At a November 11 conference, "Canadian-Northeast Energy Trade: New Issues and Challenges," sponsored by the New England-Canada Business Council, Commissioner Donald F. Santa, Jr. of the Federal Energy Regulatory Commission (FERC) declared the natural gas border wars of the late 1980s and early 1990s "over." He heralded an increasingly integrated North American natural gas market, stemming from looser regulation in the United States and Canada, the North American Free Trade Agreement, and completion of substantial crossborder pipeline capacity.
Santa identified the electric generation market, and the nonutility generator (NUG) market in particular, as a growth area for Canadian natural gas and for the gas industry in general. He noted that Energy Information Administration data shows that almost 80 percent of long-term contracts for the sale of Canadian gas to NUGs involve generators located in the northeast United States.
Santa queried whether the FERC "should tailor its natural gas policies to facilitate greater use of natural gas for electric generation." However, while noting that federal environmental and energy policy has created a favorable climate for gas-fired generation, Santa said it would raise significant legal and policy issues for the FERC to adopt policies that favor gas-fired generation over other end uses of natural gas. According to Santa, the natural gas industry benefits from the restructuring of the electric industry, which has made gas-fired combined-cycle plants the benchmark for competitively priced generation in the new market. Nevertheless, Santa warned that electric generation will become an intensely competitive market, and that the days of the "PURPA machine" are gone. (em LB