Gas-Electric
Infrastructure Challenges
WPUI Gas Program
September 17, 2012
September 13, 2012 Madison, WI
MISO EPA/Gas related efforts - Timeline
EPA Rules & Regulations
MISO EPA Impact Study, Oct 2011
Gas Consultant Phase 1 Study, Feb 2012
Gas Consultant Phase 2 Study, July 2012
MISO Gas Electric Infrastructure Workshops, July 2012
FERC Gas Electric Technical Conferences, Aug 2012
MISO Gas Pipeline discussions, Present
2
September 13, 2012 Madison, WI
Overview of Impacts
• 12.6 GW of coal capacity Identified as at-risk
– Expected retirement dates to be in the 2014/2015 calendar years
– 12.6 GW of retirement would erode MISO projected reserve
margins by 12 percentage points, dropping system resources 6
to 7 percentage points below required targets.
• Capital investment of $33.0 Billion will be required to
retrofit and/or replace units
• Average energy prices may increase by $5/MWh
Energy Cost Impacts
EPA Compliance Retrofit Capital
Costs
New Capacity Capital Fixed
Charges
Fixed O&M Capital Costs
12,652 MW of
Retirements
$5/MWh
$22.5B
$9.6B
$0.0B
Transmission Capital Costs
$0.9B
Total Capital Costs
$33.0B
September 13, 2012 Madison, WI
3
Key Issues Affecting Compliance (3-5 years)
• MATS related - coordination of outages required to install
compliance equipment
– Maintenance margin calculator tool
– Quarterly survey
– Investigate Reciprocal Internal Combustion Engines (RICE) standards
and their impact on Behind the Meter Generation (BTMG)
• Sufficient manufacturing, engineering and other resource availability
to meet necessary timelines
• Ability of the natural gas infrastructure to meet the anticipated fuel
switching requirements
4
September 13, 2012 Madison, WI
Why should MISO be concerned about gas? –
Forecast Perspective
• Capacity Factors (CF) increase
significantly for the existing gas
fleet under changing regulatory
and gas price scenarios
– Historic CF is based on 20 year
averages. No new EPA rules, no
retirements and $4.50 gas
– Phase 1 is based on EPA rules, 12,000
MW of retirements and $4.50 gas price
– Phase 2 Expected is based on EPA
rules, 12,000 MW of retirements and
$2.50 gas price
– Phase 2 Max based on existing gas
units running at same level as new gas
units
90
80
70
60
50
40
30
20
10
0
82
65
27
CT
CC
17
10
1
2
6
5
September 13, 2012 Madison, WI
Contribution to Total Energy Served Jan thru June only
Why should MISO be concerned about gas?
– Real Time Perspective
90%
80%
77%
78%
75%
70%
65%
60%
50%
40%
30%
20%
10%
0%
14%
14%
3%
3%
2009
14%
14%
2%
5%
4%
2010
2011
11%
5%
8%
2012
Year
Coal
Nuclear
Gas
Wind
6
September 13, 2012 Madison, WI
Lack of Fuel for Gas Units Summary 2007-2011
• Total of 168 outages were recorded with an overall of 19,015 MW of
power and 1,045,576 MWH of energy.
• These 168 outages have two different cause codes and are divided
into five main categories.
