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Power-Grid Operator Pledges to Work Closely With Natural-Gas Sector

PJM agreement seeks to ensure reliability as coal-fired plants are phased out and more gas-fired units are built

natural gas pipeline

In a move aimed at enhancing reliability, the regional operator of the power grid plans to work with several natural-gas pipeline operators to ensure there is plenty of fuel available to generators when they need to produce electricity.

In the agreement, detailed in a four-page memorandum of understanding, PJM Interconnection pledged to work more closely with suppliers to improve operational planning and address the growing interdependence between the electric and natural-gas industries.

The agreement comes at a time when natural gas is displacing coal as the fuel of choice for power generators, in part because of tougher environmental standards and concerns about global climate change.

Cheap natural gas from Pennsylvania and neighboring states also has led to a rapid buildout of pipelines in New Jersey, with about a dozen projects either approved or under consideration by various regulatory agencies.

The intent of the agreement is to provide a better understanding of the needs of gas-fired generators and to work toward providing reliable and flexible solutions that promote adequate natural-gas pipeline capacity, according to PJM.

“This agreement sets the stage for greater coordination between electric generators and the natural-gas pipeline industry,’’ said Mike Kormos, chief operations officer of PJM. “As electricity-generating facilities increasingly turn to natural gas, it is important that we all communicate clearly to assure reliable service.’’

An executive involved in the natural-gas sector said the effort will promote greater transparency and shared knowledge. “Continued dialogue will result in more informed decisions by the PJM market participants that operate and rely upon gas-fired generators,’’ said Don Santa, president and CEO of the Interstate Natural Gas Association of America.

In New Jersey, three new natural-gas-fired projects have been approved or are under construction. A fourth project to convert the B.L. England coal-fired unit to natural gas also has been proposed, but it has been held up because of opposition to a new pipeline through the Pinelands to bring fuel to the facility.

Natural-gas power plants are much cleaner than coal units in the amount of pollution they spew, including greenhouse-gas emissions that contribute to global climate change. Nevertheless, many environmental groups oppose the projects because they fear they divert investments from cleaner sources of electricity, such as solar and wind.

“You can’t beat global warming by doubling down on fossil fuels,’’ said Doug O’Malley, director of Environment New Jersey.

If the grid operator wants to make the system more resilient and reliable, the way to do it is to promote more investment in distributed generation, such as solar and wind, according to Jeff Tittel, director of the New Jersey Sierra Club. “And the biggest savings of all is through energy efficiency,’’ he said.

As part of the deal with PJM, the companies agreed, subject to execution of firm contracts, to provide services where appropriate and to serve additional generators as facilities are converted and new ones built.

Among other things, the parties agreed to demonstrate capability to access gas at the peak hours of electric demand, although individual performance will be unit-specific.

Parties to the agreement with PJM include Dominion Cove Point, LNG, LP; Dominion Transmission, Inc.; Columbia Gas Transmission, LLC; National Fuel Supply Corp.; Texas Eastern Transmission, LP; Texas Gas Transmission, LLC; Transcontinental Gas Pipeline Company, LLC; Tennessee Gas Pipeline Company, LLC; and Natural Gas Pipeline Company of America, LLC.

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