Overview of the Natural Gas Curtailment of Interruptible

Overview of the Natural Gas Curtailment of
Interruptible Customers In January 2014
Presented on
May 21, 2014
Jeffrey L. Davis
Director, Natural Gas Division
1

The primary purpose of the Public Staff’s
Natural Gas Division is to fulfill the legislative
mandate to represent the using and consuming
public (or ratepayers) on all natural gas matters
before the Commission.
◦ The Natural Gas Division is comprised of four engineers and an program
assistant.
Our technical unit accomplishes its function by investigating,
monitoring, and providing recommendations to the Commission regarding all
regulatory engineering and policy matters as they apply to the natural gas local
distribution companies (LDCs).
2
Natural Gas Division’s Primary List of Duties

Investigation, review, and analysis of filings by the LDCs, including:
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General Rate Cases;
Annual Review of Gas Costs;
Rulemaking Proceedings;
Complaint Proceedings;
Special Contracts;
Incentive Programs;
Purchase Gas Adjustments;
FERC Proceedings;
Conservation Programs;
Integrity Management Riders;
Margin Decoupling Filings;
Statistical Meter Sampling;
Natural Gas Expansion Projects; and
Special Investigations
3
Natural Gas Utilities Regulated by the NCUC
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Four (4) Local Distribution Companies
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Frontier Natural Gas Company, LLC
Piedmont Natural Gas Company, Inc.
Public Service Company of North Carolina, Inc. (PSNC Energy)
Toccoa Natural Gas
One (1) very small propane distribution system
◦ Summerlyn Farms, LLC
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One (1) Intrastate Natural Gas Pipeline
◦ Cardinal Pipeline Company, LLC
4
Natural Gas Utilities Service Territories
5
Curtailment
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The natural gas LDCs offer industrial customers the option of taking
service under interruptible rate schedules.
This offering is voluntary.
Customers who choose this service receive reduced rates per
dekatherm (dt).
Customers agree to:
◦ Be capable of being 100% curtailed (there is an allowance for volumes used for pilot
lights)
◦ Cease usage of natural gas after a 2 hours’ notice.
6

Why do some industrial customers choose service on interruptible
rate schedules?
◦ These industrial customers are energy intensive and are in a competitive
environment.
◦ Most have alternative fuels.
◦ Those with alternative fuel systems will switch to if the price for their alternate fuel is
less than natural gas or use the price differential to negotiate their rate under other
special tariffs.
◦ Some anticipate that the typical few days of curtailment per year is worth the risk to
receive a lower rate.
7
Peak Day Planning

