Gas – Electric Coordination

1. Gas – Electric Coordination Joint Guidance Committee Meeting May 31, 2013

2. Gas – Electric Coordination • FERC Activities: Coordination between Natural Gas and Electric Markets (AD12-12) • On February 15, 2012, the FERC issued a notice requesting the natural gas and electric industries provide comments concerning gas-electric interdependence in response to the questions posed to the industries by Commissioner Moeller on February 3, 2012.

3. Gas – Electric Coordination • The FERC noted that since natural gas is expected to be relied on much more heavily in electric generation in the future, the interdependence of these industries merits careful attention. • While comprehensive solutions will require more time to implement, FERC stated that improvements to the system should be made now.

4. Gas – Electric Coordination • FERC held a series of Regional Conferences in 2012 and 2013 to discuss national and regional policies. • The most recent technical conference was on April 25, 2013 and discussed natural gas and electric scheduling, and issues related to whether and how natural gas and electric industry schedules and practices could be harmonized in order to achieve the most efficient scheduling systems for both industries.

5. Gas – Electric Coordination • NERC recently released its second natural gas – electricity report: 2013 Special Reliability Assessment: Accommodating an Increased Dependence on Natural Gas for Electric Power Phase II: A Vulnerability and Scenario Assessment for the North American Bulk Power System May 2013

6. Gas – Electric Coordination • NERC’s 2011 and 2012 Long‐Term Reliability Assessments identified that increased dependency on gas‐fired generation can amplify the exposure of the BPS to disruptions in fuel supply, fuel transportation, and delivery. • This report (1) determines the different risks that can affect BPS reliability, (2) identifies ways to minimize vulnerabilities, and (3) identifies areas where coordinated interindustryefforts could provide enhanced system reliability.

7. Gas – Electric Coordination • A constant theme throughout this report is the need for inter‐industry coordination at the regional level, because of both significant differences in operational characteristics as well as regulatory rules and market environments. • NERC will determine if further action on this issue is necessary by using an advisory committee for strategic guidance. This includes organizing a group of subject matter experts, allowing for technical committee reviews, and prioritizing risks.

8. Gas – Electric Coordination • Accurate representations of potential vulnerabilities through comprehensive planning studies are key in aiding risk‐informed policy decisions. • From an operations perspective, seasonal preparations, operational planning, and real‐time operating procedures need to reflect formalized coordination with the gas pipeline industry, with specific focus on emergency procedures during extreme events.

9. Gas – Electric Coordination Key Finding: Risk‐based approaches are needed to study the impact and regional challenges associated with an increasing dependence on natural gas.

10. Gas – Electric Coordination Recommendations: • Implement advanced modeling and analysis approaches. NERC recommends the Three‐Layer approach or similar advanced probabilistic techniques. • Enhance the NERC Generator Availability Data System (GADS) to increase the effectiveness of trending gas‐fired generator outages and causes related to fuel issues.

11. Gas – Electric Coordination Key Finding: Enhancements to reliability and resource assessments should reflect risks to gas‐fired generation as a result of various fuel disruptions.

12. Gas – Electric Coordination Recommendations: • Incorporate natural gas fuel availability or natural gas‐fired generation availability into the NERC Long‐Term Reliability Assessment and Seasonal Reliability Assessments. • Identify how risk assessments are performed in different regions and use this information to develop recommendations for a uniform seasonal and long‐term reliability assessment process for consideration by NERC Planning Committee.

13. Gas – Electric Coordination Recommendations: • Improve Generator Owner procedures and methods to maintain fuel switching capabilities. • Enhancements to market products supporting higher levels of fuel certainty should be considered (i.e., adequate level of fuel inventories and functional capability testing and/or firm natural gas transportation). • NERC should support further studies for enhancing planning processes that relate to fuel availability and resource adequacy.

14. Gas – Electric Coordination Key Finding: Regional solutions will likely include a mix of mitigating strategies, increased gas and/or electric infrastructure, and dual or back‐up fuel capability.

15. Gas – Electric Coordination Recommendations: • Policymakers and regulators should consider developing solutions that provide the right balance between electric reliability and the increased costs associated with it.

16. Gas – Electric Coordination Key Finding: Enhancements to data sharing and planning coordination can provide insights through additional studies and scenario analysis.

17. Gas – Electric Coordination Recommendations: • Work jointly with the natural gas industry to identify data requirements that can be used for electric reliability analysis. • Planning Coordinators and/or Reliability Coordinators should identify critical gas‐fired electric generation to ensure “critical generators” have the ability to mitigate or reduce the risks associated with fuel disruptions and curtailments.

18. Gas – Electric Coordination Key Finding: Sharing information for operational planning purposes is essential to fully understanding generator availability risks in the season ahead.

19. Gas – Electric Coordination Recommendations: • Increased situation awareness of the natural gas supply and pipeline system enhances the electric system operator’s ability to make risk‐informed decisions. • In preparation for summer and winter extreme conditions, electric system operators need enhanced observabilityof pipeline conditions, capacity availability, supply concerns, and potential issues affecting fuel for gas‐fired generation.

20. Gas – Electric Coordination Key Finding: Formalized communication and coordination with the gas pipeline and supply industry during extreme events is needed.

21. Gas – Electric Coordination Recommendations: • System operators should re‐examine interindustry communication protocols that apply during periods of stress.

22. Gas – Electric Coordination Key Finding: System operators will need access to sufficient flexible resources to mitigate the added uncertainty associated with natural gas fuel risks, including those introduced by interruptible gas transportation service.

23. Gas – Electric Coordination Recommendations: • NERC should leverage its stakeholder groups to identify best practices in areas currently most vulnerable to gas dependency risks and taking immediate actions for improvement. Such an effort could lead to insights for enhanced operator training and table‐top exercises.

24. Gas – Electric Coordination Recommendations: • Joint industry drills or table‐top exercises with the key players of both gas, electric, and various state commissions would foster enhanced coordination and harmonize cross‐industry issues, response plans, and mitigation measures.

25. Craig L. Williams WECC Market Interface Manager C: 801-455-9812 cwilliams@wecc.biz Questions?