This report finds that natural gas-fired power plants purchase fuel both on the spot market and through firm supply contracts
there do not appear to be clear drivers propelling power plants toward one or the other type. Most natural gas-fired power generators are located near major natural gas transmission pipelines, and most natural gas contracts are currently procured on the spot market. Although there is some regional variation in the type of contract used, a strong regional pattern does not emerge. Whether gas prices are higher with spot or firm contracts varies by both region and year. Natural gas prices that push the generators higher in the supply curve would make them less likely to dispatch. Most of the natural gas generators discussed in this report would be unlikely to enter firm contracts if the agreed price would decrease their dispatch frequency. The price points at which these generators would be unlikely to enter a firm contract depends upon the region that the generator is in, and how dependent that region is on natural gas. The Electric Reliability Council of Texas (ERCOT) is more dependent on natural gas than either Eastern Interconnection or Western Interconnection. This report shows that above-ground storage is prohibitively expensive with respect to providing storage for an extended operational fuel reserve comparable to the amount of on-site fuel storage used for coal-fired plants. Further, both pressurized and atmospheric tanks require a significant amount of land for storage, even to support one day?s operation at full output. Underground storage offers the only viable option for 30-day operational storage of natural gas, and that is limited by the location of suitable geologic formations and depleted fields.