GAS/ELECTRIC POWER INTEGRATION SUMMIT

Transcription

1 CONFERENCE GAS/ELECTRIC POWER INTEGRATION SUMMIT Sheraton Pentagon City Hotel Post-Conference Workshop PRICING, HEDGING & PORTFOLIO MANAGEMENT UNDER CONSTRAINED GAS SUPPLY CONDITIONS May 6, 2015 Sponsor Supporting Organizations is authorized by IACET to offer 1.6 CEUs for the conference and 0.3 CEUs for the pre-conference workshop. 1

2 OVERVIEW The emergence of natural gas as a primary fuel for power generation is a relatively recent and rapidly evolving phenomenon with significant market implications. Recent developments in technology and public sentiment for lower carbon-emitting generation sources are changing the narrative of energy use in the United States, thereby setting the stage for gas-fired power to play an increasing role in producing electricity for a sustainable energy future. However, the increasing role of gas for power has already proven to be a challenging process, as the integration of two historically separate industries is easier said than done. The natural gas and electric industries contrast in their fundamental business practices, and continue to struggle in synchronizing basic technologies and operations. Meanwhile, utility demand for reliable gas supplies is expected to accelerate as proposed environmental regulations constrict the traditional baseload sources of power, coal and nuclear. This has raised concerns over fuel assurance to the extent that FERC has intervened, proposing industry coordination requirements in an attempt to minimize reliability issues. This conference will serve as a collaborative forum for the electric and gas industries to address coordination issues, share institutional knowledge, and enhance mutual system awareness. It will consider lessons learned from gas/electric coordination studies and initiatives underway, identifying areas of progress and conflict. It will also present a balanced perspective from both industries, examine the hard questions of whether successful coordination will ultimately require significant shifts in industry business models, and consider if there is a middle path agreeable to all. The emphases of this program will be to initiate proactive collaboration that could mitigate reliability concerns, and to inform specific players active in the two industries vertically integrated utilities, gas utilities, transmission and local distribution companies, merchant power producers, infrastructure (grid and system operators), regulators, and service providers on strategies to deal with these challenges in real time, and in the future. WHO SHOULD ATTEND Representative Organizations Vertically integrated utilities and local distribution companies Gas utilities LDCs Pipeline companies Independent system and regional transmission operators (ISO/RTOs) Members of reliability associations Regulatory staff responsible for electric/natural gas coordination, reliability, and fuel assurance projects Transmission planning and engineering companies Consultants with an interest in gas and electric coordination Companies with an interest in developing software and other tools for gas and electric interconnection Accountants practicing in natural gas business development Department Areas Electric power scheduling Gas and pipeline scheduling Gas/Electric coordination and operations Power engineering Infrastructure planning and development Pipeline management Natural gas storage Natural gas contracting Power market operations Reliability and extreme weather preparedness Very informative about changes in the gas industry due to shale gas developments. Vice President, PCI 2

3 LEARNING OUTCOMES Assess drivers of gas and electric coordination issues Examine the market relationship of oil prices relative to gas for power market Review regional gas/electric forecasting study results o Eastern Planning Collaborative (EIPC) o Western Interstate Energy Board (WIEB) o Texas Clean Energy Coalition (TCEC) Determine resolutions for functional and operational issues between natural gas pipelines and electric transmission operators Analyze RTO/ISO gas/electric coordination efforts o Mid-continent ISO (MISO) o PJM Interconnection o ISO New England (ISO-NE) Review FERC gas/electric initiatives and market analysis Evaluate issues and progress in utility fleet transition from coal to gas Identify strategies to overcome functional and operational issues for fuel assurance Discuss solutions to overcome market coordination challenges Analyze gas and power industry perspectives on gas/electric day synchronization Examine methods for industry collaboration for new infrastructure development Review gas services and pipeline arrangements for gas for power Assess future trends and technology impacts on gas-fired infrastructure AGENDA Monday, May 4, :30 8:00 a.m. Registration and Continental Breakfast 8:00 8:15 a.m. Overview and Welcome 8:15 9:15 a.m. Drivers and Overview of Electric and Gas Industry Coordination Five years ago, the notion of natural gas as a major generating source for electricity was largely unheard of. This presentation will set the context for how the electric and gas industries came to be interconnected, discussing technological and social drivers. It will also give a brief synopsis of electric and gas industry overlays and incongruities relating to: Regulatory distinctions and responses Infrastructure distinctions and responses Storage Power system reliability/resource adequacy Operational flexibility considerations Fuel planning and contracting divergence Scheduling and dispatch variations Communication issues Market clearing challenges Integrated resource planning strategies Geographic distinctions and variations - Brian Heslin, Member-Energy Regulatory and Internal & Governmental Investigations, Moore & Van Allen PLLC - Randell Johnson, Regional Director USA East Coast, Energy Exemplar 3

