By William Opalka
Electric and gas utilities tried to convince FERC at a technical conference last week that targeted release of natural gas capacity to generators would alleviate supply constraints and help lower prices.
Other participants said the proposal is premature, ill-defined, discriminatory and interferes with the wholesale power market.
The May 9 conference was scheduled in response to Algonquin Gas Transmission’s petition asking FERC to allow exemptions from its capacity release bidding requirements (RP16-618).
The proposed changes to the company’s tariff would permit “prearranged releases” of firm capacity to utilities or generation owners. The company is one of the partners in the proposed Access Northeast pipeline that would expand capacity by 900,000 dekatherms per day into New England. (See FERC to Consider Electric Utility Purchases of Gas Pipeline Capacity.)
Electric distribution companies in Maine, New Hampshire, Massachusetts, Connecticut and Rhode Island have asked state regulators to approve cost recovery from their ratepayers for access to expanded pipelines.
Richard Kruse vice president, regulatory for Algonquin’s parent, Spectra Energy, told FERC the region is vulnerable to gas and electric price volatility.
“Every time this issue comes up, the rest of the country says ‘New England needs to get its act together,’” he said. The market has not solved the issue. “We have not seen generators sign up for pipeline capacity. We’ve held multiple open seasons and it has not materialized.”
Generators have commitments for about 80,000 dekatherms per day of firm capacity, but Kruse said that has dropped in recent years.
“We thought this would create a clear line of sight between the cost causation to the customer and the benefit [through lower electric rates],” said James Daly, vice president of energy supply for Eversource Energy, another partner in Access Northeast.
Algonquin said its waiver request is consistent with FERC policy exempting releases for state-regulated retail access programs from bidding requirements.
But critics said programs to benefit the electric distributors don’t yet exist.
“To a suspicious mind, any program that any state asserts would advance reliability would fall under the ambit of the program,” said former FERC Chairman Joseph Kelliher, now vice president for federal regulatory affairs at NextEra Energy. “Here the commission would be writing a blank check to the states that any program you stick the reliability label on would be permitted.”
Kruse said Algonquin would welcome guidance from the commission.