Monday, July 28, 2014

DOE Quadrennial Energy Review Meeting on Gas-Electric System Interdependency

Today, the DOE held the 7th meeting in its Quadrennial Energy Review series at Metropolitan State University with the discussion focusing on the interrelationship between natural gas and electric system markets and infrastructure.  Click here for the DOE website.

The discussion of day ahead markets and the fact that electric market operating day begins at midnight while natural gas operating day begins at 9am (central time) may have seemed arcane to some.  The discussion also focused on how firm gas transportation is required to ensure electric system reliability.  This became a big issue last winter when tight natural gas supplies due to cold winter impacted electric generation in the northeast. Given that natural gas is the predominant fuel for home heating, and is playing an increasing role in electrical generation, this becomes a very complex interaction. Think about it this way... when supplies are tight, will the available gas be directed toward heating or electrical generation?  Moreover, how does one use impact the price of the other?  While an electric utility has alternatives to generate electricity, albeit perhaps at a higher price, the consumer with gas heating has no such alternatives to turn to.

The speakers, who mostly came from gas and electric utilities, didn't come to any definitive conclusions but the discussion did highlight the differing perspectives of the two industries.  Apparently, there will be several more meetings in this series in the coming weeks on a variety of energy market topics.