Top officials at several U.S. retail gas companies reveal how they are rethinking their business models and developing new approaches to serve customers in the face of supply concerns and price...
Leaning on Line Pack
Green energy mandates might overburden gas pipelines.
declared a grid emergency resulting from the abrupt loss of 1,400 MW of wind resources in West Texas, coupled with increased load due to colder-than-expected weather. ERCOT curtailed about 1,100 MW within 10 minutes. 12 The prospect of cascading power loss was averted by calling on reserve capacity including loads acting as a resource (LaaR)—large industrial and commercial customers who are compensated for curtailing their electricity supply. Service to the interrupted customers was restored in about 90 minutes, but operational changes have since been implemented, including DA and HA wind production forecast modifications, and more regulation. 13 Also, LaaR has come under greater scrutiny as a dispatchable resource. And ERCOT implemented wind resource scheduling commitments in the DA market, and penalties for under-performance.
The new generation of quick-start peakers has a hard time complying with restrictive pipeline tariff conditions and the daily nomination cycles set forth under the North American Energy Standards Board (NAESB) governing DA nomination and confirmation cycles, including changes to the DA schedule and the intra-day schedule. NAESB recognizes that timely gas nomination cycles occur well before the time when ISOs clear their timelines and commit for the DA market. According to NAESB, “this disconnect leaves some generators two main options of either a) purchase and nominate gas transportation on a timely basis and risk not having their bid subsequently clear the power market or, b) wait to see if their bid clears the power market and risk relying upon the intraday gas transportation nominations without the level of assurances offered in the timely cycle for firm gas transportation services.” 14 Generators are faced with the unenviable choice between purchasing and nominating gas in the timely nomination periods and risking the bid not being cleared, or purchasing gas in the intraday market at a premium over DA prices and at the risk of triggering additional fees for unauthorized use.
While pipelines and local distribution companies (LDCs) administer penalties and resolve imbalances in different manners, gas burning power plants generally can’t lean on the pipeline or LDC system for free. Doing so could hinder reliable service to entitlement holders who pay top dollar in exchange for the pipeline’s promise to deliver the requisite flow of natural gas at a specified minimum pressure. In actuality, leaning on the pipeline or LDC system is a valuable right that is specifically monetized under FERC and state commission approved charges. These charges often deter quick-start units from firing on natural gas, especially during the heating season, November through March, when congestion patterns along interstate pipelines and local systems make it expensive and risky to pull unauthorized gas volumes from the network. Wind production is generally higher in winter months, especially during cold snaps. However, turbines have cut-out wind speeds, typically 25 meters per second, above which their operation is curtailed. Icing of the blades can also be problematic in winter months if the plant isn’t equipped with a cold weather package that ensures the turbines operate in temperatures as low as minus 22 F. Therefore, during the heating season, absent a flexible gas supply