4 AGENDA Monday, May 4, 2015 (Continued) 9:15 10:15 a.m. Effects of Declining Crude Oil Prices and Oil Production on Gas for Power The plummeting price of oil, starting in fall of 2014, has been the biggest energy story in the world. Historically, the price of oil has been intricately related to the price of natural gas. After the dramatic halving of oil prices, there is now every chance that natural gas will follow suit. Unlike oil, natural gas is an important fuel for electricity production, both globally and in the U.S. Changes in the price of natural gas have traditionally been associated with profound implications on the utility industry and a country s electric generation portfolio. This session will explore the volatility in the oil-gas price ratio in the global and national markets, focusing on the effects of declining crude oil and oil production on gas for power in the U.S. It will identify short and long-term trends, regional variations, and project the overall positive outlook on the future of gas-fired generation in this context. - Anthony J. Scaraggi, Vice President Operations, GDF SUEZ Gas NA LLC 10:15 10:30 a.m. Morning Break 10:30 a.m. 12:00 p.m. Gas/Electric Study Highlights: Eastern Planning Collaborative (EIPC), Western Interstate Energy Board (WIEB), and Texas Clean Energy Coalition (TCEC) This session will feature presentations by contractors who worked on gas-electric coordination studies in each of the three major regional U.S. electricity markets, providing a national overview of challenges, trends and projections for gas-fired power. Highlights and key findings from the Eastern Planning Collaborative (EIPC), Western Interstate Energy Board (WIEB), and Texas Clean Energy Coalition (TCEC) gas-electric studies will be presented. The session will conclude with time for Q&A. Moderator: Dena Wiggins, President & CEO, Natural Gas Supply Association (NGSA) - Richard Levitan, President & Principal, Levitan & Associates - Nick Schlag, Consultant, E3 - Jurgen Weiss, Principal, The Brattle Group 12:00 1:00 p.m. Group Luncheon 1:00 2:00 p.m. Resolving Functional and Operational Issues for Communication between Natural Gas Pipelines and Electric Transmission Operators Required information necessary for sharing (e.g. pipeline EBBs) o FERC Order 698 Costs Implementation Strategies o Software modifications Pipeline & LDC Tariffs Monitoring Confidentiality and regulatory prohibitions Percentage of firm fleet - Elliott Nethercutt, Senior Technical Analyst Reliability Assessment, North American Electric Reliability Corporation (NERC) REGISTER 4601 TODAY! DTC Blvd., CALL Suite OR VISIT 4

