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March 5, 2007 Prepared by the North American Energy Standards Board 1 North American Energy Standards Board NAESB Gas-Electric Interdependency Standards.

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Presentation on theme: "March 5, 2007 Prepared by the North American Energy Standards Board 1 North American Energy Standards Board NAESB Gas-Electric Interdependency Standards."— Presentation transcript:

1 March 5, 2007 Prepared by the North American Energy Standards Board 1 North American Energy Standards Board NAESB Gas-Electric Interdependency Standards & Issues for EUCI Conference on Managing Electric Utility and Natural Gas Interdependency

2 March 5, 2007 Prepared by the North American Energy Standards Board 2 North American Energy Standards Board NAESB Gas-Electric Interdependency Standards & Issues TIMELINE

3 March 5, 2007 Prepared by the North American Energy Standards Board 3 North American Energy Standards Board Gas Electric Interdependency - Timeline Timeline of Events November 14, 2003: Letter from Chm. Wood asking NAESB to develop interdependency standards – related to 2003 cold snap in New England November 14, 2003: Letter from Chm. Wood asking NAESB to develop interdependency standards – related to 2003 cold snap in New England Gas-Electric Coordination efforts resulted in two reports Gas-Electric Coordination efforts resulted in two reports Gas Electric Coordination Interim Status Report, filed , 31 issues identified Gas Electric Coordination Interim Status Report, filed , 31 issues identified Gas Electric Coordination Final Report, filed , 31 issues further defined Gas Electric Coordination Final Report, filed , 31 issues further defined Outcome of Reports: Received 3 requests for standards development Outcome of Reports: Received 3 requests for standards development R04016: Energy Day R04016: Energy Day R04020: Market Timelines R04020: Market Timelines R04021: Pipeline-Generator Communications R04021: Pipeline-Generator Communications

4 March 5, 2007 Prepared by the North American Energy Standards Board 4 North American Energy Standards Board Gas Electric Interdependency - Timeline Timeline of Events Request Status Request Status All requests approved and found within the scope of NAESB by both NAESB and the Joint Interface Committee (in an MOU with NERC and the ISO-RTO Council) All requests approved and found within the scope of NAESB by both NAESB and the Joint Interface Committee (in an MOU with NERC and the ISO-RTO Council) R04016 and R04021 were jointly assigned to wholesale gas and wholesale electric groups R04016 and R04021 were jointly assigned to wholesale gas and wholesale electric groups R04020 was assigned to wholesale electric group only R04020 was assigned to wholesale electric group only Two pronged approach: Work began on R04021, and Board Committee formed to determine other actions Two pronged approach: Work began on R04021, and Board Committee formed to determine other actions Results of approach -- Report filed with FERC on June 26, 2005 (Interim GEIC Report) Results of approach -- Report filed with FERC on June 26, 2005 (Interim GEIC Report) Requests R04016 and R04020 were withdrawn Requests R04016 and R04020 were withdrawn

5 March 5, 2007 Prepared by the North American Energy Standards Board 5 North American Energy Standards Board Gas Electric Interdependency - Timeline Timeline of Events February 24, 2006: 6 Interdependency Issues raised in Docket No. RM (Final GEIC Report) February 24, 2006: 6 Interdependency Issues raised in Docket No. RM (Final GEIC Report) June 22, 2006: A primer from Jimmy Glotfelty of ICF sponsored by the Department of Energy supporting the GEIC report June 22, 2006: A primer from Jimmy Glotfelty of ICF sponsored by the Department of Energy supporting the GEIC report July 30, 2006: A primer from Ken Costello of NRRI (NARUC) supporting issues identified in the GEIC Report July 30, 2006: A primer from Ken Costello of NRRI (NARUC) supporting issues identified in the GEIC Report July 30, 2006: NAESB participated in a panel on gas-electric coordination at NARUC. July 30, 2006: NAESB participated in a panel on gas-electric coordination at NARUC. October 25, 2006: NOPR issued on standards. Order on Inquiry to the ISOs and RTOs. Comments were due and data from the ISOs and RTOs to be forwarded on October 25, 2006: NOPR issued on standards. Order on Inquiry to the ISOs and RTOs. Comments were due and data from the ISOs and RTOs to be forwarded on Topic of other industry meetings Topic of other industry meetings

