Energy Exchange

It’s time to harmonize New York’s natural gas and climate policies

New York is a national leader on energy and climate. The state’s Clean Energy Standard provides that half its electricity will come from renewables by 2030. The state has also committed to reduce greenhouse gas emissions 80% below 2005 levels by 2050. Governor Andrew Cuomo’s new plan to reduce methane pollution directs state agencies to develop policies to inventory emissions and identify strategies to reduce them.

These are ambitious goals that require proactive, flexible policies from New York regulators. However, embedded within New York Public Service Commission precedent and policies are preferences for utility decisions weighted in favor of natural gas utilization and infrastructure. These policies risk locking in that infrastructure at the expense of alternatives.

Dusting off old policies

One such policy, in place since 1989, incentivizes utilities that expand gas service into new areas by increasing the rate of shareholder return they’re allowed to earn on these investments. Others put the finger on the scale for increased utility investment in natural gas pipelines and delivery infrastructure. Read More »

Posted in Gas to Clean, Natural Gas / Read 1 Response

Greater Flexibility, Efficiency in Gas Markets Requires New Standards

Markets for electricity and natural gas in the U.S. grew up independently of one another. The rules in one do not always align with the rules in the other, creating challenges for both operators and regulators. Cumbersome inefficiencies are becoming more evident with the rapid evolution of the electric system. With more gas-fired power plants coming online, and the growing requirement to balance intermittent renewable sources on the electric grid, there is now a pressing need to synchronize these two markets. Fixing the disconnects means the two systems need a better framework for doing business with one another. The place where the markets meet is gas generators’ use of the nation’s pipeline system.

Flexibility is Key

Pipelines primarily make money by selling firm (i.e., premium) transportation service. This type of service places value on one thing: moving gas from point A to point B. This market design means that pipelines have no commercial incentive to provide services that are actually needed by gas generators (they get paid regardless of how the capacity is used). The fuel supply needs of gas generators vary over the course of the day and therefore require pipelines to deliver gas on a more variable basis—a “smart” service far more valuable to power generators because they are paying for what they use, rather than for pipeline capacity. Furthermore, signing up for firm service is often too expensive for gas generators who don’t need the service on every day of the year and are not guaranteed recovery of these costs in the electric markets. Read More »

Posted in Gas to Clean, General, Natural Gas / Comments are closed

Warning: Unnecessary Pipelines Could Leave Consumers Holding the Bag

ngpipelines_map

U.S. Natural Gas Pipeline Network, 2009

New oil pipelines are very much in the national spotlight. There’s been less attention on big pipes to transport natural gas. So far, debates over gas pipelines have been mostly local and regional affairs, even though there are dozens of gas pipeline applications pending before the Federal Energy Regulatory Commission (FERC). The traditional concerns with both types of pipelines are largely the same: safety, routing, and environmental impacts.

But even before you get to those questions, there’s a more fundamental one we should be asking:  Have the pipeline developers established a true need for the project? Read More »

Posted in Natural Gas / Tagged | Comments are closed