Craig Williams Market Interface Manager August 21, 2014 ISAS, Portland, OR

2 FERC NOPR Docket No. RM On March 20, 2014 the Federal Energy Regulatory Commission (Commission) proposed as part of a series of orders to revise its regulations at section to better coordinate the scheduling of natural gas and electricity markets in light of increased reliance on natural gas for electric generation, as well as to provide additional flexibility to all shippers on interstate natural gas pipelines.

3 FERC NOPR Docket No. RM The proposed revisions in this Notice of Proposed Rulemaking deal principally with revision of the operating day and scheduling practices used by interstate pipelines to schedule natural gas transportation service.

CurrentNGCRM14-2 National Grid 9AM 4AM2AM Timely CycleNoms Due11:30 AM1:00 PM Confirm Due3:30 PM4:30 PM- SQR Issued4:30 PM5:00 PM4:30 PM5:00 PM Flow Time9:00 AM 4:00 AM2:00 AM Evening CycleNoms Due6:00 PM6:30 PM6:00 PM6:30 PM Confirm Due9:00 PM9:30 PM- SQR Issued10:00 PM Flow Time9:00 AM 4:00 AM2:00 AM ID 1 CycleNoms Due10:00 AM9:00 AM8:00 AM7:00 AM Confirm Due1:00 PM11:30 AM-9:00 AM SQR Issued2:00 PM12:00 PM11:00 AM9:30 AM Flow Time5:00 PM3:00 PM12:00 PM10:00 AM Flow Hours16 Hours18 Hours16 Hours ID 2 CycleNoms Due5:00 PM (no-bump)2:00 PM10:30 AM11:00 AM Confirm Due8:00 PM4:00 PM-1:30 PM SQR Issued9:00 PM4:30 PM2:00 PM Flow Time9:00 PM 4:00 PM2:00 PM Flow Hours12 Hours ID 3 CycleNoms Due 9:00 PM (no-bump)4:00 PM5:00 PM (no-bump) Confirm Due 11:00 PM-7:30 PM SQR Issued 11:30 PM6:00 PM8:00 PM Flow Time 12:00 AM7:00 PM8:00 PM Flow Hours 9 Hours 6 Hours ID 4 CycleNoms Due 7:00 PM (no-bump)9:00 PM (no-bump) Confirm Due 8:30 PM11:00 PM SQR Issued 9:00 PM11:30 PM Flow Time 9:00 PM12:00 AM Flow Hours 7 Hours2 Hours

5 Natural Gas Industry Perspective Gas Day and nomination cycle timelines proposed in the NOPR will not significantly improve reliability, increase transportation capacity or ensure supply availability for the power sector o National consequences for a regional issue Perceived benefits of such changes o Do not outweigh the costs of implementing the changes o Proposed changes to the Gas Day can be managed by pipeline no-notice service o Current NAESB process allows pipelines to add additional cycles and services

6 Natural Gas Industry Perspective o Many companies haves additional cycles above NAESB standards Changes must result in improvements for the power sector without detriment to the majority of natural gas customers

7 Natural Gas Industry Perspective Impacts to Customers  Condensed nomination and scheduling timelines result in less time to resolve nomination and scheduling issues and provide for extensions of nomination deadlines  Increased costs will be reflected in increased rates for pipelines and customers – the costs will be borne by everyone in the industry

8 NAESB Gas-Electric Harmonization Nearly 470 people reportedly participated in the four GEH Forum meetings held in Houston, TX and nearly 700 people monitored the effort through distribution lists. Throughout the course of the meetings, more than 13,000 individual votes were cast on 56 ballots. The GEH Forum narrowed the proposals down to four for consideration in a vote in early June. None of the four proposals garnered the requisite level of support from the GEH Forum participants to constitute a consensus.

9 NAESB Gas-Electric Harmonization However, the NAESB Board of Directors noted that “there appeared to be broad support from interested parties in both the gas and electric industries for changes to the intraday scheduling cycles and the day-ahead nomination cycles.” Accordingly, the NAESB Board voted to modify the Wholesale Gas Quadrant (“WGQ”) Annual Plan to assign standards development work to several WGQ Subcommittees in order to implement changes to these cycles consistent with the timelines presented in the final proposal considered by the GEH Forum.

10 NAESB Gas-Electric Harmonization Based on a simple majority vote by each quadrant of the Board, it modified the WGQ Annual Plan to assign the following standards development work: “Develop new standards and modify existing standards to support the timelines for timely, evening, ID1, ID2 and ID3 nomination cycles as specified in Attachment A of this plan and make corresponding changes where necessary to other standards such as those that support capacity release programs. The standards should be neutral on gas day start times; meaning that all references to the 9 am CCT start of the gas day should be removed.”

11 NAESB Gas-Electric Harmonization By July 18 – Subcommittee will vote on a recommendation containing the modified or new standards and post standards for a thirty-day industry wide comment period. August 18 – Industry comment period ends. August 22 – WGQ Executive Committee will consider the recommendation and comments submitted, and will vote on recommendation. If approved, the recommendation will be distributed for ratification by NAESB membership. September 22 – Ratification Ballot Period ends. If ratified, the standards become NAESB final action. September 29 – NAESB standards filed with FERC.

12 NAESB Gas-Electric Harmonization Upon issuance of a final rule by FERC, NAESB plans to respond by integrating FERC regulations into its standards within 90 days of the effective date of the final rule and will notify FERC when the standards have been approved.

13 WIEB Natural Gas Study Phase 2 of Natural Gas Infrastructure Adequacy in the Western Interconnection: An Electric System Perspective is complete. The report is available on the study webpage.study webpage Phase 2 addresses whether the natural gas system will have adequate short-term operational flexibility to meet increased volatility in hourly electric industry natural gas demand due to higher penetration of wind and solar resources in the Western Interconnection. Energy and Environmental Economics (E3) presented the results of the study and answered questions.

14 WIEB Natural Gas Study Two of the seven main results were: 1. Under the conditions examined in this study, meeting the variable gas demands needed to integrate high penetrations renewables is technically feasible. 2. The addition of renewable generation to an electric system reduces the overall level of gas demand while increasing its variability.

15 Dynamic Transfers Dynamic Transfers consist of: Dynamic Schedules and Pseudo-Ties These practices have evolved over time and are due for a review of their reliability effects on the interconnection. A draft charter has been created for the JGC to create a Dynamic Transfers Task Force (DTTF) to examine if there is a better way to conduct these transfers and report back to the JGC. This is a brainstorming group.

16 UFMP Software Changes webSAS changes are scheduled to be done in late October. Software testing will take place after the changes are complete. When testing is resolved, a date will be determined to implement the new program in WECC. Estimating around January 2015???

Craig L. Williams WECC Questions?