ISO New England "ISO New England is the independent, not-for-profit company authorized by the Federal Energy Regulatory Commission (FERC) to perform three critical, complex, interconnected roles for the region spanning Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and most of Maine. Together, these three responsibilities help protect the health of the region’s economy and the well-being of its people by ensuring the constant availability of competitively-priced wholesale electricity—today and for future generations. The ISO’s unique mission requires active stakeholder involvement, as well as a highly skilled workforce across a wide range of disciplines. One goal lies at the heart of this mission: reliability.” 

 

ISO New England, “New England power system performed well through winter 2014/2015” (4.7.15)

“However, while increased competition in the gas market helped to dampen prices over the course of the winter, the amount of Marcellus shale gas that could be delivered to the region from the west remained limited by New England’s constrained pipeline system. During many cold days in February, daily spot-market natural gas prices hovered in a range of $20 to $30 per million British thermal units (MMBtu), which is high by historical standards. These higher gas prices increased winter wholesale electricity prices: February’s average wholesale energy price was $126.70/MWh, which makes it the third-highest average monthly wholesale energy price in New England.”

“While nuclear and natural gas were the dominant fuels used to produce power this winter, oil and coal resources were competitively priced and, at times, were a large part of the fuel mix—especially during the coldest month of February 2015. On some days, oil and coal together fueled more than 40% of the region’s power needs, as shown in the pie chart.”

 

ISO New England, “Wholesale electricity prices and demand in New England” (4.7.15)

ISO New England reports that New England paid the third highest monthly average wholesale electricity price in February of 2015 at $126.7/MWh.  To generate that over-priced electricity, we relied on coal for 12.3%, oil for 5.3%, and another 10% came from units that can burn gas or oil.  But because oil was cheaper than natural gas (due to OPEC maintaining supply levels to hurt U.S. producers) 86% of the time, those dual-fuel units likely burned oil 86% of the time.  Thus, coal and oil were responsible for a staggering 26.2% of our electricity in February, and at times as much as 42% while gas contributed only 17%.  For comparison to a time when pipelines were not constrained, coal and oil combined to generate about 3% of our electricity in 2012.

 

ISO New England, “ISO New England Overview and Regional Update” (presentation to the Connecticut General Assembly Energy & Technology Committee) (1.21.15)

 

ISO New England, “State of the Grid: Managing a System in Transition” (presentation by and remarks of Gordon van Welie, President and CEO, ISO New England) (1.21.15)

 

ICF International, Study prepared for ISO New England, “Assessment of New England’s Natural Gas Pipeline Capacity to Satisfy Short and Near-Term Electric Generation Needs: Phase II” (11.20.14)

• "Despite the increase in currently contracted capacity on the interstate pipelines and the likelihood of 450 MMcf/d of new capacity being added by the end of 2016, the New England market is likely to remain supply constrained through 2020."
• "The updated forecast for capacity retirements (Phase II Retirements) results in very little change in projected gas consumption for electric generation."
• "The updated energy efficiency projection (Phase II Energy Efficiency) has a significant impact on projected gas consumption for electric generation."
  • "The Phase II Energy Efficiency cases reduced projection winter peak day gas consumption by as much as 550,000 Dth by 2019/20."
  • "However, the consumption reductions in the Energy Efficiency cases were not sufficient to eliminate the projected winter peak day supply deficits."
• "Future imports of LNG into the region (Phase II Decreased LNG) are likely to be well below the rated capacity of the import terminals."
  • "As in the Phase I study, neither Northeast Gateway nor Neptune are projected to receive any future LNG shipments."
  • "M&N Pipeline is expected to continue to flow at full capacity on a peak winter day."
    • "The ramp-up of Deep Panuke production will increase supplies feeding into M&N through 2014, but Eastern Canadian production is expected to decline from 2015 through 2020."
    • "Even with reduced LNG shipments, sendout from the Canaport terminal has been managed so to keep M&N Pipeline full on peak winter days (when New England gas demand and gas prices are highest). However, with fewer LNG shipments coming in, M&N will flow full on fewer winter days in the future."
  • "Since 2010, Distrigas winter sendout has declining on both the peak day and over the entire winter."
    • "Based on the 2012/13 sendout pattern, the projected winter peak day sendout from Distrigas is less than 60 percent of its rated capacity."
• "The Winter Near-Peak analysis indicates that gas supply deficits may occur not just on peak days, but also on multiple high demand days throughout the winter."
  • "Based on projected gas supplies, LDC demands, and electric generator gas demands, there is a high probability that the electric sector will have a gas supply deficit on 24 to 34 day per winter by 2019/20."

