Electricity and Natural Gas Markets Align

In musical terms, you could say that the electric and natural gas industries have long marched to the beats of different drummers.

But starting April 1, the industries will be in better synchronization, due to efforts both have made at the Federal Energy Regulatory Commission (FERC’s) request.

On April 1, FERC Order 809 launches. The order aligns the timetables natural gas and electric use to schedule next day operations.

Until fairly recently, these divergent scheduling practices seldom posed major problems for either industry. Gas and its associated network of pipelines and other infrastructure were used more for home-heating and manufacturing than power generation. But gas-fired generation is on the rise in the MISO footprint (and elsewhere) due to plentiful and affordable natural gas. At the same time, coal generation is declining, partially because of new environmental regulations. Aligning the two industries’ scheduling practices has become more important than ever.

For example, in the existing system, gas-fired generators make bids to buy gas before they know if they have cleared the Day Ahead Market. During extreme conditions, when all “committed” units must be available to maintain reliability, gas generators may not be able to get fuel. The polar vortex of 2014 was one of these situations.

FERC Order 809 addresses scheduling issues. Additionally, MISO has made non-required efforts towards better alignment. MISO worked with stakeholders to develop a compliance strategy that both respects stakeholder preferences and enhances reliability and market efficiency. Among other things, we will post results from the Day-Ahead electricity market at least 30 minutes sooner than current practices. This gives  “committed” gas-fired units time to procure gas and pipeline transportation during the gas industry’s “Timely” nomination cycle, or scheduling window. This change takes effect in November 2016.

Timeline adjustments are new, but MISO has been working towards better gas coordination for years.  We’ve hired new employees with gas industry experience, including Phil Van Schaack. He’s MISO’s first-ever full-time Gas-Electric Operations Coordinator.

“As MISO’s reliance on natural gas increases, natural gas generators rely more on flexible pipeline service to meet dynamic dispatch requests,” said Phil, who has strong experience in gas nominations, trading and purchasing gas for gas-fired generators. “The new FERC regulations are a step in the right direction for coordination efforts between the two industries.”

MISO has taken other steps towards gas-electric coordination and fuel assurance:

  • Establishing direct communications with gas pipeline operators.
  • Increasing situational awareness around fuel-related outages that could threaten grid reliability. MISO administers voluntary Winter Generator Fuel Surveys that give us information about how gas generators are getting the fuel they need to operate.
  • Using a real-time mapping tool to anticipate which gas units may be forced offline by fuel outages and pipeline issues.
  • Identifying locations that repeatedly experience outages due to fuel restrictions. We conducted in-depth reviews to identify these areas and are monitoring them.
  • Analyzing how the U.S. Environmental Protection Agency’s Clean Power Plan and other environmental regulations could bring changes to gas-fired generation, gas pipelines and transmission infrastructure across the MISO footprint.

MISO expects gas-fired generation to grow even if the Clean Power Plan is scaled back or struck down. As the image on the right illustrates, gas-fired generation comprises nearly 40% of all of the new generation that is currently in our interconnection queue.

Still, we have not lost sight of the important fact that gas is only one source of generation in our region. Our fuel mix includes coal, nuclear, hydro power, and renewables. All these generation sources are necessary and valuable in MISO’s mission to provide reliable, low-cost energy. You can look at the MISO fuel mix in real-time on the MISO website.

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