6 March 5, 2007 Prepared by the North American Energy Standards Board 6 North American Energy Standards Board Active FERC Dockets Related to NAESB WEQ Standards Active Dockets Related to Gas-Electric Interdependency: RM : Order No. 676 issued on April 25, 2006 for implementation by the industry on July 1, 2006 RM : Order No. 676 issued on April 25, 2006 for implementation by the industry on July 1, 2006 RM : First filing made in this docket on June 27, 2005 for Gas-Electric Interdependency. Standards and 6 issues identified. NOPR has been issued in Docket No. RM for the standards. RM : First filing made in this docket on June 27, 2005 for Gas-Electric Interdependency. Standards and 6 issues identified. NOPR has been issued in Docket No. RM for the standards. RM : NOPR issued October 19, 2006 regarding communication standards – electric (R04021). Comments due RM : NOPR issued October 19, 2006 regarding communication standards – electric (R04021). Comments due RM : NOPR issued on October 25 regarding communication standards – gas (R04021). RM : NOPR issued on October 25 regarding communication standards – gas (R04021).

7 March 5, 2007 Prepared by the North American Energy Standards Board 7 North American Energy Standards Board NAESB Gas-Electric Interdependency Standards & Issues June 2005 Report

8 March 5, 2007 Prepared by the North American Energy Standards Board 8 North American Energy Standards Board Gas Electric Interdependency – June 2005 Report Summary of Report Filed June 27, 2005 for RM : Business practices were developed to address communications between pipelines and generators in three situations (R04021): For generation facilities that have gas scheduled This generation facilities that do not have gas scheduled but need it For gas that is needed in extreme unanticipated demand 13 issues were identified related to gas-electric interdependency, and were categorized as to the type of issue raised –policy, business practices, reliability, regional or infrastructure related

9 March 5, 2007 Prepared by the North American Energy Standards Board 9 North American Energy Standards Board Gas Electric Interdependency – June 2005 Report Communication Standards for Pipelines & Generators Business practices were developed to address three situations: Business practices were developed to address three situations: For generation facilities that have gas scheduled For generation facilities that have gas scheduled This generation facilities that do not have gas scheduled but need it This generation facilities that do not have gas scheduled but need it For gas that is needed in extreme unanticipated demand For gas that is needed in extreme unanticipated demand The standards were filed with the FERC on June 26 in Docket No. RM The standards were filed with the FERC on June 26 in Docket No. RM

10 March 5, 2007 Prepared by the North American Energy Standards Board 10 North American Energy Standards Board Gas Electric Interdependency – June 2005 Report Communication Standards for Pipelines & Generators Add the following NAESB WEQ and NAESB WGQ Definitions: (WEQ) , , , (WGQ) 0.2.1, 0.2.2, Add the following NAESB WEQ and NAESB WGQ Definitions: (WEQ) , , , (WGQ) 0.2.1, 0.2.2, Add the following NAESB WEQ and NAESB WGQ Standards: (WEQ) , , , , (WGQ) , , , Add the following NAESB WEQ and NAESB WGQ Standards: (WEQ) , , , , (WGQ) , , , Add the following NAESB WEQ Standards: , Add the following NAESB WEQ Standards: , Add the following NAESB WGQ Standard: Add the following NAESB WGQ Standard:

11 March 5, 2007 Prepared by the North American Energy Standards Board 11 North American Energy Standards Board Gas Electric Interdependency – June 2005 Report Gas- Electric Interdependency Issues – Basis & Considerations Basis for Issues: Basis for Issues: Lead time differences Lead time differences Response time differences Response time differences Reserve Margins versus Contractual Commitments Reserve Margins versus Contractual Commitments Utility models versus Market driven models Utility models versus Market driven models Load curtailment prioritizations Load curtailment prioritizations Other Considerations: Differences in regulatory frameworks and complexities Differences in regulatory frameworks and complexities Coordination Issues as related to Real-time versus Day Ahead markets Coordination Issues as related to Real-time versus Day Ahead markets Regional differences Regional differences

12 March 5, 2007 Prepared by the North American Energy Standards Board 12 North American Energy Standards Board Gas Electric Interdependency – June 2005 Report Gas- Electric Interdependency Issues – Categories Issue Categories: Issue Categories: Policy directions from regulatory agencies, contractual issues Policy directions from regulatory agencies, contractual issues Standards development by NERC Standards development by NERC Standards development by NAESB Standards development by NAESB Regional issues Regional issues Infrastructure Concerns Infrastructure Concerns

