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ISO New England says resources should be adequate this winter, raises concerns about natural gas reliance

From the December 5, 2012 issue of Public Power Daily

Originally published December 5, 2012

New England should have sufficient resources to meet consumer demand for electricity during the 2012-2013 winter season, ISO New England Inc. said Dec. 3. However, the region's reliance on natural gas as a fuel to produce electricity could create operational challenges if natural gas supplies become tight this winter, the grid operator said. If this occurs, ISO New England will rely on oil- and coal-fired generation to lessen any operational risks to the region's power system. 

"ISO New England has raised concerns about the region's reliance on natural gas as part of our broader strategic planning Initiative efforts," said Vamsi Chadalavada, executive vice president and chief operating officer of ISO New England Inc. "And while we currently are working on several mid- and long-term solutions with stakeholders, including changes to the wholesale electricity markets, these will take time to implement. In the meantime, the ISO will continue to turn to coal- and oil-fired generation when necessary to ensure that the power needed to meet consumer demand and maintain grid reliability is available this winter." 

Under winter temperatures of about 7 degrees Fahrenheit (deg F), demand is projected to peak at about 22,355 megawatts this winter, but demand could reach 23,095 MW if extreme winter weather of 2 deg F occurs, ISO-NE said. The six-state region has generation and demand-side resources totaling about 33,000 MW, including about 30,500 MW from generators, about 1,920 MW from demand-side resources, and about 475 MW of net imports from neighboring regions. 

New England's reliance on natural gas to produce electricity has increased significantly in the past several years, the ISO said. More than 13,000 MW--almost 45% of the region's generating capacity--is natural-gas-fired generation, and these generators produce more than half of the region's power. While oil- and coal-fired generators are seldom called on to provide electricity because of their higher fuel costs, they make up nearly 30% of the region's generating capacity--more than 6,000 MW and 2,000 MW, respectively, ISO-NE said. "These resources play an important role in maintaining reliability during times of high demand, system stress, or the unavailability of natural-gas-fired generation."

Companies that procure natural gas for heating purposes typically have firm contracts for pipeline delivery, which gives them priority and creates the possibility of reduced fuel deliveries to some natural-gas-fired generators in the region, the ISO said. To gauge any potential impact that a natural gas fuel supply issue could have on power system reliability, the ISO said it will continue its coordination efforts with the regional gas pipeline companies and has surveyed the fuel inventory at dual-fuel, coal, and oil power plants to establish their likely availability in the event these resources are needed to run.
In addition, the ISO has filed proposed changes with the Federal Energy Regulatory Commission that would allow power system operators to communicate specific real-time generating information with natural gas pipeline operators for ensuring power system reliability. 

ISO New England also can implement special procedures in the event of a predicted severe cold snap, including one that temporarily shifts the timing of the day-ahead electricity market to more closely align with the natural gas market. This enables natural-gas-fired generators to know earlier in the day whether they will operate the following day, giving them more time to procure and schedule the gas they will need to operate in real time, the ISO said.


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