D.West Region
Participants at the West technical conference discussed many subregional differences within the region, including resource mix, market structure, and degree of dependence upon natural gas for electric generation. There was general agreement that the West as a whole will have a greater reliance on natural gas for electric generation in the future. Some participants expect the burn profile for natural gas used for electric generation to become more volatile, due both to the normal variation in electric demand and the increased use of gas for balancing, resulting from the increase in renewable generation in the region.
Representatives from both natural gas and electric entities in the West stated that most of the natural gas-fired electric generation in the West region (outside of the
California Independent System Operator Corp. (CAISO)) is backed by firm gas transportation contracts. Natural gas-fired electric generators served by the LDCs within CAISO mainly use interruptible gas transportation contracts on the LDCs’ distribution systems, but this service reportedly performs like firm because gas pipeline infrastructure within CAISO is expanded in anticipation of load, as opposed to responding to long-term firm contracts.
Some conference participants stated that gas-electric coordination issues could be alleviated by having more efficient electric markets in the West region. An energy imbalance market was explicitly mentioned as one way of achieving additional efficiencies. A representative of CAISO indicated that it has no mechanism to look at firmness of fuel, and believes that it should not have a mechanism for this purpose. He noted that CAISO’s market has a penalty for non-performance.
Several conference participants requested more opportunities for intra-day nomination adjustments on pipelines, but a few pipelines clarified that these additional nomination opportunities would have value only if they resulted in actual physical changes; actual changes in pipeline flow can only occur if gas can be purchased and injected into the pipeline to accommodate the revised nomination and then delivered. The appropriateness of the “no-bump” rule was challenged on multiple occasions. A few participants from the Southwest opined that both the gas and electric scheduling days should go until midnight local time.
Regarding communications, CAISO’s representative discussed recent Commission-approved revisions to its tariff to permit sharing generation and transmission outage information with utilities that operate pipelines and/or deliver gas to gas-fired generators, pursuant to non-disclosure agreements. Additionally, a few participants both inside and outside California currently send estimated burn profiles for electric generation to the pipelines on a day-ahead basis.
Representatives of several pipelines in the region discussed their efforts to improve communications with generators and electric balancing authorities, including updating points of contact and communication methods, conducting regional table top exercises, and reviewing emergency procedures. For example, one pipeline hosted a mock gas supply emergency exercise following the February 2011 cold weather event, and another plans to host a similar mock emergency drill in 2013. Pipeline representatives added that both gas and electric operators could benefit from education about the other’s system, in particular how to interpret and determine the important information from the notices and information that is provided, especially given the sheer volume of postings from both sides. The pipeline representatives also described efforts between the RTOs/ISOs and the Interstate Natural Gas Association of America (INGAA), as well as operator training programs that can provide that education. For example, in the wake of the February 2011 Southwest cold weather event, a number of
entities participated in the electric and natural gas interdependency conferences at the Western Electricity Institute, which focused upon educating the electric and gas companies about how the other functions.19
Several participants stated that FERC’s Standards of Conduct are a barrier to communications. For example, the representative of a utility in the Northwest described a tabletop exercise in that region during which it was discovered that some organizations have employees with considerable operational experience within marketing groups. This gave rise to the concern that the Standards of Conduct would prohibit these employees from being involved with efforts to resolve operational problems or emergency situations.
Some participants stated that the Northwest needs to improve gas-electric coordination and communication during normal operating conditions, but noted that there are agreements in place to help during emergency situations. One example mentioned as a model for such coordination is the Northwest Mutual Assistance Agreement (NMAA), which aids coordination between utilities during gas-related emergency situations by maintaining updated emergency contact information, and conducting semi-annual planning meetings and periodic emergency exercises for utilities.20 Some participants at the technical conference believe that this type of agreement should be extended to the rest of the West region. It was mentioned that the Western Energy Institute maintains the Western Region Mutual Assistance Agreement, but this agreement only covers crew assistance during emergencies.
The importance of gas storage, especially during emergency situations, was expressed by multiple participants. Representatives of several utilities in Arizona noted that that state has been attempting to get market area storage, without success, for many years. CAISO’s representative stated that long-term electric contracts may be needed to finance and construct market area gas storage facilities.
Representatives of several Southwest utilities suggested a regional gas sharing pool or pooling mechanism for pipeline capacity, in which members of the pool could give up pipeline capacity to help a generator that requires more gas. One pipeline representative at this conference commented that this already occurs in the market through capacity releases.