5 AGENDA Monday, May 4, 2015 (Continued) GAS/ELECTRIC REGIONAL CASE STUDIES 2:00 2:45 p.m. MISO: Effective Communication and Operations Case Study 2:45 3:00 p.m. Afternoon Break Over the last few years, the Midcontinent ISO (MISO) has made strides to gain a stronger awareness of gas business practices and effectively collaborate with the gas and pipeline industries. This presentation will explore specific strategies MISO has implemented to improve communication and operational coordination. It will review MISO s website and real-time gas display projects/enhancements, communication strategies with pipeline operatives, and decision to implement a full-time electric/gas operations coordinator position. - Tag Short, Manager Intra-day Reliability Assessment Commitment (IRAC) System Operations & Market Services, Mid-continent ISO (MISO) 3:00 3:45 p.m. PJM: Operational Initiatives Case Study PJM has undertaken a number of initiatives to improve its ability to manage its gas-fired generation, based on its experience from the polar vortex events. Those initiatives include developing new tools to present gas-fired generator status to the system operators, modifying market rules to improve information coming in from the gas-fired generators, and establishing a task team to provide assessments in real time to the operators. - Chantal-Aimee Hendrzak, Executive Director Operations Support, PJM Interconnection 3:45 4:30 p.m. ISO-NE: Improving Reliability: Addressing Seasonal & Infrastructure Challenges Case Study The trend of increased reliance on natural gas-fired generation resources has been especially challenging for New England, a region that has struggled with infrastructure limitations and gas supply interruptions. This presentation will focus on what ISO New England (ISO-NE) is doing to implement change and work with the issues of gas-electric coordination in the short and long term to promote regional reliability. This session will focus on strategies to address communication gaps with the gas industry, infrastructure constraints, and the conflict over firm transportation for new pipelines. It will also discuss how varying seasonal resource supplies affect the market, identifying factors that improved regional gas supplies this past winter for the first time in years. - William Callan, Operations Forecast and Scheduling, ISO New England (ISO-NE) 4:30 5:30 p.m. FERC Initiatives and Market Analysis The challenges that the electric industry is facing due to increasing reliance on natural gas could have a national impact on reliability and fuel assurance. Thus, the Federal Regulatory Commission (FERC) has become active in measures to better coordinate the natural gas and power industries. This session will give an overview of FERC s initiatives for gas/electric coordination, including a summary of FERC s technical conferences of gas-electric scheduling and a status update on the forthcoming gas/electric rulemaking. It will also present a technical discussion on FERC s economic analyses on fuel assurance, exploring fuel assurance methods and associated costs that go beyond dual fuel and firm transportation. - Devin Hartman, Analyst, Federal Energy Regulatory Commission (FERC) - Caroline Daly Wozniak, Energy Industry Analyst, Federal Energy Regulatory Commission (FERC) 5:30 6:30 p.m. Networking Reception 5

6 AGENDA Tuesday, May 5, :30 8:00 a.m. Continental Breakfast 8:00 10:00 a.m. Fuel Assurance for Fleet Transition: Navigating Functional and Operational Issues in the Coal to Gas Shift 10:00 10:15 a.m. Morning Break The U.S. coal industry has been under fire from government regulators and environmental activists for being a major source of carbon dioxide emissions. Furthermore, technical advances and cheap natural gas prices are making the nation s fleet of coal plants less and less economical, as many older, dirtier and underutilized coal units are no longer competitive or sensible. All these factors are set to accelerate the decline of coal-fired generation, a generation source currently responsible for approximately 40 percent of electricity generated in the U.S. The death of coal in the U.S. will leave huge capacity gaps that will significantly increase utility demand for reliable gas for power, and raise concerns over national reliability and fuel assurance. This session will identify the impacts of the coal to gas shift on the natural gas and power industries, focusing on how to navigate projected functional and operational issues during this transition: What are the anticipated capacity gaps and fleet implications from the EPA s clean power plan (CPP), the mercury and air toxics standards (MATS) and the new source review (NSR)? What needs to happen to expedite the transition to natural gas replacing coal? How are electric utilities adapting to the significant increase of natural gas as a fuel for power generation? How do fuel assurance initiatives vary by region? What are the best strategies to mitigate functional and operational issues for gas-electric coordination under this fuel shift? What strategies can/are utilities utilizing to procure gas? What are the maintenance implications of running gas power plants at a higher capacity than originally intended? What are the reliability concerns for shifting to one fuel type? How can proper market behavior in the gas and power industry be incentivized to improve fuel assurance under these conditions? Moderator: Brian Heslin, Member Energy Regulatory and Internal & Governmental Investigations, Moore & Van Allen PLLC - Tessa Haagenson, Policy Studies Engineer, Mid-Continent ISO (MISO) - Dan Kirchner, Executive Director, Northwest Gas Association (NWGA) - Joe McCallister, Director Gas, Oil and Power, Duke Energy Corp - Elliott Nethercutt, Senior Technical Analyst Reliability Assessment, North American Electric Reliability Corporation (NERC) 6

