Market Forces Moving Gas and Electric Industries Toward Consensus on Convergence?

Natural Gas & Electricity, Vol. 28 Issue 12 pp.1

July 2012

By Evan Reese and Janna Chesno

The United States is becoming increasingly reliant on natural gas–fired generation to meet its electricity (power and reliability) needs. Perhaps once unthinkable, due in part to vast coal reserves and comparatively high natural gas prices, natural gas is now fueling more base-load generation resources and is being used to support variable energy resources and meet the reliability needs of the electric system.

The reasons for this growing reliance are widely known in industry circles. To name a few: the United States is experiencing a boom in shale gas production, which has helped produce the lowest natural gas prices in a decade; companies are turning away from once-dominant coal-fired generating resources in response to Environmental Protection Agency mandates; and state-imposed renewable standards and favorable tax considerations have increased development of wind, solar, and other renewable variable energy resources that need quick-response load-following services in order to “firm” the deliveries to the electric grid

An increasingly gas-fired future is now being factored into electric-industry integrated resource planning and reliability assessments. Accordingly, questions have surfaced regarding the interface between the gas and electric industries. These questions concern whether communications, scheduling, cost recovery, contracting, and other practices need to be modified to preserve electric reliability.

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This is an exercpt of an article published in Natural Gas & Electricity © 2012, July, Wiley Periodicals, Inc.