO-NE stated its belief that the current timeline leaves it with too little time to mitigate generation supply risks before the start of the operating day. Some conference participants voiced support for such a change, while others stated that it would reduce, but not eliminate, the risk exposure of the generators.
Some electric utility and gas local distribution company (LDC) participants suggested that further, coordinated studies of regional gas and electric infrastructure are needed. A few electric industry participants offered the idea of a regional gas infrastructure planning effort, similar to how the region already performs regional electric infrastructure planning. Gas industry participants did not express support for this idea.
Commentary of participants suggested that they are generally comfortable with the quality of communications between the pipelines, generators, and ISO-NE. Some observed that the communications currently occur on a largely ad hoc basis, and suggested that efforts to further formalize the communications procedures could be beneficial.
Northeast Regional Initiatives
Many technical conference participants supported the idea of forming a steering committee to address concerns about gas-electric coordination in the Northeast. The steering group would consider changes to the electric day, maximizing assets in the region through maintenance planning, and changes to ISO-NE’s market rules, scenario planning, and funding mechanisms.
Participants at the conference discussed the need for improved coordination of maintenance outages among electric and natural gas industry participants. Representatives of pipelines and LDCs offered that the Northeast Gas Association is willing to lead the efforts to develop communication protocols governing gas and electric maintenance-related outage coordination.
As noted above, and according to the ISO-NE participants at the conference, ISO-NE is considering several potential modifications to its tariff, some to take place sooner than others. In the near-term, ISO-NE is considering a plan to conduct a supplemental procurement for natural gas, liquefied natural gas, or back up oil supplies to ensure adequate supplies over 2013 and 2014. Longer-term, ISO-NE plans to develop certain tariff revisions to move up the timeline for day-ahead unit commitment and the resource adequacy assessment process in an effort to provide additional time to ensure that gas-fired generators may procure gas supplies and delivery services so that adequate generation capacity is available in real time.7 Further, ISO-NE is considering several
changes to the market rules to allow energy and capacity prices to better reflect the risk of generator interruptible vs. firm gas procurement, including changes to the capacity product definition, changes to the resource adequacy assessment process, and a review of the consequences of generator non-delivery. ISO-NE is also considering a proposal to modify the real-time energy market and bid mitigation rules to allow generators to update bids to reflect changes in natural gas prices.
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