For Immediate Release: January 20, 2015
Contact: Rob Thormeyer, 202-898-9382, rthormeyer@naruc.org
If differences between natural gas and electricity industries aren't harmonized, it will be a short marriage for the two industries, a new white paper concludes.
Authored by the Illinois Institute of Technology, the Long-Term Electric and Natural Gas Infrastructure Requirements White Paper offers a series of recommendations aimed at harmonizing electricity and natural gas markets and raising greater awareness within the industry and regulatory community about potential challenges that may arise.
"States are taking an increasingly active interest in the implications of higher natural gas utilization for electric power generation, its effect on more traditional usages of natural gas by residential and commercial customers, and its impact on market operations including the potential impacts on natural gas and power distribution companies," the White Paper said.
The Eastern Interconnection States' Planning Council and the National Association of Regulatory Utility Commissioners commissioned the white paper. EISPC is a consortium of State-level government agencies responsible for siting electric transmission across the 39 States, including the District of Columbia and City of New Orleans, located within the Eastern Interconnection. The group is funded by the U.S. Department of Energy.
EISPC sought the report in light of the anticipated increase in the use of natural gas as a fuel for new electricity generating facilities. New environmental regulations and a plentiful domestic supply of gas have made the fuel a popular choice for meeting growing electricity demand.
According to the report, though, State regulators and others are raising concerns about how greater use of natural gas will impact consumers and the integrity of both the electricity and gas systems.
"This report will help regulators analyze these issues," said EISPC President David Boyd of Minnesota. "With gas taking a greater role in our electricity resource mix, federal and State policymakers need to fully understand the risks and benefits moving forward. As this report spells out, there are a number of differences between the two industries that, if not reconciled, could have unintended consequences for consumers."
These challenges include a lack of firm delivery contracts between local distribution companies and gas pipelines, differences in resource adequacy planning in the gas and electricity sectors, discrepancies in financial trading instruments, and concerns over cybersecurity and potential network vulnerabilities that may result from integrating natural gas and electric systems.
The report offers several recommendations for State and federal policymakers to consider, such as:
- Harmonizing natural gas and electricity infrastructures;
- Aligning daily market schedules;
- Establishing an independent coordinator (similar to an independent grid operator) in the natural gas industry;
- Expanding inter-industry communications protocols during extreme weather conditions;
- Investigating cybersecurity issues in any coordinated systems; and
- Reinforcing education and workforce training.
"Natural gas has the potential to increase the overall efficiency of energy use, to shrink air emissions, to cut energy costs, and to boost local economic development," the report said. "Eanring potential benefits from the revolutionized natural gas market could be stimulated by evaluation of existing [State public utility commission] and natural gas LDC policies and practices. Further, substantial regional diversity across U.S. energy markets impedes a one-size-fits-all approach to energy policy, regulation, and business models."
The report is available here: http://www.naruc.org/Grants/Documents/Elecgas%20White%20Paper.pdf
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NARUC is a non-profit organization founded in 1889 whose members include the governmental agencies that are engaged in the regulation of utilities and carriers in the fifty States, the District of Columbia, Puerto Rico and the Virgin Islands. NARUC's member agencies regulate telecommunications, energy, and water utilities. NARUC represents the interests of State public utility commissions before the three branches of the Federal government.# # # #
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