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September 13, 2012 Madison, WI
Outages with Cause Code 9130
Category
Category Description
Lack of Supply
Sum of Total Loss
Instances (MWH)
Maintenance or Technical Issues at Other Points 4
Lack/Loss Fuel Supply
23
No Fuel Contract
1
Lack of Supply Total
28
Maintenance
Station/Pipeline/Valve Maintenance
22
Maintenance Total
22
Pipe Contingency
Restrictions placed because of Excessive
1
Demand
Supply Valve/Pipeline Failure/Outage
5
Pipe Contingency Total
6
Pressure
Low Gas Pressure; some because of
24
Maintenance/Technical Issues at Other Points
Pressure Total
24
N/A
No Information was Provided
39
N/A Total
39
Range of Loss
(MWH)
6,392
33,2672
4,472
343,536
69,236
69,236
3,285
1,598
101
4,472
1,598
32,206
4,472
115
15,023
3,285
3,285
88,209
91,494
38,672
340
61,040
3
29,789
38,672
108,539
108,539
3
7,224
Total
Reduction
(AVG MW)
188
1977
13
2,178
1,477
1,477
280
Range of
Reduction
(MW)
47
47
6
164
13
13
1,505
1,785
2,537
2,537
4,748
4,748
14
144
280
280
85
545
1
390
1
286
*Cause Code 9130: Lack of fuel where the operator is not in control of contracts, supply lines, or delivery of fuels
8
September 13, 2012 Madison, WI
Outages with Cause Code 9131
Category
Category Description
Lack of Supply
Sum of Total Loss
Instances (MWH)
Lack/Loss Fuel Supply
6
Maintenance or Technical Issues at Other Points 5
Lack of Supply Total
11
Maintenance
Software/System Upgrade
7
Maintenance Total
7
Pipe Contingency Restrictions placed because of Excessive
8
Demand
Supply Valve/Pipeline Failure/Outage
11
Pipe Contingency
19
Total
Pressure
Low Gas Pressure; some because of
4
Maintenance/Technical Issues at Other Points
Pressure Total
4
N/A
No Information was Provided
8
N/A Total
8
Range of Loss
(MWH)
65,371
5,238
70,609
884
884
12,970
4
918
32,826
1,320
97
140
20
3,388
75,616
88,587
20
18,920
2,996
242
1,300
2,996
231,020 19
231,020
Total
Reduction
(AVG MW)
409
873
1,282
404
404
1,185
Range of
Reduction
(MW)
1
191
153
220
35
158
5
220
1,161
2,346
42
220
354
53
153
12
545
354
111,103 1,903
1,903
*Cause Code 9131: Lack of fuel (interruptible supply of fuel part of fuel contract)
9
September 13, 2012 Madison, WI
Contingency Type vs. Unit Size
Pressure
Pipe Contingency
Maintenance
Lack of Supply
0
30
60
90
120
150
180
210
240
270
300
330
360
390
420
450
480
510
540
570
600
Unit Capacity (MW)
This Plot represents that units are involved with Pressure and Pipeline contingencies
regardless of their size where as, Maintenance and Lack of Supply are constraints that
mainly happen to units smaller than 300 MWs.
10
September 13, 2012 Madison, WI
Key Gas-Electric Interdependency Issues
Information
Sharing &
Communication
Flexible
Solutions to
Interdependency
Issues
Involvement of
State and
Federal
Regulators
Cross-Industry
Education
Coordination of
Emergency
Operations
11
September 13, 2012 Madison, WI
Workshop feedback received to-date
MISO
Gas Industry
• Coordinate communication,
but not gas infrastructure
planning and expansion
• Examine the treatment of firm
vs. non-firm service going
forward
• Examine the feasibility of
aligning the MISO electric day
with the gas day
• Extend MISO’s forward
capacity market
• Write flexibility into the
generator retirement reporting
requirements (Attachment Y)
for definitive retirements
• Review the “no-bump” rule
• Work to provide clarity on
existing pipeline
services/contractual
arrangements
• Work with FERC to develop a
streamlined regulatory
process for pipelines to
incorporate more flexible
service in their tariffs
• Help improve understanding
of the gas industry by electric
industry players
• Examine the possibility of
adding nomination periods
across pipelines
• Incorporate forward-looking
planning into business
operations
• Improve industry transparency
Joint Partnership
• Improve information sharing
and communication
• Improve system emergency
planning and coordination
12
September 13, 2012 Madison, WI
Next Steps
• MISO will coordinate with INGAA to provide Planning &
Operations Training for gas industry professionals
• MISO will establish a stakeholder group (Gas-Electric Task
Force) to offer a forum for moving forward on gas-electric
efforts
• A tariff workshop will be scheduled to address potential tariff
changes related to gas-electric issues
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September 13, 2012 Madison, WI
Appendix
14
September 13, 2012 Madison, WI
Environmental Protection Agency Proposing
Four New Regulations
2010
Clean Water Act
Coal Combustion
Residuals
Clean Air Transport
Rule/Cross State Air
Pollution Rule
Mercury and Air
Toxics Standards
September 13, 2012 Madison, WI
2011
2012
Develop
Rule
2013
2014
2016
Compliance
Prep Period
Develop Rule
2017
2018+
Compliance
Compliance
Prep Period
Develop
Rule
Develop
Rule
2015
Compliance
Compliance
Vacated
Compliance
Prep Period
State
Exten
-sion
EPA
Exten
-sion
Compliance
Purpose of the Phase 1 and Phase 2 Studies
1. Review and analyze current and future natural gas pipelines,
storage facilities and related infrastructure, and extrapolate
the impact for natural gas-fired electric power generation
from 2011 – 2030 in the MISO region.
