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PJM, Interstate Natural Gas Pipelines Agree to Advance Grid Reliability

PJM Interconnection (PJM) – a regional transmission organization (RTO) that coordinates wholesale electricity for 13 states and the District of Columbia – has signed a memorandum of understanding with nine large natural gas pipelines (the PJM Pipelines) that provide fuel for electric power generators in the PJM footprint. The pact, completed on July 30, is intended to improve operational planning, increase grid reliability and address the growing interdependence between the electric and natural gas industries.

“This agreement sets the stage for greater coordination between electric generators and the natural gas pipeline industry” said PJM Chief Operations Officer Michael Kormos. “As electricity-generating facilities increasingly turn to natural gas, it is important that we all communicate clearly to assure reliable service.”

In addition to the PJM Interconnection, parties to the agreement include Dominion Cove Point LNG, Dominion Transmission, Columbia Gas Transmission; National Fuel Gas Supply, Natural Gas Pipeline, Tennessee Gas Pipeline, Texas Eastern Transmission, Texas Gas Transmission and Transcontinental Gas Pipe Line.

The parties also are in consultation with the Independent Market Monitor, Monitoring Analytics – which is responsible for monitoring compliance with the rules, standards, procedures and practices of PJM markets.

As permitted by the Federal Energy Regulatory Commission  (FERC) Order No. 787, PJM and the participating pipeline companies plan to share certain non-public information to promote reliable service and improved operational planning for both the electric grid and the interstate natural gas pipeline network.

Specifically, PJM has agreed that it will establish, upon approval by FERC of its Capacity Performance filing, generally uniform performance characteristics for gas-fired generators that bid into the PJM capacity market, and will share such performance characteristics with the PJM Pipelines. While individual performance factors will be unit-specific, they will include a demonstration of capability to access firm gas flows at the peak hours of a given Electric Day; and hourly flexibility, such that PJM will not be asked to compensate the generator for costs incurred due to inability to procure the natural gas commodity outside the normal scheduling window.

Prior to requesting specific generator information from a PJM Pipeline, PJM will first seek to obtain the information directly from the power generator.

The PJM Pipelines have agreed that each of them will provide to PJM a description of services that are available to be requested by a generator that could satisfy PJM’s Capacity Performance proposal, and a high level availability and feasibility estimate of those services along its pipelines; and upon request by PJM, provide PJM with a summary of services that have been requested by generators to be evaluated, as well as the status of that evaluation.

If PJM requests specific information regarding a generator service request, the pipeline will first notify the generator of its intent to relay this information to PJM, and then provide PJM with a copy of the pipeline’s preliminary evaluation for that generator, excluding any specific pricing information. To the extent that any PJM Pipeline believes that any specific type of information-sharing that is requested hereunder is not currently authorized through orders of the FERC and / or its FERC Gas Tariff, the pipeline will make an appropriate filing with FERC as it may deem necessary.

The initial effort will continue through June 30, 2016, and will be evaluated for next steps. The parties expect to communicate their progress and any insights that emerge from this continued dialogue to FERC and other interested stakeholders.

“Continued dialogue will result in more informed decisions by the PJM market participants that operate and rely upon gas-fired electric generators,” commented Don Santa, president and CEO of the Interstate Natural Gas Association of America.

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