The discord between generators, whose dependence on natural gas continues to escalate, and natural gas pipeline operators must be resolved to improve the reliability of both sectors, regulators from around the country said July 31 at the National Association of Regulatory Utility Commissioners meeting in San Francisco. "The two have been cohabitating and need to get married," said Robert Gee, consultant and former chair of the Texas Public Utilities Commission. "In my view, the status quo is not acceptable." The problem is that the pipeline and generation businesses can't live together and can't live apart because of their mutual dependence. Yet they have sharp cultural and historical differences, Gee noted. Many agreed with him, saying that the practices of the two sectors need to be harmonized to avoid overstressing their intertwined systems. In the long term, new liquefied natural gas and a diversity of fuel are needed, said Richard Smead, Navigant Consulting director. These include investments in energy efficiency, wind energy, hydropower, and other alternative resources. Meanwhile, the electricity sector's dependence on natural gas is increasing at the same time demand for the fuel for other uses is rising. This clashing demand is moving the relationship between the power and gas sectors close to a breaking point. The culture clash is not a major issue in California, but generators are keeping tabs on the rift. More significant for independent power producers in the Golden State is the quality of gas. That matter is part of an ongoing proceeding at the California Public Utilities Commission, where a draft decision is expected soon (Circuit, May 27, 2006). Scheduling differences between the two industries are also adding to the strain. Generators schedule on an hourly basis, while pipeline owners schedule on a daily basis. "Gas-fired generators frequently have to commit power to the regional electricity grid before they have the assurance of pipeline capacity," noted a briefing paper by the National Regulatory Research Institute on the need to coordinate the two sectors' practices. A potentially more serious issue, according to the study, is the questionable "willingness of gas pipelines to accommodate the stringent demands of power generators and regional system operators." In addition, the gas industry was deregulated 20 years before parts of the electricity sector were, with the former being handled at the national level and the latter at the state level. The North American Energy Standards Board, which is overseen by the Federal Energy Regulatory Commission, is working to standardize business practices in the two sectors. Key issues need to be resolved, according to Smead, Those include the lack of "synchronization" between the two industries, which is attributed to generators that function largely in the forward market and don't want to overcommit on needed gas supplies or be caught short. In addition, there is no agreement on the definition of terms. "We need to get all the lawyers out of the room," Smead said.