New England asks for earlier power bids to ensure gas supply
NEW YORK Feb 26 (Reuters) - The New England electricity grid operator and association of power producers have filed with federal energy regulators to force electricity providers to submit bids for the day-ahead market two to three hours earlier to insure they tap enough supply to support gas-fired power generation.
Filing earlier bids may not allow a power provider to see a full spectrum of natural gas prices since the market trades mostly between 10 a.m. and noon EST.
Natural gas makes up the fuel component of the power price.
Bids for electricity prices in New England are currently due at noon EST (1700 GMT).
The ISO New England and New England Power Pool (NEPOOL) filed a request on Feb. 7 with the U.S. Federal Energy Regulatory Commission (FERC) to bump up the time to file bids under the Federal Power Act, citing a need to improve reliability of receiving natural gas to support power generation.
"Increased demand for natural gas in New England has increased competition for the use of the natural gas pipelines and has made it more difficult for generators to obtain natural gas for power generation," the filing said.
Market comments in favor or against the proposal are due to FERC on Thursday.
The New England region has too little pipeline capacity to deliver as the fuel has grown in popularity for both power generation and space heating.
Prices at a major New England pipeline hub, Algonquin, located in the Boston area, have risen by as much as two-to-six times during peak weather demand.
Natural gas accounted for 15 percent of electricity production in New England in 2000. By 2011, it had grown to 52 percent.
"Given how gas markets function, some gas generators previously have not been able to perform when called upon due to fuel issues," ISO and NEPOOL also said in the filing.
ISO is calling for bids to be in at 9 a.m., NEPOOL at 10 a.m.
The FERC has 60 days to "accept, reject or suspend (meaning it can defer the effective date for up to five months) filings made under the section 205 of the Federal Power Act," a FERC spokesman said via email.
A trade association representing the New England regional power producers plans to file on Thursday a motion that supports the NEPOOL proposal.
"If the electricity bids are due by 9 a.m. before there is any liquidity in the gas market, you put in bids without knowing the price of gas or, in an extreme situation, how much gas is available," said Dan Dolan, president of the New England Power Generators Association (NEPGA). "Even just 10 a.m. will provide some indication of where the fuel markets are going."
ISO believes the gas market would adjust to a new trading time.
"We do not believe there will be a material impact on prices because there appears to be adequate time for price discovery and, to the extent there's a need for earlier liquidity, the gas markets will shift in response to the large number of buyers requiring firm quotes before the day-ahead market bidding window closes at 9:00 a.m.," an ISO spokeswoman said in an email.
Calpine Corp, NRG Energy, Vitol and Exelon Corp are among the companies that filed so-called motions to intervene with the FERC.
An NRG spokesman and Calpine spokeswoman referred to the NEPGA to provide comment, while an Exelon spokesman said the company had no further comment beyond what it filed with FERC.
A Vitol spokesman was unable to provide a response in time for this story.
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