North American Energy Standards Board

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North American Energy Standards Board
NAESB Gas-Electric Interdependency Standards
Issues for EUCI Conference on Managing
Electric Utility and Natural Gas Interdependency
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North American Energy Standards Board
NAESB Gas-Electric Interdependency Standards
Issues TIMELINE
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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
• Gas-Electric Coordination efforts resulted in two
  reports
• Gas Electric Coordination Interim Status Report,
  filed 4-16-04, 31 issues identified
• Gas Electric Coordination Final Report, filed
  11-30-04, 31 issues further defined
• Outcome of Reports Received 3 requests for
  standards development
• R04016 Energy Day
• R04020 Market Timelines
• R04021 Pipeline-Generator Communications

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North American Energy Standards Board Gas
Electric Interdependency - Timeline

• Timeline of Events
• 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)
• R04016 and R04021 were jointly assigned to
  wholesale gas and wholesale electric groups
• R04020 was assigned to wholesale electric group
  only
• 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)
• Requests R04016 and R04020 were withdrawn

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North American Energy Standards Board Gas
Electric Interdependency - Timeline

• Timeline of Events
• February 24, 2006 6 Interdependency Issues
  raised in Docket No. RM05-28-000 (Final 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 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 1-15-07 and data from the ISOs and RTOs
  to be forwarded on 1-16-07.
• Topic of other industry meetings

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North American Energy Standards Board Active
FERC Dockets Related to NAESB WEQ Standards

• Active Dockets Related to Gas-Electric
  Interdependency
• RM05-5-000 Order No. 676 issued on April 25,
  2006 for implementation by the industry on July
  1, 2006
• RM05-28-000 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. RM05-5-001 for the
  standards.
• RM05-5-001 NOPR issued October 19, 2006
  regarding communication standards electric
  (R04021). Comments due 12-18-06.
• RM96-1-027 NOPR issued on October 25 regarding
  communication standards gas (R04021).

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North American Energy Standards Board
NAESB Gas-Electric Interdependency Standards
Issues June 2005 Report
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North American Energy Standards Board Gas
Electric Interdependency June 2005 Report

• Summary of Report Filed June 27, 2005 for
  RM05-28-000
• 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

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North American Energy Standards Board Gas
Electric Interdependency June 2005 Report

• Communication Standards for Pipelines
  Generators
• Business practices were developed to address
  three situations
• 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
• The standards were filed with the FERC on June 26
  in Docket No. RM05-28-000.

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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) 011.0.1, 011.0.2, 011.0.3,
  (WGQ) 0.2.1, 0.2.2, 0.2.3
• Add the following NAESB WEQ and NAESB WGQ
  Standards (WEQ) 011.1.1, 011.1.2, 011.1.3,
  011.1.6, (WGQ) 0.3.11, 0.3.12, 0.3.13, 0.3.15
• Add the following NAESB WEQ Standards 011.1.4,
  011.1.5
• Add the following NAESB WGQ Standard 0.3.14

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North American Energy Standards Board Gas
Electric Interdependency June 2005 Report

• Gas- Electric Interdependency Issues Basis
  Considerations
• Basis for Issues
• Lead time differences
• Response time differences
• Reserve Margins versus Contractual Commitments
• Utility models versus Market driven models
• Load curtailment prioritizations

• Other Considerations
• Differences in regulatory frameworks and
  complexities
• Coordination Issues as related to Real-time
  versus Day Ahead markets
• Regional differences

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North American Energy Standards Board Gas
Electric Interdependency June 2005 Report

• Gas- Electric Interdependency Issues Categories
• Issue Categories
• Policy directions from regulatory agencies,
  contractual issues
• Standards development by NERC
• Standards development by NAESB
• Regional issues
• Infrastructure Concerns

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North American Energy Standards Board Gas
Electric Interdependency June 2005 Report

• Gas- Electric Interdependency Issues
  Characterized
• 13 Issues Identified fall into the following
  groupings
• Communications issues between pipelines and
  generators
• Risk assumptions in using interruptible
  transportation
• Differences in timelines between markets
• Need for regional or national solutions
• Cost recovery and reserve capacity
• Valuing and using short term capacity
• Differences in curtailment policies in emergencies

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North American Energy Standards Board Gas
Electric Interdependency June 2005 Report

• Gas- Electric Interdependency Issues Report
  Conclusions
• 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.
• 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.

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North American Energy Standards Board
NAESB Gas-Electric Interdependency Standards
Issues February 2006 Report
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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

• Summary of Report Filed February 2006 for
  RM05-28-000
• 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.

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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

• RM96-1-027 (RM05-28-000) 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.

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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

• RM96-1-027 (RM05-28-000) 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.

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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

• RM96-1-027 (RM05-28-000) 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.

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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

• RM05-5 (RM05-28-000) 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.

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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

• RM05-5 (RM05-28-000) 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.

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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

• RM05-5 (RM05-28-000) 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

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North American Energy Standards Board Gas
Electric Interdependency February 2006 Report

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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.

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North American Energy Standards Board
How to Contact NAESB
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North American Energy Standards Board

• How to Participate
• Join the distribution lists on the NAESB Web Site
  www.naesb.org
• 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
  713-356-0060

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North American Energy Standards Board

• Web Site Information and Contacts
• Web Site www.naesb.org
• Quadrant Procedures, Bylaws, Certificate for
  NAESB
• Calendar of Meetings, Agendas, Work Papers,
  Comments
• Board minutes, EC Minutes, How to order
  Transcripts
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• Phone [phone]
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• For further information on the organization,
  please contact Veronica Thomason (713-356-0060,
  naesb_at_naesb.org, vthomason_at_naesb.org)

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North American Energy Standards Board

• How To Monitor Activities
• Monthly Update Calls http//www.naesb.org/month
  ly_update.asp
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  http//www.naesb.org/materials/gov.asp
• Review Board minutes quarterly
  http//www.naesb.org/weq/weq_bod.asp
• Sign up for email distribution notices on
  subcommittees of interest http//www.naesb.org/li
  stserv/mail/mail_register.cfm
• Call NAESB office (713-356-0060, naesb_at_naesb.org)