Expressing concern about looming gas deliverability problems and diminished electric reliability, representatives of the US manufacturing sector on Thursday called on the Federal Energy Regulatory Commission to initiate an in-depth analysis of pipeline capacity and other infrastructure issues.
In a December 20 letter to Chairman Jon Wellinghoff, the Industrial Energy Consumers of America pointed to "growing evidence of potential electric reliability and natural gas deliverability issues that stem from coal-fired electric generation unit retirements and natural gas pipeline capacity sufficiency at peak demand."
And while the North American Electric Reliability Council is studying electric reliability issues, "we do not see action" by FERC to take a similar look at the ability of the existing pipeline network to handle growing and fluctuating demand, said the group.
"This gap in oversight could undermine reliability of both the electric and natural gas markets," it said, adding that "both of these markets could benefit from FERC guidance on how to accelerate build-out of pipeline infrastructure to meet the accelerating demand from the electric and industrial sectors." A hard look at "the sufficiency of natural gas pipeline capacity at expected new peak demand levels" could pave the way for "the accelerated build-out of pipeline infrastructure needed to avoid reliability problems for both electric generators and industrial facilities," said the letter.
The trade group went on to assert that interruption or curtailment of gas deliveries to industrial facilities "is both a safety and cost issue," potentially costing "each industrial facility tens of millions of dollars per day."
IECA applauded FERC for its ongoing gas-electric coordination proceeding, including a series of technical conferences and a recent staff report and NERC for its reliability assessments. But these and other data gathering and assessment initiatives have the trade group worried about near- and mid-term electric and gas reliability, said the letter.
It pointed to a recent study by Midwest Independent System Operator indicating that roughly 65% of pipelines in the region have insufficient capacity to feed gas-fired generation that will be needed over the next five-to-six years to replace expected coal-fired generation unit retirements. "Since a large proportion of gas supply presently goes to industrial demand in that region, there is concern that industrial gas use will be interrupted or curtailed. Additionally, electricity reliability is at risk," IECA told Wellinghoff.
"Manufacturers in other organized markets have reason for concern as well," it continued, noting that PJM Interconnection, New York Independent System Operator and ISO New England recently "have undertaken an effort to study gas pipeline sufficiency." One major Mid-Atlantic pipeline company, NiSource, "recently made a presentation indicating little or no additional capacity for gas-fired generation on its system," according to the letter.
"The industrial sector is a major stakeholder on these important issues, consuming one-fourth of US electricity and one-third of the natural gas," said IECA, calling on FERC "to take additional steps to safeguard reliability and ensure that the industrial sector concerns are considered in all studies and evaluations."
