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Steptoe & Johnson PLLC: FERC Schedules Regional Conferences on Gas & Electricity Market Coordination

By Kurt Krieger

"These standards will establish communication protocols between interstate pipelines and power plant operators and transmission owners and operators. Through this rulemaking, the Commission is seeking to improve coordination between the gas and electric industries in order to limit miscommunications about scheduling of gas-fired generators." Words from a recent proposed rulemaking on the need for gas and electric coordination? No. This statement is from the Federal Energy Regulatory Commission's ("FERC") October 25, 2006 Notice of Proposed Rulemaking (Docket Nos. RM96-1 and RM05-5), which resulted in issuance of FERC Order No. 698 on June 25, 2007. Interstate natural gas pipelines and public utilities made compliance filings to demonstrate compliance with then new gas and electric coordination standards by November 1, 2007.

However, given some recent events and the current and proposed increase in gas-fired generation of electricity, the need continues to focus on the coordination between gas and electricity markets. Among other industry standards adopted since 2007, FERC's effort to coordinate the two markets formally continues in a new docket (AD12-12). In that proceeding, FERC recently announced the scheduling of several regional technical conferences "to discuss the various aspects of gas-electric interdependence and coordination, as well as ways to improve communication and coordination between the two industries." See Coordination between Natural Gas and Electricity Markets, Docket No. AD12-12, "Notice of Technical Conferences" (July 5, 2012) ("Notice").

Reliability of the nation's electric grid is now and will continue to be a much greater issue pertaining to gas-fired electric generation -- an issue that did not loom so large for this segment in 2007. This initiative and ones that preceded it lead to new innovations in gas pipeline transportation and storage services and protocols, including the manner in which gas is scheduled and balanced. In the name of reliability, and perhaps over a short-term horizon, FERC may eventually require even greater precision from interstate gas pipeline services, customers and upstream interconnected parties (including upstream gathering, midstreams and suppliers) to enable servicing the gas-fired electric generation load. And to satisfy reliability objectives, the firmness of pipeline services procured by gas-fired generation will be in focus.

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Kurt Krieger focuses his practice in the area of energy law with experience representing regulated companies and interested parties before the Federal Energy Regulatory Commission ("FERC") and state and commonwealth public service or utility commissions.

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