INGAA president urges prompt action to address electric power rule deficiencies

WASHINGTON— Don Santa, president and CEO of the Interstate Natural Gas Association of America, today urged the Federal Energy Regulatory Commission and the electric power industry to take prompt action to address the deficiencies in current electric power market rules that create unnecessary and avoidable risks to electric power reliability:

“We appreciate the House Energy and Power subcommittee’s attention to the matter of gas-electricity reliability. We recognize that many see the problem as one of insufficient pipeline capacity. While we agree that pipeline capacity expansion in some regions is necessary, it is important to clarify that the root cause of the problem is a structural flaw in the deregulated wholesale electric power markets. These markets fail to compensate for electric reliability, regardless of fuel the generator uses to create electricity. This, in turn, discourages electric generators from holding firm pipeline capacity, a prerequisite for natural gas pipeline expansion.

“The current legal and regulatory framework for natural gas pipeline expansion, which requires pipelines to demonstrate market need, most typically with customer contracts for firm, long-term service, works. Interstate pipelines have built about 10,000 miles of pipeline in the past decade.

“In the past year, thanks to FERC’s decision to hold technical conferences on this issue, we’ve learned what the problems are. Now is the time for FERC to demonstrate leadership by encouraging and, if necessary, requiring amendments to electric power market rules to ensure continued reliability of the bulk power system.”