Several participants from the electric industry confirmed that pipeline contingencies are not currently included in planning studies. One participant argued that the probability of an event on the gas side is so low that it is negligible, but others still want it quantified because it may be within the risk parameters that are planned for on the electric side.
West Regional Initiatives
Participants representing entities in the Northwest described regional efforts by the Pacific Northwest Utilities Conference Committee (PNUCC), the Northwest Power and Conservation Council (NPCC), and the Northwest Gas Association (NWGA) to look at long-term resource adequacy needs through analyses of utility integrated resource plans.22
Representatives of two utilities in the Northwest discussed regional emergency coordination efforts, including the Northwest Mutual Assistance Agreement described above, that provides procedures to address anticipated cold weather events and critical situations leading to loss of pressure on a pipeline or storage facility. These utility representatives believe that such efforts have led to improved coordination and cooperation among regional entities, but that communications with the Bonneville Power Administration (BPA) could be improved because they are not a customer of any pipeline. A representative of BPA noted that the mutual assistance agreement works well
in dealing with emergencies but does not address non-emergency situations. BPA’s representative added that the Western Electric Coordinating Council also maintains a “merchant alert protocol” that facilitates communications and coordination between merchant generators and reliability entities prior to an emergency situation occurring.23
A representative of CAISO stated that California entities talk frequently and meet at least quarterly to examine outages and coordinate generation and transmission. According to CAISO’s representative the result has been that even major pipeline outages have not led to electric outages, and the electric and gas systems within California have been robust enough to weather an extended outage at Southern California Edison Company’s San Onofre nuclear plant.
The Northwest transmission planning group, ColumbiaGrid,24 announced on August 28, 2012, that it has formed a study team to analyze potential impacts of a gas supply limitation in the Interstate 5 corridor area of Oregon and Washington.25 ColumbiaGrid stated that the study is an exploration of possible consequences if something happened to the natural gas supply system in a way that limited supply to the electric generating stations. Columbia Grid will coordinate the study with PNUCC and NWGA.26
In October 2012, members of the Committee on Regional Electric Power Cooperation and State-Provincial Steering Committee formed a task force to identify and study issues at the interface of the gas and electric industries. The Task Force is currently
engaged in outreach to determine the scope of its work and potential for collaboration with others, with the goal of providing direction to states and provinces as they consider the interface issues most important to the West.
Participants at the West technical conference discussed many subregional differences within the region, including resource mix, market structure, and degree of dependence upon natural gas for electric generation. There was general agreement that the West as a whole will have a greater reliance on natural gas for electric generation in the future. Some participants expect the burn profile for natural gas used for electric generation to become more volatile, due both to the normal variation in electric demand and the increased use of gas for balancing, resulting from the increase in renewable generation in the region.Representatives from both natural gas and electric entities in the West stated that most of the natural gas-fired electric generation in the West region (outside of the
California Independent System Operator Corp. (CAISO)) is backed by firm gas transportation contracts. Natural gas-fired electric generators served by the LDCs within CAISO mainly use interruptible gas transportation contracts on the LDCs’ distribution systems, but this service reportedly performs like firm because gas pipeline infrastructure within CAISO is expanded in anticipation of load, as opposed to responding to long-term firm contracts.
Some conference participants stated that gas-electric coordination issues could be alleviated by having more efficient electric markets in the West region. An energy imbalance market was explicitly mentioned as one way of achieving additional efficiencies. A representative of CAISO indicated that it has no mechanism to look at firmness of fuel, and believes that it should not have a mechanism for this purpose. He noted that CAISO’s market has a penalty for non-performance.
Several conference participants requested more opportunities for intra-day nomination adjustments on pipelines, but a few pipelines clarified that these additional nomination opportunities would have value only if they resulted in actual physical changes; actual changes in pipeline flow can only occur if gas can be purchased and injected into the pipeline to accommodate the revised nomination and then delivered. The appropriateness of the “no-bump” rule was challenged on multiple occasions. A few participants from the Southwest opined that both the gas and electric scheduling days should go until midnight local time.
Regarding communications, CAISO’s representative discussed recent Commission-approved revisions to its tariff to permit sharing generation and transmission outage information with utilities that operate pipelines and/or deliver gas to gas-fired generators, pursuant to non-disclosure agreements. Additionally, a few participants both inside and outside California currently send estimated burn profiles for electric generation to the pipelines on a day-ahead basis.
