FERC: Natural gas pipeline congestion sparked high winter power prices
- The Federal Energy Regulatory Commission (FERC) has told the Illinois Commerce Commission (ICC) that competition between heating and electricity companies for natural gas this winter caused congestion in natural gas pipelines, leading to delays and spikes in the price of electricity.
- FERC suggested utilities and heating companies can prevent the same situation from happening next year by getting power plant operators to store natural gas at the generation site -- possibly at extra cost -- and through better planning, so plants don't buy gas they don't need.
- FERC further recommends better communication and coordination between utilities, heating companies and pipeline operators.
Utilities and heating companies contend the real problem is pipeline capacity. New pipeline is getting built, but won't be ready for next winter. “Timeline adjustments will not create additional pipeline capacity. The pipe doesn’t shrink and swell with the load throughout the day. We have to put the pipe in place to serve it,” said Tim Sherwood, vice president of gas supply operations for Nicor Gas.
Part of the price spike problem is caused when generators that tend not to run during the year are asked to switch on for a few hours during the winter.
“When you have that kind of unusual extreme weather, it’s going to tax the system, it’s going to increase demand for the resources the systems relied on to operate reliably and it's going to increase prices," said Ed Murrell, deputy director of the division of economic and technical analysis at FERC's Office of Energy Policy and Innovation. "That’s unfortunately how markets work."