Housley Carr of
RBN Energy notes that coordination between natural gas and electricity is at an
all-time high. This is necessary to optimize power generation and ensure
reliability. The National Petroleum Council’s Reliability Report was compiled
at the request of Energy Secretary Chris Wright. Reliability and resilience
risks were highlighted in the report. Both the natural gas and power grids are
in need of new buildout due to rising demand for both.
Carr addresses market model
misalignment. He notes that electric utilities “operate within a specified
service territory and have an obligation to serve customers within it.”
Electric utilities have monopoly rights and are permitted to recover costs,
including investment costs. Local gas distribution companies may operate by a
similar service-obligation model.
“Midstream companies that develop, own and run the
interstate pipelines that transport vast volumes of gas to electric utilities,
IPPs and gas distribution companies operate under an entirely different
construct. Midstreamers are on-request service providers — their core role is
to transport gas to their customers under individual contracts that are
governed by tariffs (i.e., terms and rates) determined to be just and
reasonable by the Federal Energy Regulatory Commission (FERC). (Note: Even
discounted and negotiated rates are subject to FERC oversight.) Put another
way, pipelines act simply as contract vendors to their customers, with their
mix of capital facilities (pipelines and storage) and service offerings based
on what their customers want, and are willing to pay for.”
Of course, where gas
pipelines are constrained will be the places most at risk, where gas will
become unavailable to some markets, as its use for heat is prioritized.
“The need for stability and balance in operating the
pipelines means they frequently collide with the substantial swings in power
requirements as electric utilities follow their public service obligations to
keep the lights on.”
Another important issue, he
says, is a lack of incentives for firm gas transportation to electric
utilities. Again, this is exacerbated by pipeline constraints. He says that
part-time demand response generators can be disincentivized by paying higher
costs for firm transportation, especially if they are not utilized.
Solutions to these issues
include “preemptive line packing (pushing extra gas into pipelines in
advance of anticipated high-demand periods) to help sustain deliveries.”
Incidentally, this would be less effective if hydrogen were mixed in with the
gas since its lower power density means it can’t be packed as easily as natural
gas. Another solution, which is quite common in the ISO-New England territory,
is replacing unavailable natural gas with diesel fuel oil. As shown below, this
happened during winter storm Fern. The first days of the cold spell are shown
below, where petroleum fuel oil became the largest generation source on the
grid, with its associated increased air pollution, which exceeded limits and
increased carbon emissions, compared to natural gas. LNG may be used in a
similar fashion, with emissions between those of fuel oil and non-LNG natural
gas.
FERC regulates interstate gas
transmission but not intrastate gas transmission. Other regulatory bodies
include state regulatory commissions, the National Association of Regulatory
Utility Commissioners (NARUC), which coordinates state regulators, and the
North American Electric Reliability Corp. (NERC), which works with all
stakeholders. Other “helpers” include the North American Energy Standards Board
(NAESB) and the National Petroleum Council, which advises the Secretary of
Energy.
Carr goes into more detail
and reviews some recent FERC orders related to gas-electric coordination.
Winter Storm Uri in 2021
involved power plant and natural gas infrastructure freeze-ups due to
inadequate weatherization of such facilities in the ERCOT region in Texas.
Winter Storm Elliott in 2022 involved “freezing equipment and
mechanical/electrical issues led to reliability lapses, and system operators
narrowly avoided catastrophic gas service loss.” Winter Storm Fern
encountered fewer problems due to better preparation. Coal and diesel oil
shored up grid reliability along with natural gas, where it was available. Coal
generation rose from 17% of the power share to 21% during the cold spell. More gas
plants were ramping up and down to support higher levels of wind and solar on
the grid. This means there is a lot of load volatility. Those peaking plants
need to be ready to respond, which also entails more emissions. Supplying gas
to new AI data centers also competes for pipeline capacity with gas that powers
the grid.
As I have noted many times,
one of the most pressing reliability issues is inadequate gas pipeline
capacity.
