Congress should tackle whether the natural gas industry should be subject to mandatory reliability standards similar to those that exist for the electric power sector, the nation’s top energy regulator said Thursday.
“This is a matter that Congress needs to take a look at— whether we need to have a similar approach that we did to the electric side as to mandatory reliability standards,” FERC Chairman Richard Glick told reporters following the Commission’s monthly open meeting yesterday.
“I think it’s worthwhile investigating. It would be a shame to have standards on one side and not have sufficient investments made in terms of reliability on the natural gas side,” Glick said.
At FERC’s monthly meeting, Glick and his fellow commissioners received a preliminary report on the extended bout of cold weather in February that forced more than 23,000 megawatts of power outages, mostly in Texas.
The preliminary report was jointly produced by the Commission and the North American Electric Reliability Corp. (NERC). A final report is due in November.
The report tracks events that occurred during Winter Storm Uri from Feb. 8-20, when extreme cold weather and precipitation caused large numbers of electric generating units to experience outages, derates or failures to start, resulting in energy and transmission emergencies affecting millions of customers in Texas, Oklahoma, Arkansas, Louisiana and Mississippi.
The February freeze triggered a total loss of 61,800 megawatts of electric generation, as 1,045 individual generating units experienced 4,124 outages, derates or failures to start.
The cold weather also severely reduced natural gas production, with the largest effects felt in Texas, Oklahoma and Louisiana, where combined daily production declined to an estimated 20 billion cubic feet per day — a reduction of more than 50% compared to average production from Feb. 1 to 5.
Despite the severity of the power outages, “FERC doesn’t have jurisdiction over reliability of the natural gas system,” Glick explained to reporters.
But there is growing “interdependency in Texas and elsewhere between natural gas reliability and electric reliability, and we need to think about that some more,” not only at FERC “but I think other policymakers need to think about how to ensure greater reliability on the natural gas side,” Glick said.
FERC’s Office of Enforcement is investigating possible instances of market manipulation during the February outages. “Those investigations continue,” Glick said, adding that the Commission’s enforcement staff has not made a final determination.
Those sentiments were echoed by Jim Robb, president and CEO of NERC, who expressed concern about the “incredible interdependencies of electric power with other sectors,” especially natural gas. “I think this needs to be a real wake-up call for us,” Robb said.
NERC develops and enforces mandatory reliability standards for the bulk power system in the U.S., Canada, and the northern portion of Baja California, Mexico.
Report makes more than two dozen recommendations
The freezing of power plant components and access to fuel were the major causes of generator outages, the report said.
Of the 1,045 generating units affected, 57% were natural gas-fired units that primarily faced fuel-supply challenges.
The preliminary report also recommends that generator owners be provided the opportunity for compensation and recovery of the costs of building or retrofitting to operate to a specific temperature, and that Congress, state legislatures and jurisdictional regulators require gas facilities to prepare and follow cold weather preparedness plans.
“There was a similar inquiry after Texas experienced extreme cold weather in 2011, but those recommendations were not acted on,” Glick said.
“We can’t allow this to happen again. This time, we must take these recommendations seriously, and act decisively, to ensure the bulk power system doesn’t fail the next time extreme weather hits. I cannot, and will not, allow this to become yet another report that serves no purpose other than to gather dust on the shelf.”
The report makes 28 recommendations, including that FERC consider establishing a forum in which representatives of state legislatures and/or regulators with jurisdiction over natural gas infrastructure identify concrete actions to improve the reliability of the natural gas infrastructure system necessary to support bulk-power system reliability.
The report also recommends that Congress, state legislatures and regulators “with jurisdiction over facilities used for producing, treating, processing, pressurizing, storing, or transporting natural gas should require those gas facilities to have cold weather preparedness plans, including measures to prepare to operate during a weather emergency.”
Natural gas production, gathering and processing facilities should consider implementing measures to protect against freezing and other cold-related limitations, such as covering or sheltering sensitive facilities, adding heating equipment, and installing backup generation at critical sites, the report said.