7 AGENDA Tuesday, May 5, 2015 (Continued) 10:15 a.m. 12:15 p.m. Gas/Electric Day: Overcoming Market Coordination Challenges Market coordination and scheduling has been a major challenge for the gas and electric industries. Historically independent, the two markets have evolved differently so that the operating days for the natural gas and electric industries are not aligned. In March 2014, FERC issued a NOPR (notice of proposed rulemaking) to change the Gas Day and pipeline nominations to better coordinate with the power industry. The NOPR has sparked a big debate, and the gas and electric industries remain fundamentally divided over the proposed changes. This session will focus on solutions to overcome market coordination challenges, exploring: What will FERC s proposal mean for market coordination if issued as written? Will it be of benefit, or will service still be a mismatch? What alternative solutions are there to FERC s NOPR? What arrangement is most agreeable to both sides? If there is a final rule issued, what is the breakdown of the ruling and how can both industries successfully implement changes? How will the final FERC rule on market timing and gas day affect the gas and power industries? How will the daily operations of gas and power schedulers be impacted? Will RTOs need to make concessions to make the power markets more parallel with the gas markets? - Dan Buckner, Director of Fuels Origination and Strategic Development, ACES Power Marketing - William Callan, Operations Forecast and Scheduling, ISO New England (ISO-NE) - Frank Koza, Executive Director Infrastructure Planning, PJM Interconnection - Dena Wiggins, President & CEO, Natural Gas Supply Association (NGSA) 12:15 1:15 p.m. Group Luncheon 1:15 3:15 p.m. Developing Strategic Infrastructure Growth: Collaborating for a New Planning Paradigm The polar vortex has been viewed as a warning sign of how increased demand for natural gas fired generation can cause regional price spikes and infrastructure constraints. As consumption of natural gas for electric power further escalates, the time is now to engage in proactive planning to ensure adequate gas delivery systems are in place to meet future demand. However, as the gas and power industries become more interconnected, the traditional processes for building new pipelines and transmission may no longer make sense. New collaborative and strategic planning methods may be necessary for sensible building. This session will explore needs and opportunities for expanding gas access and infrastructure under the new paradigm of gas-electric coordination, discussing: Type of infrastructure needed to accommodate natural gas fired generation Capacity gaps for customer delivery on peak days Shortcomings with traditional incentives and processes used to build and site transmission Gas and power industry language gaps Needs to collaborate and strategize cross-industry for sensible building Opportunities for new planning paradigms Determining sensible transmission - more wires vs. more pipelines How to finance and develop fuel expansion in regions of need Fair cost allocation for new pipeline capacity Regulatory processes needed to support natural gas expansion Methods to incentivize new development under current market rules What rules need to be modified so people can build The role of the market in supporting sufficient fuel for generator performance Promoting competitive customer pricing in times of peak demand and extreme weather Moderator: Dan Kirschner, Executive Director, Northwest Gas Association (NWGA) - Dan Dolan, President, NEPGA - Randell Johnson, Regional Director USA East Coast, Energy Exemplar - Richard Kruse, Vice President Regulatory and FERC Compliance Officer, Spectra Energy 7

8 AGENDA Tuesday, May 5, 2015 (Continued) 3:30 5:00 p.m. Gas Services and Pipeline Arrangements This session will examine the various types of gas services available for the power industry from both a pipeline and utility perspective. Included will be a discussion on how the nation s largest utility is adapting to increased gas-fired generation through gas procurement strategies of long-term supply contracts and asset management arrangements. A pipeline expert will discuss the effect that power plants need nonrateable services and pipeline impact, and what pipelines can and cannot do for power industry service. - Curtis Kole, Director Business Development, Kinder Morgan - Joe McCallister, Director Gas, Oil and Power, Duke Energy Corp 5:00 5:30 p.m. Future Trends and Technology Impacts on Gas-fired Infrastructure This session will discuss longer-term trends of the gas-electric interface in the US future energy supply mix, exploring the correlation between the evolving renewable market and natural gas generation. It will also discuss potential impacts of technological innovations: Germany s new practice of making renewable natural gas and methane Opportunities in natural gas demand-response as an alternative to new infrastructure - Jurgen Weiss, Principal, The Brattle Group 5:30 p.m. Conference Adjourns 8