“In particular, the NPC report called for many more
“fit-for-purpose” facilities — not just regular point-to-point pipeline
capacity, but facilities capable of managing large fluctuations in demand in
real time.”
Carr thinks FERC action to
better coordinate gas and electric grids would be good, but also notes that due
to employee loss, low morale, and lack of available staff, such new orders may
not come quickly enough.
Digging into the NPC’s
report, one can see that firm transportation capacity share has moved from
local distribution companies (LDCs) to power generation since 2010.
The 181-page report goes into
detail about the challenges facing different U.S. regions and power grids. The
graphics, findings, and recommendations below are mainly from the executive
summary. The report notes that gas pipeline expansion in recent years has
mainly come from reversing flows and adding compression rather than building
new pipelines.
“According to the EIA, approximately 44 Bcf/d of
interstate natural gas capacity has been added in the United States since
2010.78 That about equals the average natural gas consumption for power
generation nationwide during peak summer months. It is also enough gas to heat
around 160 million homes annually—more than double the total number of U.S.
households that use natural gas.”
“With this level of expansion, one might reasonably
assume that the ability of pipeline operators to support variable demand would
be increasing, not decreasing. The reasons for this counterintuitive dynamic
have to do with where the expansions have occurred, and how.”
“First, nearly half of this expansion capacity was
driven by the growing LNG export industry on the Gulf Coast, which reshaped
interstate pipeline flows. Instead of moving gas primarily from Gulf producing
basins to markets in the Mid-Atlantic and Northeast, flows increasingly shifted
toward the Gulf to meet LNG demand for exports. At the same time, production
growth in shale basins such as the Permian (West Texas and eastern New Mexico),
Haynesville (Northwest Louisiana and eastern Texas), and Marcellus (Appalachia)
positioned these regions as key suppliers for LNG exports.”
One of the main issues has
been the opposition to new gas pipelines by anti-fossil fuel activists. If we
had been able to build more pipelines in the past 15 years, there would be far
fewer reliability challenges than there are today. New pipeline projects have
been essentially tortured by environmentalists with too much influence, causing
years-long delays and massive ballooning costs. Now, as new demand comes, it is
the gas and power consumers who are paying the price.
As can be seen below, peak
winter demand forecasts for PJM are very high and in need of being addressed.
Below are some findings and
recommendations for improving operational efficiencies and misalignments.
Findings and recommendations
for addressing fuel assurance are shown below.
The table below shows that
wind and solar have much smaller average capacity factors than combined cycle
natural gas plants, and this is especially true in the PJM region, which is not
ideal for solar or wind.
The map below shows where
natural gas power plants are directly connected to selected major gas pipelines in the eastern U.S. The
takeaway is that natural gas pipelines are needed to provide gas for
electricity.
The report concludes that
there is a clear need for better natural gas and electric coordination to
optimize these assets. The report concludes that there are not adequate
incentives for fuel assurance and reliability assurance. It also concludes that
communication and operational integration of the gas and electric systems are
inadequate. The report notes that permitting reform could seriously aid
gas-electric coordination, as detailed below.
References:
Happy
Together – A Renewed Push for Tighter Gas-Electric Coordination as Potential
Crises Loom. Housley Carr. RBN Energy, December 22, 2025. Happy
Together – A Renewed Push for Tighter Gas-Electric Coordination as Potential
Crises Loom | RBN Energy
Reliable
Energy: Delivering on the Promise of Gas-Electric Coordination: A Report of the
National Petroleum Council Committee on Gas-Electric Coordination. December 3,
2025. NPC_gas-electric_report_2025-12-3.pdf
Happy
Together – Natural Gas and Electric Power More Intertwined Than Ever; NPC
Sounds the Alarm. Housley Carr. RBN Energy. February 9, 2026. Happy
Together – Natural Gas and Electric Power More Intertwined Than Ever; NPC
Sounds the Alarm | RBN Energy
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