May 2018, Vo. 245, No. 5



Major Power System Broker Pushes for New Gas Tariffs

At least one major, regional electric grid operator in the U.S. is pressing the Federal Energy Regulatory Commission (FERC) to revise the tariffs interstate pipelines can charge electric utilities and to institute mandatory information sharing requirements to replace the voluntary provisions in Order 787 adopted in 2013. 

FERC asked regional transmission operators (RTOs) and independent system operators (ISOs) for ideas to improve the flow of natural gas to electric utilities in cold weather. That is increasingly important as utilities retire coal- and nuclear-fired generators.  The mandatory rules proposed by PJM Interconnection would require pipelines to share information that could impact the availability of gas.

Interstate pipelines, natural gas suppliers, alternative energy producers had until May 15 to respond to RTO/ISO submissions. FERC’s request for ideas to make the bulk power system more resilient came after the commission decided against a proposal by Energy Secretary Rick Perry for rate adjustments that could delay the retirement of coal and nuclear generation.

PJM, the largest RTO in the U.S., suggested development of a gas generation-specific tariff with specific rates and services for the generation fleet directly connected to interstate pipelines. PJM, whose service area includes a major swath of the Midwest that extends east to New Jersey, contends the pipeline industry sets rates with utilities and industrial plants in mind, while the electric generators now clamoring for gas have been an afterthought. 

PJM acknowledged that some pipelines are more accommodating to their needs. “But such new flexible services, to the extent they have been offered, appear to have been confined to the secondary market in which available gas from LDCs or industrial customers is made available, for a price, on the non-transparent bilateral secondary market,” PJM wrote in comments to the FERC. “Although this is an effective short-term strategy to ‘move around’ available capacity and take advantage of diversity in demand, it cannot, in the long run, serve as the sole means to meet the ever-growing demand for gas transportation by the generation sector.”

Pipelines are not likely to endorse the PJM tariff suggestion once formal comments are filed.

“INGAA is surprised that PJM is requesting that FERC compel each interstate pipeline to develop a gas generation-specific tariff because pipelines always have been willing to develop services and rates tailored to the needs of gas-fired generators,” says Cathy Landry, spokesperson for the Interstate Natural Gas Association of America, previewing its formal comments. “The problem has been that generators have not signed up for such service offerings.”

INGAA also disagrees with PJM’s assertion that FERC Order 787 must be revised,” Landry continued. “Interstate pipelines already have increased the sharing of confidential information pursuant to the flexible framework established by Order 787. Pipelines question why PJM is pressing FERC to require more information from pipelines when the desired information concerning generators’ contracting and operational practices can be provided most directly to PJM by the generators themselves.”

PJM argues that implementation of Order No. 787 has varied markedly among the pipelines, although great progress has been made, generally. One reason for the lack of greater progress is that some pipelines still maintain that information specific to their individual customers cannot be shared with system operators – even on a confidential basis for reliability reasons – without a circuitous process of obtaining consent from end-use customers. 

PJM appears to be the only RTO asking FERC impose mandatory information-sharing requirements on interstate pipelines. The California ISO (CAISO) and New York ISO, for example, make only passing reference to gas pipelines in their comments on the reliability of the electric grid. 

Craig Glazer, PJM’s vice president of Federal Government Policy, said the absence of similar recommendations from other RTOs and ISOs has more to do with their interpretation of FERC’s request for input than their positions on specific issues. 

Big New Dollars 

Broadband infrastructure was one of the big winners in the fiscal 2018 appropriations bill President Trump signed in late March. That bill included $600 million for rural broadband deployment through a new pilot program to be administered by the U.S. Department of Agriculture’s Rural Utilities Service (RUS). 

That new program sits very well with NTCA-The Rural Broadband Association, whose CEO Shirley Bloomfield said, “We are excited by the promise of the resources provided within the omnibus and the prospect of continuing our members’ work with RUS. We also look forward to further conversations with Congress, the agencies and other policymakers about additional steps and resources needed to deliver on this vision.”

The NTCA has been up on Capitol Hill, along with CTIA, the wireless association which represents the big broadband companies, arguing for inclusion of provisions for their industry in any large infrastructure bill Congress might pass. Their wish lists are different, however. Wireless carriers want regulatory easements for 5G deployment to give the United States a technological leg up on China, which is seen as its major competitor in the 5G race. The rural broadband industry, however, is much less fixated on 5G, which Michael Romano, senior vice president of Industry Affairs & Business Development, NTCA, said won’t solve the problem of unserved, rural areas. 

In areas served by NTCA members, 13% of consumers still cannot get 10 megabits per second (Mbps) broadband, while 33% are unable to obtain the 25 Mbps-broadband rate that is considered to be a threshold level in more populated areas today. “And the story appears worse in areas that are not fortunate enough to be served by cooperatives and other small, hometown-based telecom companies like those in NTCA’s membership; in these other rural communities, we know that many more consumers, businesses, schools, and medical facilities lack access to even basic levels of broadband,” Romano told the Senate Commerce Committee in March. The rural carriers want additional funding through the Federal Communications Commission.

Both the big and rural carriers agree on one thing: that federal environmental laws impede the permitting of broadband facilities. The chief barriers to construction are the National Historic Preservation Act (NHPA) and the National Environmental Policy Act (NEPA).

“NHPA mandates alone recently cost a carrier more than $170,000 to install just 23 small cells in a parking lot,” said Brad Gillen, executive vice president, CTIA, at the Senate hearings. “Another provider estimates that reviews under NHPA and NEPA comprised, on average, 26% of its total small cell deployment costs last year. These reviews can take months, which add delays and uncertainty to projects, keeping customers from enjoying the benefits of better service.”   

The CTIA is pushing a bill called the SPEED Act (S.1988) which would modernize the NEPA and NHPA review process for wireless facilities. It allows antennas in public rights-of-way and where new facilities simply replace existing ones or do not significantly expand existing ones. It also recognizes that a small cell should not face the same requirements as a 250-foot tower. 

But additional funding is the top priority for the rural carriers, and no new programs are needed, according to Romano. P&GJ

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