FERC to probe gas price spikes during deep freeze
Cheryl LaFleur, the agency’s acting chairwoman, said today that FERC will hold a technical conference April 1 to evaluate the grid’s performance this winter to better understand the interplay between gas and electric markets and determine what market and operational issues were at play.
LaFleur also noted that FERC for the first time this month ordered a private pipeline to prioritize shipments of propane into the Midwest. A cold snap through much of the Midwest and Northeast earlier this month crimped propane supplies used by about 14 million rural Americans to heat their homes, and supplies dropped to their lowest in more than two decades.
Last month, FERC approved PJM Interconnection’s request to temporarily let its generators exceed a long-standing $1,000-per-megawatt-hour price limit for electricity sold into the market through the end of March (Greenwire, Feb. 11).
Spot prices for natural gas in the Mid-Atlantic on Jan. 22 surged almost 340 percent to $45 per million British thermal units, and gas prices in New York City rose more than 780 percent. As a result of the high fuel costs, the price of electricity in the region shot up to $857 per MWh.
FERC Commissioner Philip Moeller said he’s concerned recent warm winters may have been masking the grid’s growing reliance on natural gas — revealed during this winter — and he hopes to garner insights from the conference.
Democratic FERC Commissioner John Norris, a former regulator from Iowa, said it’s FERC’s responsibility to fully explore reasons behind the high energy prices, including fuel supply issues, and said it was a matter of safety for farmers and homeowners in the Midwest.
“Maintaining confidence in our jurisdictional markets is paramount,” Norris said, adding that the technical conference will provide insight into market and operational challenges, as well as possible market changes.
Tony Clark, a Republican member of the commission, said it was a “big deal” that FERC for the fist time under the Interstate Commerce Act ordered a private pipeline — Enterprise TE Products Pipeline Co. LLC — to temporarily provide propane shipments from its Texas hub, in Mont Belvieu outside Houston, to locations in the Midwest (Greenwire, Feb. 7).
But Clark warned that the propane order was “not a silver bullet” and noted there have been multiple actions on various jurisdictional levels that have been taken to address the dangerous fuel shortages.