FERC outlines ‘catastrophic’ gas, grid threats

By Miranda Willson | 09/22/2023 06:41 AM EDT

The agency revealed details about a natural gas crisis in New York last December and approved four new fossil fuel projects.

Federal Energy Regulatory Commission acting Chair Willie Phillips.

Federal Energy Regulatory Commission acting Chair Willie Phillips testifies earlier this year before a House subcommittee on Capitol Hill. Francis Chung/POLITICO

The natural gas system in New York City nearly failed and left a million customers without heat last Christmas Eve, federal regulators said Thursday.

The near-emergency — not previously disclosed publicly — occurred during Winter Storm Elliott, which brought below-freezing temperatures to the eastern United States for several days in December.

Had Consolidated Edison Inc. — New York State’s largest utility — not taken emergency action, gas heating could have been shut off for months in “all or portions” of its territory, according to staff at the Federal Energy Regulatory Commission. The utility provides gas service to 1.1 million customers in Manhattan, the Bronx and parts of Queens and Westchester County.


“This would’ve been catastrophic. Everyone should be concerned enough to take action on this report and recommendations when they come out, immediately,” FERC acting Chair Willie Phillips said after the commission’s monthly meeting.

FERC, which oversees the electric power system, and the North American Electric Reliability Corp., a nonprofit that enforces grid reliability, shared highlights from a final report about the storm’s power and gas impacts during the meeting. Also Thursday, FERC approved four new natural gas projects despite continued disagreement over how projects’ greenhouse gas emissions should be assessed.

The morning of Dec. 24, 2022, ConEd declared a gas emergency as pipeline pressure declined rapidly, effectively halting gas flows at a utility station in Manhattan, according to FERC and NERC. At the time, cold temperatures across the country had caused natural gas production to decline, and pipeline operators reduced pipeline pressure in response.

The incident was among the revelations included in FERC and NERC’s findings. It underscores growing concerns about the reliability of the nation’s electric and gas systems amid severe weather made more frequent by climate change.

FERC and NERC’s final report — which should be released in the coming days — also highlighted what Phillips described as a reliability “gap.”

Essentially, there are no mandatory federal reliability standards for the entire natural gas system, from wellheads to pipelines to gas distribution lines. That’s different from the electric grid and power plants, which are largely subject to such standards, even though both systems are increasingly interdependent. The largest source of electric power in the country today is natural gas.

To prevent crises like those that occurred in New York and surrounding states during Elliott, Congress must step in and expand regulation of the gas system, said Phillips, a Democrat.

“We need someone who is directly responsible for the reliability of our natural gas systems and for enforcing reliability standards for the natural gas system,” said Phillips, adding that it “does not have to be” FERC in that role.

Elliott was the fifth event in the past 11 years during which a large number of U.S. power plants failed amid severe cold weather. During this recent storm, however, more electric capacity went offline at the same time than during any of the previous storms, according to FERC and NERC’s findings.

Power plants largely failed because of freezing, mechanical or electrical issues at those facilities or due to issues with obtaining fuel — mostly natural gas for natural-gas-fired power plants. The issues are similar to those seen during other recent winter storm events, including Winter Storm Uri, which left millions of customers in Texas without power and more than 200 people dead in February 2021.

“Five events in 11 years, three events in the last five — that’s too often. These are not infrequent events,” Jim Robb, CEO of NERC, told reporters after the meeting.

During Elliott last December, natural gas wellheads froze, and freezing and mechanical issues disrupted the operations of natural gas processing plants. There were also problems with getting natural gas to where it was needed through the nation’s interstate pipelines. All told, outages at 63 natural power plant units were attributed to natural gas deliveries being cut off, officials said.

How the incident affected the natural gas system and natural gas utilities, however, had not previously been widely documented.

Although others experienced similar challenges, ConEd was the only gas utility to declare a gas system emergency, FERC staff said. For the New York utility, the problems originated “well upstream of Con Edison’s delivery system,” said Allan Drury, a spokesperson for the utility.

The company was able to draw on its own supply of liquefied natural gas and use other measures to prevent a catastrophic gas system failure. Such a scenario would have required utility workers to manually relight gas appliance flames in individual homes and buildings, a process that may have taken several months.

“We asked customers to conserve, used LNG and [compressed natural gas] and switched steam/electric plants to alternative fuels,” Drury said in an email. “Then on Christmas Day, temps were a bit higher than forecasted and there was no gas shortage.”

Representatives for New York Gov. Kathy Hochul, a Democrat, and the New York Public Service Commission touted the reliability of New York’s energy system in response to questions about the winter storm’s impacts.

“New York is proud to have very high reliability standards and safety requirements for our gas distribution system,” Katy Zielinski, a spokesperson for Hochul, said in a statement.

Reliability and transmission

Phillips has not been shy in calling for reliability standards for the natural gas system. But whether Congress will enact such measures is unclear.

Last year, Rep. Frank Pallone (D-N.J.) and Rep. Bobby Rush (D-Ill.) introduced legislation to establish gas pipeline reliability standards. Among the bill’s supporters was former FERC Chair Richard Glick. Yet many Republicans opposed the legislation, which also faced backlash from the pipeline industry.

When asked if he’s spoken to lawmakers recently about the issue, Phillips said he’s been “consistent” in vocalizing his support for creating a gas reliability entity during his appearances before members of Congress.