North Carolina LDCs use Design Day Planning for Firm Service
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Companies use 55 Heating Degree Days (HDD) for planning for peak day events.
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HDD = 65 F  ( Max. Temp.  Min. Temp.)
2
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Commission Rule R6-23 entitled “Adequacy Of Supply”
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 Therefore, a Design Day represents an average temperature of 10˚F
LDCs only plan for firm customers
“The production and/or storage capacity of the utility’s plant, supplemented by the gas
supply regularly available from other sources, must be sufficiently large enough to meet all
reasonably expectable demands for firm service”.
Commission Rule R6-19.2 details how curtailment is implemented if the
demands of customers cannot be supplied.
8
SIMPLIFIED LOAD DURATION CURVE
360,000
A
P
P
R
O
X
I
M
A
T
E
Source: Public Staff - Natural Gas Division
Jeffrey L. Davis
LPG [liquefied petroleum gas (propane)]
300,000
LNG ( liquefied natural gas)
240,000
D
T
S
LGA propane service injection
Some GSS and LGA b ecomes "excess" due to high cost for industrial customers)
per
D
A
Y
GSS general storage service
Firm Pipeline Capacity
200,000
LNG Storage & GSS Injection
Excess Supply Available for New Sales
120,000
Industrial Heavy Oil
80,000
Residential & Commercial Firm Supply Customers
Industrial #2 Oil Alt.
Industrial Propane (LPG) Alt.
0
Coldest Day
Normal Days
COLDER
9
NORTH CAROLINA LDCs
SOURCES OF DESIGN DAY SEND-OUT
FOR THE 2013-2014 WINTER SEASON
(Dekatherms Per Day)
Source of Capacity
Transco
Firm Transportation (FT)
Southern Expansion
Southeast Expansion (SE94/95/96)
Sunbelt
FT-Peak Shaving
East Tennessee - FT-APT
DTI
Columbia Gas Transmission (FTS, NTS, TPS)
Capacity Subtotal
N.C. Capacity Subtotal
Piedmont
395,688
137,753
129,485
41,400
6,314
45,000
Storage and Peaking Subtotal
N.C. Storage and Peaking Subtotal
202,439
39,330
44,627
4,347
7,331
111,636
867,276
728,425
Storage and Peaking
Transco
LNG/Liquid Gas-Air (LG-A)
General Storage Service (GSS)
Columbia
Firm Storage Service (FSS)
FSS/SST
DTI GSS
Pine Needle
Hardy Storage Service (HSS)
Cove Point LNG
Company Owned LNG
Saltville FSS
PSNC
8,643
77,475
298,074
298,074
Total
598,127
177,083
174,112
41,400
10,661
45,000
7,331
111,636
1,165,350
1,026,499
5,175
33,218
13,818
110,693
35,335
190,000
25,000
100,000
48,877
35,335
86,368
60,883
366,900
70,600
25,000
290,000
48,877
696,486
584,979
411,988
411,988
1,108,474
996,967
86,368
263,400
70,600
60,883
103,500
Capacity, Storage, and Peaking Totals
Total Company
1,563,762
710,062
2,273,824
Total North Carolina
1,313,404
710,062
2,023,466
10
Storage and Capacity Requirements Schedule
Based On Design Day Conditions of
(All values are dekatherms/day)
DEMAND
DD Dmd @ Feb '07
Reserve Margin (5%)
54.0 Degree Days
Winter Period:
54.0 DD
Subtotal Demand
NC Firm Transportation
Total Demand
2013 - 2014
1,401,038
70,052
1,471,090
2014 - 2015
1,415,825
70,791
1,486,617
2015 - 2016
1,430,790
71,540
1,502,330
2016 - 2017
1,445,935
72,297
1,518,232
2017 - 2018
1,461,262
73,063
1,534,325
(95,640)
1,360,107
(97,043)
1,374,047
(75,000)
1,411,617
(75,000)
1,427,330
(75,000)
1,443,232
(75,000)
1,459,325
65,018
95,614
221,824
382,456
65,018
95,614
221,824
382,456
65,018
95,614
221,824
382,456
65,018
95,614
221,824
382,456
65,018
95,614
221,824
382,456
52,268
76,864
178,324
307,456
90
90
90
1,073
1,579
3,662
6,314
1,073
1,579
3,662
6,314
1,073
1,579
3,662
6,314
1,073
1,579
3,662
6,314
1,073
1,579
3,662
6,314
1,073
1,579
3,662
6,314
FT Southern Expansion
FT SE 1994
FT SE 1995/1996
Sunbelt
90
365
365
365
72,502
21,829
107,656
41,400
243,387
72,502
21,829
107,656
41,400
243,387
72,502
21,829
107,656
41,400
243,387
72,502
21,829
107,656
41,400
243,387
72,502
21,829
107,656
41,400
243,387
72,502
21,829
107,656
41,400
243,387
FT Leidy SE
FT Virginia Southside
365
365
0
0
0
0
0
0
0
0
0
0
0
0
100,000
20,000
120,000
100,000
20,000
120,000
NTS
FTS
365
365
10,000
32,801
42,801
10,000
32,801
42,801
10,000
32,801
42,801
10,000
32,801
42,801
10,000
32,801
42,801
10,000
32,801
42,801
SUPPLY
Firm Supplies
Transco
FT - Zone 1 to 5
FT - Zone 2 to 5
FT - Zone 3 to 5
FT PS Zone 1 to 5
FT PS Zone 2 to 5
FT PS Zone 3 to 5
Columbia Gas
2012 - 2013
1,386,426
69,321
1,455,747
Days
365
365
365
44,798
44,798
44,798
44,798
44,798
44,798
719,756
719,756
719,756
719,756
839,756
764,756
77,475
86,368
13,225
68,835
245,903
77,475
86,368
13,225
68,835
245,903
77,475
86,368
13,225
68,835
245,903
77,475
86,368
13,225
68,835
245,903
77,475
86,368
13,225
68,835
245,903
77,475
86,368
13,225
68,835
245,903
Firm Supplies Total
965,659
965,659
965,659
965,659
1,085,659
1,010,659
Peaking Supplies
Piedmont LNG
Piedmont LPG
Pine Needle
188,000
8,643
263,400
170,000
8,643
263,400
190,000
8,643
263,400
190,000
8,643
263,400
190,000
8,643
263,400
190,000
8,643
263,400
Peaking Supplies Total
460,043
442,043
462,043
462,043
462,043
462,043
1,425,702
65,595
104.82%
1,407,702
33,655
102.29%
1,427,702
16,085
101.08%
1,427,702
372
100.02%
1,547,702
104,470
106.88%
1,472,702
13,377
100.87%
East Tennessee
Total FT
Storage
Transco
GSS Storage
Columbia FSS/SST
Dominion GSS
Hardy
Total Storage
Total
Surplus (Deficit)
% of Total Demand
365
55
59
60
70
11
Facts About The January 2014 Curtailment Event
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Transcontinental Gas Pipe Line Company (Transco) was able to meet
its contractual obligations to N.C. LDCs.
◦ Transco did issue some Operational Flow Orders (OFOs), but those were to direct its
customers to keep their volumes within daily contractual amounts.

