|February 24, 2012|
Previously published on February 22, 2012
FERC Commissioner Moeller has issued a request for comments on the need for coordination between the natural gas and electricity markets. FERC and other industry participants have viewed this issue with increasing interest over the past few years. Many predict a dramatic increase in the reliance on natural gas as a fuel source for electricity due to factors such as climate change regulation and a surge in the development of shale gas.
The increased reliance on natural gas as a fuel source underscores the interdependency of the electric and natural gas industries, as well as key differences that could adversely affect reliability and operations within both industries. Organizations such as the North American Electric Reliability Corporation (NERC) and the North American Energy Standards Board (NAESB) have established committees to examine the need for industry coordination. RTOs are analyzing the issue through their stakeholder processes as well. Commissioner Moeller’s request for comments marks FERC’s first attempt to address these coordination issues in a comprehensive manner.
Commissioner Moeller emphasizes the need for national and regional policies to address these concerns. He has posed a number of broad questions geared towards laying the foundation for future regulation in this arena, including:
- What role FERC should have in overseeing coordination and what duties should be delegated to other entities (NERC, NAESB, etc.);
- Whether and how FERC should take into account regional differences, such as the differences between regions with organized electricity markets and those operating on a bilateral basis;
- Whether, with an increase in gas-fired generation, FERC needs to address the effect of electric generators on natural gas transportation and the flows on natural gas pipelines;
- Whether there is a need to address operational differences between the two industries and harmonize standard business practices.