“The other problem we have is we keep treating our gas and electric systems as though they’re completely different, and the truth is, increasingly, they’re intermingled,” he said. “There’s no one who sits at the apex. This is where the problems lie.”

Other FERC commissioners stressed additional potential solutions to reduce grid reliability issues in the coming winters.

Commissioners Mark Christie and James Danly, the two Republicans on the commission, said more natural gas infrastructure is needed to improve reliability. One of the recommendations from the Elliott report was that an independent research group study whether more gas pipelines and storage facilities should be built — and how much it would cost.

“Your recommendation No. 7 says, ‘Study whether we need more infrastructure.’ I think that’s frivolous. Of course we do,” Christie told FERC staff.

Commissioner Allison Clements, a Democrat, expressed skepticism that building more pipelines would be the solution, noting problems with existing pipelines.

“The infrastructure that was there didn’t work. From the production head through generation, we saw failures,” Clements said. “So we need to focus on the part that we have jurisdiction [of] now, and industry needs to lean in, whichever part of the industry you’re in, to cut through some of these problems.”

In addition to freeze-related issues, the report from NERC and FERC highlighted potential problems with forecasting.

Most entities overseeing parts of the grid underestimated how much power would be needed last Dec. 23 and 24, the report said. One such grid overseer, known as a “balancing authority,” underestimated electric power demand by 11.6 percent for Dec. 23.

Ultimately, several utilities in the U.S. Southeast resorted to power shutoffs on Dec. 24 as demand for electricity exceeded available supply. PJM Interconnection LLC, the nation’s largest regional grid operator spanning 13 Eastern states and the District of Columbia, also came close to shutting off power but ultimately avoided doing so.

The report’s recommendations include a suggestion that NERC ensure power plant owners protect their facilities from extreme cold weather and that the grid organization identify plants that are most at risk of facing failings.

FERC could also ask natural gas entities to provide reports outlining what they’re doing to address vulnerabilities to extreme cold weather, NERC and the agency’s staff said. In addition, legislation is needed to establish reliability rules for natural gas infrastructure, their report said, echoing statements from Phillips and Clements.

The two Democratic commissioners also said developing more transmission lines between different regions of the power grid could help keep the lights on.

The issue is currently being debated by Congress, with Sen. John Hickenlooper (D-Colo.) and Rep. Scott Peters (D-Calif.) having introduced legislation this month that would require grid planning regions to be able to transfer 30 percent of their peak electrical loads to their neighbors.

In addition, Congress mandated in the debt ceiling bill earlier this year that NERC study interregional transmission issues. That study is now “well underway,” said Robb of NERC.

“As we do the work, we’ll do it with intense objectivity and analytical rigor,” Robb said. “We won’t have a policy position we’re trying to push through the analysis, and it will give policymakers and FERC a great foundation to make the appropriate decisions around where to go with interregional transfer capacity.”

Pipelines and LNG

The commission’s approval of four natural gas projects comes as the commissioners have been at an apparent stalemate over greenhouse gas emissions.

During the last FERC meeting in July, several natural gas projects were struck from the agenda the morning of the meeting. Phillips indicated at the time that was ready to vote on the projects, and FERC watchers speculated that other commissioners could not agree on how to discuss climate change impacts in their final decisions.

“I’m glad that we have today’s agenda,” Danly said Thursday. “I know a lot of people were concerned — dismayed perhaps — in July, but at the time I predicted we would manage to arrive at where we are.”

The projects approved included expansions at two existing liquefied natural gas terminals on the Gulf Coast. One is Port Arthur LNG Phase II, near Port Arthur, Texas, which will double the facility’s gas liquefication capacity. The other is a small increase in gas export capacity at Venture Global Calcasieu Pass LLC’s facility in Cameron Parish, La.

In addition, FERC issued a permit for the Northern Lights 2023 expansion project, which will increase gas flows through a pipeline system in parts of Minnesota and Wisconsin. The fourth project approved was for a gas pipeline project in Louisiana intended to provide gas to an LNG terminal under development in the area.

None of the orders was issued unanimously. In all four cases, Danly and Clements issued separate partial dissents.

Saying that the commissioners’ statements reflect “different perspectives on difficult legal and policy questions,” Clements emphasized her view that the agency must analyze the significance of gas projects’ greenhouse gas emissions — as it does for other environmental impacts under the National Environmental Policy Act.

“Rather than looking for reasons the commission cannot assess climate impacts, we should objectively evaluate ways that we can,” Clements said during the meeting.

Her position on greenhouse gas emissions is similar to the one taken by environmental advocates as well as some Democrats in Congress and former FERC commissioners. The U.S. Court of Appeals for the District of Columbia Circuit has ordered FERC to try to quantify how gas projects would contribute to climate change or explain why it cannot do so.

However, the commission’s Republican members have said the agency cannot quantify the significance of projects’ greenhouse gas emissions, in part because of the global nature of climate change.

Environmental advocates and community activists from the Gulf Coast were swift Thursday to criticize FERC’s approval of the four gas projects in question. The region is home to many of the LNG projects that have been built or proposed in the U.S. to date.

“The seas are rising because of climate change, but so are we,” John Beard, founder of the environmental nonprofit Port Arthur Community Action Network, said in a statement. “And we’re here to stand and rise up, and push back, not accept no for an answer, not accept the continuance of the continued approval of these various projects that are harming our world.”