Increased Dependence on Natural Gas Exposes Holes in U.S. Electrical Grid

Experts fear a cold spell could expose vulnerabilities in the natural gas generated electric system.

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The U.S. could experience an increase in dangerous power outages if issues are not addressed.

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Increasing use of natural gas to generate electricity in the United States might be helping the environment, but it's also exposing some serious issues in how the electric and natural gas industries work together — issues that could ultimately result in dangerous power outages if not addressed, experts warn.

Thanks to massive discoveries of natural gas in shale formations across the country, the United States generates 40 percent of its electricity from natural gas, up from 20 percent just a few years ago. At the current pace, the nation's electricity generation from natural gas will double in 10 years, according to some estimates.

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The shift to more natural gas is just the most recent transformation affecting the nation's electric grid. After the Arab oil embargo, more coal plants were built. When nuclear power was on the rise, that form of electricity generation also had to be integrated into the grid.

"This is another big adjustment," says Carol LaFleur, a commissioner at the Federal Energy Regulatory Commission. "This isn't unprecedented — these things come in cycles."

Still, recent high profile incidents resulting in power outages due to less-than-ideal coordination between the natural gas and electric industries have prompted policymakers and government agencies to investigate the nation's increasing reliance on natural gas-generated electricity. As recently as February 2011, unseasonably cold weather and supply issues resulted in millions of people losing power in Texas and thousands more losing natural gas service in New Mexico.

New England's heavy reliance on natural gas has created particularly acute challenges when it comes to maintaining a reliable power system, the region's grid operator said Tuesday in prepared testimony to the House Committee on Energy and Commerce.

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Limited pipeline capacity is the primary culprit, Gordon van Welie of ISO New England testified, arguing that the region cannot access abundant shale gas with the current infrastructure in place. Those bottlenecks could ultimately result in electricity price spikes for consumers as they did in January, when New England was paying eight times what other regions were paying for natural gas, even though the winter was relatively mild.

"This winter, New England did not experience record or sustained cold temperatures, or unusually high demand for electricity; however, wholesale electricity prices rose significantly during this period because of physical constraints moving the lowest-priced natural gas into New England," van Welie said.

Philip Moeller, another commissioner at FERC, is concerned about what happens when demand rises due to extreme winter weather. In testimony delivered before the House committee, Moeller warned that unseasonably warm winters in recent years could be masking vulnerabilities in the nation's electric system that could be exposed as soon as severe cold hits.

"The challenges are serious, very real, and somewhat urgent, especially in New England and the Midwest," Moeller said in prepared testimony. "Indeed, some in the industry believe nothing short of a major blackout will provide motivation to the various stakeholders to solve the problems facing us."

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Despite the challenges in improving coordination between the gas and electric industries, experts say it's a better position to be in than the alternative. After all, just a few years ago, lawmakers and policy wonks were fretting about running out of natural gas. Now that fear is long gone and industry leaders have moved on to arguing about an entirely different issue: exporting the nation's excess supplies.

"This issue is a byproduct of a success story and the realization that we have a lot more domestic natural gas than we thought," LaFleur says. "It's good news — we just have to manage the system well."

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