FERC Filings
EPSA's Comments on Natural Gas Council’s White Papers
Comments
<bold>The Need for Certainty<bold>
EPSA supports the NGSA petition for a rulemaking, as a uniform approach to gas quality and interchangeability standards will provide reliable natural gas service to end use customers. Given the interconnectedness of the natural gas transmission system, the need for a consistent approach to gas quality and interchangeability standards is not limited to a single pipeline system or region. While the white papers recommend some measure of flexibility on specific standards to accommodate historical practices, the papers advocate a consistent approach in how to address gas quality and interchangeability – an approach that pipelines should be required to adopt in accordance with a national gas quality rule.
Competitive suppliers need a clear and consistent standard for the quality of the gas they purchase to ensure that their generation equipment remains operationally sound and existing environmental requirements are maintained. Issuance of a NOPR that considers NGSA’s draft regulations (and other recommendations developed by the NGC+) is the appropriate next step to give generators the certainty they need to effectively procure fuel in the competitive gas market.
A rule specifying the interchangeability criteria of the natural gas will provide more certainty not only to generators but to all market participants along the gas value chain. Increased certainty about gas specifications allow pipelines to deliver gas to customers with known specifications, allowing turbine owners and manufacturers assurance about the gas being used in generating facilities. This certainty will ensure those manufacturers’ warranties, which rely on the manufacturer’s analysis of a pipeline’s historical gas quality, are clear and not speculative (as they would be without standardized gas interchangeability specifications), thereby eliminating potential confusion about turbine damage liability.
<bold>Wobbe Index Range<bold>
In a NOPR on gas quality, the Commission should propose that all jurisdictional pipelines include in their tariffs clear and consistent specifications for gas quality and interchangeability elements, unless these elements are already specified in their tariffs. This requirement is consistent with the draft regulation language suggested in the NGSA petition.
While EPSA agrees with the NGSA suggestions regarding which elements should be included in pipeline tariffs, the NGC+ white paper suggests that the Wobbe Index number have a range – this is an important deliverability specification that must be included in pipeline tariff. NGSA suggests that a maximum Wobbe index number is sufficient. This proposal is not consistent with the NGC+ paper’s suggestion that a range of +/- 4 percent of the historical index value be included. Of note, this range was the product of compromise among the NGC+ participants and should be retained in a FERC NOPR.
The operator of a gas turbine must know the range (i.e., both floor and ceiling) of the stability of the gas being delivered for its use because turbines are tuned to handle a specific gas quality range in accordance with historical values. If the delivered gas is variable outside of that range, above or below, the turbine will fail to operate properly, violating the manufacturer specifications as detailed under the turbine’s warranty. While 1400 is a reasonable Wobbe limit, pipelines need to determine a Wobbe value based on historical data with the obligation to deliver gas within +/- 4 percent of that number. This will ensure that existing turbine specifications are matched. Therefore, EPSA recommends that the Commission retain the white paper’s suggested +/- 4 percent Wobbe index range relative to the local average in a proposed rulemaking. Additionally, rather than not having a minimum, a standard of +/- 4 percent for a Wobbe Index of 1350 (a range of 1296 to 1404) would more closely approximate the NGSA’s proposed maximum (1400), and suggested minimum Wobbe of 1200. The use of 1350 bound by the +/- 4 percent range is more fitting for generators and other gas system end-users.
<bold>Complaint Process<bold>
The NGSA petition also proffered regulatory language to specify a procedural mechanism to be followed for gas quality disputes. This language outlines complaint procedures, including attendant decisional criteria, for use when a pipeline customer seeks a change in a pipeline’s gas quality specifications. Generally, a complainant must demonstrate the following four criteria for both CHDP and Interchangeability changes:
* The problem must be a direct result of the gas specifications in the pipeline tariff;
* The scope of impact must be identified;
* The technically feasible remedial options must be identified in order to bring the gas back within the tariff specifications;
*The costs associated with these remedial options must be identified.
EPSA lauds NGSA’s intention to specify criteria for solving gas quality disputes. However, the process is such that a customer with a valid complaint about the pipeline's tariff specifications can still bear the cost burden of correcting the problem. Hence, the NGSA recommendation does not directly answer the question of who pays to maintain gas interchangeability – an issue the Commission has rightly identified as a key question in this proceeding. In fact, the NGSA complaint process may put a complainant in an untenable position. The complainant can demonstrate that its gas quality needs are not being met by the pipeline’s current tariff specifications within a defined geographic region, but may still be responsible for the cost of treating the gas to bring it within acceptable standards.
Although EPSA appreciates the reasons why NGSA has proposed special complaint and decisional criteria for changes to pipeline standards once established, it is not clear that additional special complaint procedures are necessary. Initially, the Commission should, in any NOPR on these issues, investigate whether the existing NGA Section 5 complaint procedure can address claims concerning gas quality issues. It is possible that the Commission may find that changes are necessary to clarify the burden of proof that it would impose upon complainants subsequently seeking changes in any pipeline standards established under such a rule, including the proposed complaint demonstration and scope requirements. With respect to the specific criteria advanced by NGSA, EPSA urges the Commission to first look to designing a complaint process that ensures a fair outcome that will benefit all users of the natural gas system.
EPSA suggests that, if a complainant demonstrates that the pipeline’s tariff gas quality specification does not meet its needs and performs economic analysis described in NGSA’s petition, then it may well be in the public interest to socialize the costs associated with modifying the complainant’s facilities to accept the higher threshold, as opposed to either having these costs borne exclusively by the complainant or requiring the pipeline to modify its entire system, at much greater expense, to accept the lower threshold gas. From EPSA’s point of view, to the extent that the Public Interest is met, the resulting costs should be borne in a manner that is technically feasible and which promotes the most operational and economically remedial solution.