FERC Filings
EPSA 's Motion to Intervene and Protest Gas Technology Institute (GTI) Proposal for Advance Approval of 2005-2009 RD&D Plan
COMMENTS
The 1998 settlement with the Gas Research Institute (GRI) and GTI, GRI’s successor in interest since 2000 in relation to the settlement, was one that industry participants agreed to without significant involvement from electric generators as gas consumers. Since the settlement, however, over 90 percent of the generation additions to the U.S. electric grid have been fired by natural gas. As a result, electric generators’ consumption of natural gas has increased substantially from 17.9 percent of the gas consumed in the U.S in 1997, to 25.4 percent in 2002. While total gas consumption remained essentially flat at 22.7 trillion cubic feet (TCF), generators consumption increased 1.6 TCF over the 1997 to 2002 period.
Generators have an avid interest in maintaining economic and adequate gas supply. The price many generators pay for their natural gas is critical to the financial viability of their plant operations. Natural gas costs represent approximately 90 percent of the marginal cost of power production for that generation. As such, the cost of natural gas is important in moderating generator’s costs and directly impacts their ability to compete in electric wholesale markets.
The GTI proposal would raise the cost of natural gas for generators and make them less competitive. Utilities may have the ability to pass through this cost in rates, while competitive suppliers cannot. This puts competitive generators at a comparative disadvantage in the wholesale electric market. In the end this will raise costs for both gas and electric consumers.
EPSA and its members did not participate in the 1998 settlement, but are now an integral part of today’s gas industry. Although GTI states it has broad industry support for its proposal, EPSA views the GTI proposal as contrary to the 1998 settlement and supports the comments of several of the organizations that participated in the 1998 settlement agreement. Overall, GTI’s proposal would raise competitive supplier’s costs, while not providing any commensurate benefits. GTI has failed to provide evidence of any existing or future research that might directly benefit electric generators.