The Subcommittee on Energy and Power, chaired by Rep. Ed Whitfield (R-KY), today continued its American Energy Security and Innovation hearing series with a focus on natural gas and electric coordination challenges. This hearing builds on the subcommittee's March 5 hearing on the importance of fuel diversity, and examined the challenges facing electricity markets as a result of the growing share of natural gas in the nation's electric generation portfolio.
"It is certainly true that generating power from natural gas has many benefits, especially given that domestic supplies are increasing and current prices are relatively low. But, we are learning that there are some very real challenges to integrating more natural gas into the power sector," said Chairman Whitfield. "We are pleased to have an excellent slate of witnesses today who will discuss some of these challenges and describe for us how they are meeting them to ensure the continued supply of affordable and reliable electricity."
The increased use of natural gas to generate electricity poses certain integration, coordination, and reliability issues. FERC Commissioner Philip Moeller expressed the urgent need for regulators and industry stakeholders to work together to address these challenges. "Ultimately, the challenges we face with gas and electric coordination is a good problem to deal with as it's partially the result of abundant domestic gas resources. But the challenges are serious, very real, and somewhat urgent, especially in New England and the Midwest," said Moeller. "Indeed, some in the industry believe nothing short of a major blackout will provide sufficient motivation to the various stakeholders to solve the problems facing us. We need the energy industry, regulators, and legislators focused on the range of solutions necessary in the near term, medium term and longer term."
FERC Commissioner Cheryl LaFleur highlighted the need to ensure adequate pipeline capacity to support the increased use of natural gas to generate electricity. "Because natural gas is generally delivered on a pipeline network rather than stored on site, it is important that we have an adequate pipeline network and operating practices that support the reliability of both electric and gas networks," said LaFluer. "In certain regions, there may be inadequate local pipeline capacity to support generation during the winter heating season, due to geography, fuel mix, and market structure. This is already an issue in New England, and may be an emerging issue in other regions as more gas is utilized for generation."
Clair Moeller, Executive Vice President of Transmission and Technology of the Midwest Independent Transmission System Operator, Inc. (MISO), explained some of the regulatory issues facing regional grid operators. The Midwest has been particularly hard hit by the loss of coal-fired capacity driven by new EPA regulations. Moeller stated, "Existing and proposed environmental regulations for the electric industry, in combination with sustained low natural gas prices, are causing a shift in the generation resource mix in the MISO footprint from coal to gas-fired generation. Taken in the context of a system that is already seeing increased contributions from gas-fired generation due to economics, coal unit outages and retirements from these regulations put additional pressure on gas resources in the MISO footprint to meet demand. Addressing the increasing need for gas supply will require coordination between the electric and natural gas industries to produce tangible solutions to key issues."
Chairman Whitfield added, "America's newfound abundance of natural gas is a blessing and should play an important role in contributing to our energy needs. But we need to take steps to properly integrate it into the electricity portfolio."