13 March 5, 2007 Prepared by the North American Energy Standards Board 13 North American Energy Standards Board Gas Electric Interdependency – June 2005 Report Gas- Electric Interdependency Issues – Characterized 13 Issues Identified fall into the following groupings: 13 Issues Identified fall into the following groupings: Communications issues between pipelines and generators Communications issues between pipelines and generators Risk assumptions in using interruptible transportation Risk assumptions in using interruptible transportation Differences in timelines between markets Differences in timelines between markets Need for regional or national solutions Need for regional or national solutions Cost recovery and reserve capacity Cost recovery and reserve capacity Valuing and using short term capacity Valuing and using short term capacity Differences in curtailment policies in emergencies Differences in curtailment policies in emergencies

14 March 5, 2007 Prepared by the North American Energy Standards Board 14 North American Energy Standards Board Gas Electric Interdependency – June 2005 Report Gas- Electric Interdependency Issues – Report Conclusions Conclusions Reached: Conclusions Reached: If the issues are to be addressed, the majority of them require a level of policy discussion prior to determining if standards are to be developed. If the issues are to be addressed, the majority of them require a level of policy discussion prior to determining if standards are to be developed. It is inherently difficult for parties to address these issues because of the difference in focus between the two industries. It is inherently difficult for parties to address these issues because of the difference in focus between the two industries. For standards development, driving the development of business practices would be a qualitative cost-benefit analysis, with a focus on creation of standards that are less intrusive to already adopted wide- spread business practices and that recognize regional differences. For standards development, driving the development of business practices would be a qualitative cost-benefit analysis, with a focus on creation of standards that are less intrusive to already adopted wide- spread business practices and that recognize regional differences.

15 March 5, 2007 Prepared by the North American Energy Standards Board 15 North American Energy Standards Board NAESB Gas-Electric Interdependency Standards & Issues February 2006 Report

16 March 5, 2007 Prepared by the North American Energy Standards Board 16 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report Summary of Report Filed February 2006 for RM : 6 issues were identified in the report – three focus primarily on gas market changes, and 3 focus primarily on electric market changes All six issues have policy implications. All could result in standards development if so directed by either the market participants or the regulators. The report does not ask regulators to give policy direction, but it does note that it would be very difficult to garner industry consensus without either strong direction from the market participants or strong direction from policy makers.

17 March 5, 2007 Prepared by the North American Energy Standards Board 17 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report RM (RM ) NOPR: Gas Issues Issue 1: Consider the development of standards to support Capacity Release pricing on an index for pipelines that have the FERC authority to enter into negotiated rates and discount capacity on an index basis. The Commission clarified, releasing shippers are free to offer the same type of pricing arrangements as pipelines - gas price indices, as long as, the rate paid by the replacement shipper does not exceed the maximum rate in the pipelines tariff, including rate formulas that produce varying rates during the term of an agreement, as discounted rates. RM06-21and RM07-4; Requesting comments on the capacity release program and if changes in any policies would improve the efficiency of the natural gas market. Comments due March 12, 2007.

18 March 5, 2007 Prepared by the North American Energy Standards Board 18 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report RM (RM ) NOPR: Gas Issues continued Issue 2: Review the possibility of adding an additional intraday nomination cycle with bumping rights to provide more flexibility to shippers, including power generators, with firm transportation rights such that they can nominate for natural gas supporting their market clearing times. … making the third intra-day nomination non-bumping creates a fair balance between firm shippers, who will have had two opportunities to reschedule their gas, and interruptible shippers and will provide some necessary stability in the nomination system, so that shippers can be confident by mid-afternoon that they will receive their scheduled flows.

19 March 5, 2007 Prepared by the North American Energy Standards Board 19 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report RM (RM ) NOPR: Gas Issues continued Issue 3: Review the ability of pipelines to shift gas for primary firm transportation within a pipeline path without having to re-offer as secondary firm transportation service. In most cases, it would be reasonable to permit the reassignment since the shipper already has a transportation contract with primary points through the posted constraint point and has scheduled gas through that point so that reallocating gas to a different delivery point would not pose an operational problem. The only caveat would be if Shipper 1 seeks to re-designate a secondary delivery point (outside its path) that is also being requested by Shipper 2, and the delivery point is within the path of the Shipper 2. If both secondary nominations to that point cannot be accepted, Shipper 2, with a contract path through the secondary point, would have priority.