9 POST-CONFERENCE WORKSHOP: PRICING, HEDGING & PORTFOLIO MANAGEMENT UNDER CONSTRAINED GAS SUPPLY CONDITIONS WEDNESDAY, MAY 6, 2015 OVERVIEW This workshop will provide attendees a framework with which to: 1) evaluate weather risk, 2) apply concrete approaches to hedge price and demand volatility driven by weather, 3) measure how well the hedge fits, and 4) assess the cost-effectiveness of alternative hedging strategies. It will explore ways to bridge the chasm of physical exposure of weather with financial instruments and retail pricing. It will also examine how to incorporate weather, volumetric uncertainty, and price risk as key structural variables for portfolio management. By melding together practical experiences with leading analytic approaches, the workshop will apply a real world approach that yields practical solutions for assessing and mitigating the risk posed by extreme weather events and their ensuing market moves. Finally, it will evaluate the impact of weather on retail portfolios and how to effectively incorporate weather risk into the cost of supply. LEARNING OUTCOMES Analyze the impact of extreme weather on demand and market prices Identify metrics and approaches to visualize and quantify the value and fit of hedging strategies from flat forwards to flexible options to dynamic dailies and swings Establish validation criteria of portfolio management and modeling framework Arrange use of techniques to visualize physical and financial components of risk Illustrate approaches to determine the effect of extreme events on generating an upward shift in market expectations beyond system fundamentals Demonstrate pricing of weather risk into retail gas and power contracts Determine how and when weather derivatives make sense and employ approaches to integrate costeffective weather derivatives into portfolio management Identify how to assess portfolio sensitivity to weather risk Distinguish the benefits of assessing and hedging portfolios to delta, gamma, and vega positions driven jointly by weather and spot market prices 9

10 WORKSHOP AGENDA Wednesday, May 6, :00 8:30 a.m. Registration and Continental Breakfast 8:30 11:45 a.m. Workshop Timing Case Study of Winter of 2014 o Determining extent of weather impact on market prices o Probability of weather event and odds of recurrence o Lessons learned and market sensitivity to weather Hands-on Exercises in Portfolio Management and Cost of Supply Pricing o Hedging exercises, demonstrating visualization of hedge effectiveness o Evaluating flat, flexible and dynamic hedging strategies o Assessing portfolio weather sensitivity Methods for Model Validation Systems and Standard to Assess Portfolio Robustness Practical Issues of Developing Effective Hedges Associated with Illiquid Markets, Spot Market Volatility and Basis Risk WORKSHOP INSTRUCTOR Gary Dorris / President / Ascend Analytics Gary Dorris, Ph.D., President, Ascend Analytics has been a pioneer of innovative solutions for energy planning and risk. For the last dozen years, Dr. Dorris has grown Ascend Analytics to be a leading provider of quantitative solutions for energy risk. His analytic innovations and expertise are sought by industry leaders including 4 of the top 5 utilities in America and many COOPs and municipalities. He has established industry standards for model validation, performance metrics, and portfolio management. He has also delivered expert testimony on best practices for portfolio management, risk management, energy trading, and asset valuation and was a lead expert witness in the Enron proceedings. In 2001, Dr. Dorris won distinguished recognition from the IPE for contributions to the field of energy risk management. Dr. Dorris holds a Ph.D. in applied economics and finance from Cornell University and a BS in mechanical engineer and BA in economics with Magna Cum Laude distinction also from Cornell University. 10