Representatives of several pipelines in the region discussed their efforts to improve communications with generators and electric balancing authorities, including updating points of contact and communication methods, conducting regional table top exercises, and reviewing emergency procedures. For example, one pipeline hosted a mock gas supply emergency exercise following the February 2011 cold weather event, and another plans to host a similar mock emergency drill in 2013. Pipeline representatives added that both gas and electric operators could benefit from education about the other’s system, in particular how to interpret and determine the important information from the notices and information that is provided, especially given the sheer volume of postings from both sides. The pipeline representatives also described efforts between the RTOs/ISOs and the Interstate Natural Gas Association of America (INGAA), as well as operator training programs that can provide that education. For example, in the wake of the February 2011 Southwest cold weather event, a number of
entities participated in the electric and natural gas interdependency conferences at the Western Electricity Institute, which focused upon educating the electric and gas companies about how the other functions.19
Several participants stated that FERC’s Standards of Conduct are a barrier to communications. For example, the representative of a utility in the Northwest described a tabletop exercise in that region during which it was discovered that some organizations have employees with considerable operational experience within marketing groups. This gave rise to the concern that the Standards of Conduct would prohibit these employees from being involved with efforts to resolve operational problems or emergency situations.
Some participants stated that the Northwest needs to improve gas-electric coordination and communication during normal operating conditions, but noted that there are agreements in place to help during emergency situations. One example mentioned as a model for such coordination is the Northwest Mutual Assistance Agreement (NMAA), which aids coordination between utilities during gas-related emergency situations by maintaining updated emergency contact information, and conducting semi-annual planning meetings and periodic emergency exercises for utilities.20 Some participants at the technical conference believe that this type of agreement should be extended to the rest of the West region. It was mentioned that the Western Energy Institute maintains the Western Region Mutual Assistance Agreement, but this agreement only covers crew assistance during emergencies.
The importance of gas storage, especially during emergency situations, was expressed by multiple participants. Representatives of several utilities in Arizona noted that that state has been attempting to get market area storage, without success, for many years. CAISO’s representative stated that long-term electric contracts may be needed to finance and construct market area gas storage facilities.
Representatives of several Southwest utilities suggested a regional gas sharing pool or pooling mechanism for pipeline capacity, in which members of the pool could give up pipeline capacity to help a generator that requires more gas. One pipeline representative at this conference commented that this already occurs in the market through capacity releases.
Several participants from the electric industry confirmed that pipeline contingencies are not currently included in planning studies. One participant argued that the probability of an event on the gas side is so low that it is negligible, but others still want it quantified because it may be within the risk parameters that are planned for on the electric side.
West Regional Initiatives
Participants representing entities in the Northwest described regional efforts by the Pacific Northwest Utilities Conference Committee (PNUCC), the Northwest Power and Conservation Council (NPCC), and the Northwest Gas Association (NWGA) to look at long-term resource adequacy needs through analyses of utility integrated resource plans.22
Representatives of two utilities in the Northwest discussed regional emergency coordination efforts, including the Northwest Mutual Assistance Agreement described above, that provides procedures to address anticipated cold weather events and critical situations leading to loss of pressure on a pipeline or storage facility. These utility representatives believe that such efforts have led to improved coordination and cooperation among regional entities, but that communications with the Bonneville Power Administration (BPA) could be improved because they are not a customer of any pipeline. A representative of BPA noted that the mutual assistance agreement works well
in dealing with emergencies but does not address non-emergency situations. BPA’s representative added that the Western Electric Coordinating Council also maintains a “merchant alert protocol” that facilitates communications and coordination between merchant generators and reliability entities prior to an emergency situation occurring.23
A representative of CAISO stated that California entities talk frequently and meet at least quarterly to examine outages and coordinate generation and transmission. According to CAISO’s representative the result has been that even major pipeline outages have not led to electric outages, and the electric and gas systems within California have been robust enough to weather an extended outage at Southern California Edison Company’s San Onofre nuclear plant.
The Northwest transmission planning group, ColumbiaGrid,24 announced on August 28, 2012, that it has formed a study team to analyze potential impacts of a gas supply limitation in the Interstate 5 corridor area of Oregon and Washington.25 ColumbiaGrid stated that the study is an exploration of possible consequences if something happened to the natural gas supply system in a way that limited supply to the electric generating stations. Columbia Grid will coordinate the study with PNUCC and NWGA.26
In October 2012, members of the Committee on Regional Electric Power Cooperation and State-Provincial Steering Committee formed a task force to identify and study issues at the interface of the gas and electric industries. The Task Force is currently
engaged in outreach to determine the scope of its work and potential for collaboration with others, with the goal of providing direction to states and provinces as they consider the interface issues most important to the West.
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