Will FERC Mandate Gas Pipeline Reliability Standards for Winter?

January 6, 2025

The severe power outages that swept across the Southeast and nearly led to the collapse of New York City’s gas system during Winter Storm Elliott in December 2022 have spurred significant concerns about the reliability of gas pipeline infrastructure during extreme cold weather. In response, National Grid USA, Consolidated Edison Co. of New York (Con Edison), and Orange and Rockland Utilities (O&R) have petitioned the Federal Energy Regulatory Commission (FERC) to implement mandatory reliability-related requirements for gas pipeline operators. The utilities argue that current voluntary measures are insufficient and emphasize the need for FERC to leverage its authority under the Natural Gas Act to mandate reporting and establish enforcement mechanisms for pipeline reliability.

Inadequacy of Voluntary Measures and Need for FERC Authority

National Grid, Con Edison, and O&R collectively stress that the voluntary efforts to enhance the reliability of gas pipelines have not yielded the necessary results. They point out that without mandatory measures, pipeline operators do not have adequate incentives to prioritize and invest in reliability improvements. The call for FERC intervention underscores the importance of having a robust regulatory framework that mandates pipeline reliability reporting and enforces compliance to mitigate risks before they escalate into service interruptions.

The utilities advocate that FERC should initiate a notice of inquiry to start shaping these reliability requirements. National Grid specifically calls for tariff reforms that include stricter provisions for force majeure events, improved real-time coordination, and other operational enhancements. These measures aim to ensure that pipeline operators can effectively manage their systems during extreme weather events. By mandating these standards, FERC would be able to monitor the performance of pipelines more comprehensively and take preemptive actions to address potential reliability issues.

Proposed Reforms and Financial Incentives

One of the critical aspects highlighted by National Grid is the necessity of reforms in pipeline tariffs. These reforms should encompass a range of provisions aimed at bolstering the reliability of gas supply during winter conditions. For instance, enhancing operational flow orders and scheduling confirmation processes can significantly reduce the likelihood of disruptions. Furthermore, National Grid proposes establishing stricter rules around force majeure clauses, which currently allow pipeline operators to avoid penalties in case of unforeseeable events.

Another important suggestion put forward by National Grid is the implementation of financial incentives for gas-fired generators in New England and New York to secure long-term firm contracts. This would include encouraging the procurement of imported liquefied natural gas (LNG) supplies. By supporting financial incentives, FERC can promote investments in infrastructure that guarantee a reliable gas supply even in adverse weather conditions. Ensuring that gas-fired generators have access to dependable fuel sources is crucial for maintaining the resilience of the gas system during winter.

Con Edison and O&R’s Emphasis on Winterization Standards

Con Edison and O&R, while acknowledging recent improvements in winter weather operations by upstream pipelines and suppliers, stress that a lot more needs to be done. They highlight that progress in enhancing gas system performance during cold weather has come to a halt, necessitating a new approach. These utilities propose the implementation of activity-based winterization standards specifically for gas production and transportation facilities. Such standards would ensure that equipment heating, backup fuel sources and supplies, and equipment temperature alarms are in place.

The utilities also emphasize the need to address repeated claims of force majeure for situations that are avoidable with preventative measures. They argue that redefining the term “force majeure” in gas contracts is critical to preventing operators from sidestepping responsibilities. By establishing requirements for preventative measures and holding operators accountable, FERC can enhance the overall reliability of the gas supply system during winter.

Consensus Among Utilities and the Need for Proactive Measures

The severe power outages that hit the Southeast and almost caused the collapse of New York City’s gas system during Winter Storm Elliott in December 2022 have raised serious concerns about the reliability of gas pipeline infrastructure in extreme cold weather. In response to this, National Grid USA, Consolidated Edison Co. of New York (Con Edison), and Orange and Rockland Utilities (O&R) have formally requested that the Federal Energy Regulatory Commission (FERC) enforce mandatory reliability standards for gas pipeline operators. The companies argue that current voluntary measures are inadequate and stress the necessity for FERC to use its authority under the Natural Gas Act. They seek mandated reporting and the creation of enforcement mechanisms to ensure pipeline reliability. These utilities believe that such measures are essential to prevent future power failures during harsh winter conditions and to protect the energy grid from similar incidents.

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