11 IACET CREDITS EVENT LOCATION has been accredited as an Authorized Provider by the International Association for Continuing Education and Training (IACET). In obtaining this accreditation, has demonstrated that it complies with the ANSI/IACET Standard which is recognized internationally as a standard of good practice. As a result of their Authorized Provider status, is authorized to offer IACET CEUs for its programs that qualify under the ANSI/IACET Standard. is authorized by IACET to offer 1.6 CEUs for the conference and 0.3 CEUs for the pre-conference workshop. INSTRUCTIONAL METHODS Panel discussions, case studies, and PowerPoint Presentations will be used in this conference and affiliated workshop. REQUIREMENTS FOR SUCCESSFUL COMPLETION OF PROGRAM Participants must sign in/out each day and be in attendance for the entirety of the conference to be eligible for continuing education credit. A room block has been reserved at the Sheraton Pentagon City Hotel, 900 South Orme Street, Arlington, VA 22204, for the nights of May 3-5, Room rates are $229, plus applicable tax. Call for reservations and mention the program to get the group rate. The cutoff date to receive the group rate is April 2, 2015, but as there are a limited number of rooms available at this rate, the room block may close sooner. Please make your reservations early. SPONSORSHIP OPPORTUNITIES Do you want to drive new business through this event s powerful audience? Becoming a sponsor or exhibitor is an excellent opportunity to raise your profile before a manageably sized group of executives who make the key purchasing decisions for their businesses. There is a wide range of sponsorship opportunities available that can be customized to fit your budget and marketing objectives, including: Platinum, gold, or VIP sponsor Workshop sponsor Reception host Lanyard sponsor Networking break host Luncheon host Tabletop exhibit Breakfast host Custom sponsorship opportunities are also available. Please contact Maggie Field at or mfield@euci.com for more information. PROCEEDINGS A copy of the conference proceedings will be distributed to attendees at the event. REGISTER 3 SEND 4TH FREE Any organization wishing to send multiple attendees to these conferences may send 1 FREE for every 3 delegates registered. Please note that all registrations must be made at the same time to qualify. REGISTER 4601 TODAY! DTC Blvd., CALL Suite OR VISIT 11

12 REGISTRATION INFORMATION EVENT LOCATION Mail Directly To: Electric Utility Consultants, Inc. () 4601 DTC Blvd., Ste. 800 OR, scan and to: PLEASE REGISTER THE FOLLOWING GAS/ELECTRIC POWER INTEGRATION SUMMIT AND POST-CONFERENCE WORKSHOP MAY 4-6, 2015: US $1895 EARLY BIRD ON OR BEFORE APRIL 24, 2015: US $1695 GAS/ELECTRIC POWER INTEGRATION SUMMIT ONLY MAY : US $1495 EARLY BIRD ON OR BEFORE APRIL 24, 2015: US $1295 PRICING, HEDGING & PORTFOLIO MANAGEMENT UNDER CONSTRAINED GAS SUPPLY CONDITIONS POST-CONFERENCE WORKSHOP ONLY MAY 6, 2015: US $595 EARLY BIRD ON OR BEFORE APRIL 24, 2015: US $495 How did you hear about this event? (direct , colleague, speaker(s), etc.) A room block has been reserved at the Sheraton Pentagon City Hotel, 900 South Orme Street, Arlington, VA 22204, for the nights of May 3-5, Room rates are $229, plus applicable tax. Call for reservations and mention the program to get the group rate. The cutoff date to receive the group rate is April 2, 2015, but as there are a limited number of rooms available at this rate, the room block may close sooner. Please make your reservations early. ENERG ZE WEEKLY s Energize Weekly newsletter compiles and reports on the latest news and trends in the energy industry. Newsletter recipients also receive a different, complimentary conference presentation every week on a relevant industry topic. The presentations are selected from a massive library of more than 1,000 current presentations that has gathered during its 27 years organizing conferences. Sign me up for Energize Weekly. Print Name Job Title Company What name do you prefer on your name badge? Address City State/Province Zip/Postal Code Country Telephone List any dietary or accessibility needs here CREDIT CARD Name on Card Account Number Billing Address Billing City Billing State Billing Zip Code/Postal Code Exp. Date Security Code (last 3 digits on the back of Visa and MC or 4 digits on front of AmEx) OR Enclosed is a check for $ to cover registrations. All cancellations received on or before April 3, 2015, will be subject to a US $195 processing fee. Written cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other event or publication. This credit will be good for six months. In case of event cancellation, s liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at reserves the right to alter this program without prior notice. 12