Regional wholesale electric markets are functioning after a decade of Federal Energy Regulatory Commission oversight provocation. Now, the commission is turning attention to integrating those wholesale electric markets with far-flung gas markets. It’s addressing the “growing interdependency of the natural gas and electric markets,” said commissioner Philip Moeller Feb. 16. He explained the goal is to coordinate the day-ahead markets for both gas and electricity trading. The move opened a docket for stakeholders to help shape coordinated markets. According to commissioners, it’s a long-term effort engendered by the nation’s move to use more natural gas to generate electricity. Outside California, much electricity feedstock is coal. With the surfeit of natural gas due to shale drilling (Current, Jan. 27, 2012) some utilities across the nation are considering changing feedstock, as natural gas is inexpensive and less polluting. Changing feedstock is also being promoted by the White House. “It’s a harmonization of gas and electric--of critical importance to reliability,” commissioner John Norris said. In California, the wholesale market is run by the California Independent System Operator. Bidders in that market--both investor-owned utilities and third-party generators--have proprietary gas contracts for delivery that are not subject to the wholesale market. Some gas delivery contracts are long-held futures. Some are from spot markets. Some are from gas storage. The California Public Utilities Commission encourages the insurance mechanism of gas hedging to avoid price spikes. However, last year and this year, gas prices are extraordinarily low due to a nationwide glut of domestic production. CAISO did not return a request for comment by press time.