20 March 5, 2007 Prepared by the North American Energy Standards Board 20 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report RM05-5 (RM ) NOPR: Electric Issues Issue 4: Review and modify the requirements for organized electric markets so that the markets clear in sufficient time to nominate within the existing gas nomination timelines. Issue 5: Consider the development of business practices for generators that offer into the day ahead market to have the appropriate commercial arrangements to fulfill the needed obligations.

21 March 5, 2007 Prepared by the North American Energy Standards Board 21 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report RM05-5 (RM ) NOPR: Electric Issues The Commission concurrently opened section 206 proceedings to examine the RTO and ISO scheduling processes during emergency conditions to ensure that the RTOs and ISOs have procedures in place during emergencies to permit better synchronization of their markets with the gas market and to ensure that generators making appropriate bids into the RTO and ISO markets are able to recover their prudently incurred costs. (Docket Nos. EL07-1, EL07-2, EL07-3, EL07-4, EL07-5, EL07-6) January 16, 2007 filing deadline has been met The ISOs and RTOs have responded. Cal ISO has asked for an extension. Several stakeholders have filed motions to intervene.

22 March 5, 2007 Prepared by the North American Energy Standards Board 22 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report RM05-5 (RM ) NOPR: Electric Issues Issue 6: Develop the appropriate supporting definitions for new business practices for the Wholesale Electric Quadrant, including but not limited to definitions for: alternate fuel capability, usable alternate fuel capability, firm transportation service, firm sales service, firm supply, and must run generator. The Commission responded that the report is not clear as to what affect such definitions would have on the operation of the electric grid, or what business practices would be affected, choosing not to provide guidance on whether such definitions should be developed at this time. NAESB has since re-activated the Seams committee which will look again at the possibility of standards for energy definitions. Some of the definitions may be addressed as part of the OATT NOPR Reform as parts of RM05-17 and RM05-25 address definitions

23 March 5, 2007 Prepared by the North American Energy Standards Board 23 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report

24 March 5, 2007 Prepared by the North American Energy Standards Board 24 North American Energy Standards Board Gas Electric Interdependency – February 2006 Report Next Steps WGQ 2007 Annual Plan has an item to pursue analysis of the nominations timeline and additions to it to support electric market clearing times – controversial as it increases the value of firm transportation. Provisional item on the WEQ 2007 Annual Plan – respond to standards development needs as an outgrowth of the WGQ effort and the reports submitted to the FERC regarding the order on inquiry. NAESB Board of Directors receives a report on these efforts at each Board meeting, and the WEQ and WGQ Executive Committees prepare updates at each of their quarterly meetings.

25 March 5, 2007 Prepared by the North American Energy Standards Board 25 North American Energy Standards Board How to Contact NAESB

26 March 5, 2007 Prepared by the North American Energy Standards Board 26 North American Energy Standards Board How to Participate Join the distribution lists on the NAESB Web Site : All meetings are open and accessible via telephone All materials are posted on the NAESB web site Your comments are welcome and will be posted on any NAESB standards issues If you are not a member, but are interested in membership, please call the NAESB Office:

27 March 5, 2007 Prepared by the North American Energy Standards Board 27 North American Energy Standards Board Web Site Information and Contacts Web Site : Quadrant Procedures, Bylaws, Certificate for NAESB Calendar of Meetings, Agendas, Work Papers, Comments Board minutes, EC Minutes, How to order Transcripts Standards and Related Work Products Membership Information Contact Information Phone – Fax – – For further information on the organization, please contact Veronica Thomason ( ,

28 March 5, 2007 Prepared by the North American Energy Standards Board 28 North American Energy Standards Board How To Monitor Activities Monthly Update Calls: Monthly Update Calls: Review updated annual plans quarterly: Review updated annual plans quarterly: Review Board minutes quarterly: Review Board minutes quarterly: Sign up for distribution notices on subcommittees of interest: Sign up for distribution notices on subcommittees of interest: Call NAESB office ( , Call NAESB office ( ,


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