2. Build upon the Phase 1 analysis and incorporate the impacts
of lower gas prices; and, correspondingly higher capacity
factors on the existing gas fleet, on the existing pipeline
infrastructure in the MISO region.
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September 13, 2012 Madison, WI
Results – Phase 1 (Feb 2012)
• Wellhead Gas supply is not expected to be an issue
• Additional gas pipeline infrastructure is needed to
accommodate fuel switching
– Additional inter-regional and intra-regional (solely within MISO)
main line development needed
– Lateral pipelines and compressor additions development needed
• Timing for development of new pipeline infrastructure is the
main issue
– Planning, siting, regulatory and construction of new main line
gas pipelines will be on the order of 5-6 years, if started now
– Compliance with Mercury and Air Toxics Standards is 3-5 years
17
September 13, 2012 Madison, WI
Results – Phase 2
• Modified-Backcast analysis based on the existing gas infrastructure
with existing and new gas capacity additions running with a
$2.50/Mbtu gas price:
– The analyses were not intended to be a detailed market-area engineering
analysis that uses sophisticated forward looking flow analysis.
• Over 65% of the Pipelines have insufficient capacity at measurement
points into their market area to fully meet the needs of the existing
(embedded) units operating at expected capacity factors.
• For the period 2016 – 2030, almost 90% of the pipelines have
insufficient capacity for the existing units plus an incremental 12,000
MW of coal-to-gas retirement.
• Gas industry participants reviewed the report and provided comments
that were more optimistic than the conclusions, which are contained in
Appendix 2.
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September 13, 2012 Madison, WI
Results – Phase 2 continued
• Pipelines sourcing gas supply from the Gulf Coast have significantly
higher levels of insufficient capacity compared to the Southwest and
Mid-Continent pipeline sources.
– Shale gas supplies in proximity to MISO will need pipeline flow changes
and infrastructure build-out.
• To ensure generator availability, gas storage may be required
– Need to be addressed further.
– On site diesel or liquid natural gas (LNG) appear as viable options
– Tariff changes may be needed to add qualifications to generators
• Regional coordination of MISO members will produce a better
solution than each stakeholder acting alone
– No obvious venue (except FERC) for that coordination exists, other than
MISO
19
September 13, 2012 Madison, WI
Pipeline Specific Capacity Assessment
• New pipeline infrastructure is needed to manage volatility and
ensure reliability
– 21 major pipelines are in the MISO footprint
• With the advent of shale gas, the pipeline flow usage is in a
state of flux
– Some are essentially fully subscribed and some are not
• New gas-fired generation will be served off different lines
• New main lines as well as lateral lines (line from the main line
to the power plant) will be needed
• On-site storage of fuel, either diesel or LNG, may substantially
lessen the need for new pipeline capacity. The costs and
trade-offs need to be studied going forward.
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September 13, 2012 Madison, WI
Overview of MISO Region Major Pipelines
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September 13, 2012 Madison, WI