PSNC and Piedmont did not experience a Design Day of 55 HDD
◦ PSNC had a Peak Day of 48 HDD
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However, PSNC did experience a record throughput for the month of 14,179,485 dts; previous
record was 13,083,473 in January 2010
◦ Piedmont had a Peak Day of 46 HDD

Likewise, Piedmont experienced a record throughput of 42,974,822 dts.
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8-Apr
1-Apr
25-Mar
18-Mar
11-Mar
4-Mar
25-Feb
18-Feb
11-Feb
4-Feb
28-Jan
21-Jan
14-Jan
7-Jan
31-Dec
24-Dec
17-Dec
10-Dec
3-Dec
Dollars per Dekatherm
Transco Zone 5 Spot Price
$140.000
$120.000
$100.000
$80.000
Transco Zone 5 Spot Price
$60.000
$40.000
$20.000
$0.000
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Natural Gas Infrastructure
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Transcontinental Gas Pipe Line Company (Transco) is the primary
interstate provider
Columbia Gas Transmission (Columbia) provides a small amount of
gas in the northeastern part of the state
Cardinal Pipeline Company, LLC (Cardinal) provides intrastate service
to Piedmont and PSNC
Pine Needle LNG Company, LLC is an interstate liquefied natural gas
storage facility that provides peaking service up to 366,900
dekatherm (dts) per day
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Q&As
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Did any of the recent curtailments meet EPA’s definition?
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Were the primary distribution pipelines operating at maximum capacity at the point of origin during
any of the curtailment periods?
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No, this was a capacity issue. The LDCs were already taking their contracted maximum flow of gas. The LDCs portfolio
includes flowing gas and various types of storage that is dispatched on peak day to satisfy the needs of its firm
customers. Industrial customers do not desire to pay for storage gas or firm service as the cost of those services are
more expensive, thus the system capacity is not designed with these industrials in mind.
Did upstream natural gas production shortages cause any of the curtailments?
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As the LDCs’ Gas Control Section evaluated the weather event, an assessment was made that the demand of the firm
customers was approaching the available capacity; the decision was made to ensure system integrity by curtailing the
interruptible customers. Remember that’s how the system is designed.
Could supply have been increased to meet the demand had cost not been an issue?
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EPA’s definition of curtailment meaning “a period of time during which the supply of gaseous fuel to an affected boiler
or process heater is restricted or halted for reasons beyond the control of the facility” was certainly on target for this
event. The LDCs imposed curtailment in this situation because they were implementing their peak day planning. All of
the capacity and supplies were needed for firm customers. Peak day planning only includes providing service to firm
customers. Interruptible customers are not part of peak day planning.
No, the shortages mainly just affected the price of gas.
Could better planning have prevented any curtailments?
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Actually, the LDC’s peak day plan worked as intended. Remember, industrial customers that choose an interruptible
rate do so for a reason. Requiring the LDCs to plan to serve large industrial customer on peak day would be very
expensive for a service interruption that would only occur a few days per year.
15
Expansion Projects
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There are several planned projects that will increase the capacity to
North Carolina.
◦ Transco has several expansion project that will benefit our state
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Atlantic Sunrise
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Capacity 1,700,000 dts per day
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In Service Date – Second half of 2017
Leidy Southeast
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525,000 dts per day
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In Service Date – December 2015
Virginia Southside
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270,000 dts per day
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In Service Date – September 2015
◦ Duke Energy and Piedmont plan to jointly send out RFPs for a new interstate pipeline
to serve North Carolina.
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Planned to tap into the Utica Shale Play and move gas southward into N.C.
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Initially planned capacity of 900,000 dts per day
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In Service Date – Second half of 2018
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17
Dekatherms
Millions
Annual Volume of Natural Gas Sold in North Carolina
450
400
350
300
230
250
205
200
150
204
200
34
40
221
Gas Sales and Transportation
205
Electric Generation
100
50
0
2008
2009
69
2010
87
2011
155
2012
208
2013
Year
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Contact Information
Jeffrey L. Davis
Director, Natural Gas Division
Dobbs Building, 430 North Salisbury Street
4326 Mail Service Center
Raleigh, NC 27699-4326
Phone: (919) 733-4326
Website:
http://www.pubstaff.commerce.state.nc.us/psngas/index.htm
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