 

ISO New England, “2014/2015 Winter Outlook: Sufficient Power Supplies Expected, but Natural Gas Pipeline Constraints an Ongoing Concern” (11.20.14)

• “The 2013/2014 Winter Reliability Program was critical in keeping the lights on during last winter’s cold temperatures,” said Vamsi Chadalavada, executive vice president and chief operating officer of ISO New England Inc. “Yet even with that program, system operators’ ability to maintain a reliable supply of power was challenged as a result of the limited supply of natural gas coming into New England to serve natural gas power plants. Because of the retirement of several large non-natural-gas-fired generators since last winter, as well as the possibility of pipeline constraints, the ISO and stakeholders implemented another winter program to increase the fuel availability for oil- and natural-gas-fired power plants. If this winter is the same or colder than last winter, having generators with oil on site or a committed source of liquefied natural gas will help improve power system operations.”
• “Last winter, system operators relied on several generators that will not be available for all or part of this winter. These include Salem Harbor Station, which on May 31, 2014, retired its two remaining coal and oil units totaling about 585 MW, and Vermont Yankee Nuclear station, which will retire its 615 MW of capacity by the end of 2014. Other generators, including the 350 MW oil-fired Norwalk Harbor Station, the 125 MW coal-fired Mt. Tom Station, and a unit totaling 150 MW at the Bridgeport Harbor Station are no longer providing power to the grid.”
• “Nevertheless, on winter days when natural gas pipelines have operated at full capacity, not enough gas has been available to serve all of New England’s natural-gas-fired power plants. In fact, while gas-fired resources together represent more than 11,000 MW of generating capacity, ISO New England’s operational experience has shown that during cold periods, the pipelines are capable of supporting less than half this amount.”
• “The Winter Reliability Program will run from December 1, 2014, to February 28, 2015, to address concerns about the ability of resources to perform when dispatched, especially during cold weather conditions. The program provides incentives for oil and dual-fuel generators (i.e., units that can run on either gas or oil) to increase oil inventories, for natural-gas-fired generators to contract for liquefied natural gas (LNG) to augment pipeline gas, and for new demand-response resources to be available. … [P]reliminary results indicate that 81 oil and dual-fuel units have committed to store more than 4 million barrels of oil; eight gas-fired units have contracted for about 900,000 million British thermal units of LNG; and three new demand-response assets will be able to provide demand reductions of 14 MW. 
  Another component of the WRP that will help bolster reliability beyond this winter is the incentive for gas-fired generators to invest in dual-fuel capability. So far, six units with a combined capacity of 1,775 MW have submitted their intent to become dual-fuel capable this year or next. … Pending successful testing to ensure these resources can run on oil, units representing about 1,000 MW of capacity plan to add dual-fuel capability this winter.”
• “Last winter, periods of sustained cold weather boosted demand for natural gas, causing severe pipeline constraints that led to record-high natural gas prices. As a result, for much of winter 2013/2014, natural gas was often more expensive than oil, which is relatively uncommon. Because oil-fired generation was more competitively priced than the natural-gas-fired generation on many days, the oil fleet ran at higher-than-normal capacity through much of the winter; coal-fired generators also ran more often than usual. Most significantly, on certain cold days, the natural gas pipelines in New England were running at maximum capacity, but very few gas-fired generators were producing power, signaling that the gas was being used for other purposes, most likely to heat homes and businesses.”

 

ISO New England, “Final Comments of Gordon van Welie on the U.S. Department of Energy’s Quadrennial Energy Review” (10.10.14)

• “ISO New England's interconnection queue suggests that this shift toward natural gas and renewable energy resources will continue. In September 2014, the list of generation projects showing interest in being built in New England and connecting to our electric grid is comprised of two major fuel types: Natural gas (55%) and wind (44%).”
• “At the same time, older, oil- and coal-fired power plants (many of which are more than 50 years old) that for many years served as baseload generators are beginning to retire.”
• “The impact of these changes on electric grid operations is significant. The region continues to transition away from a system that has relied on resources with on-site fuel inventory (e.g. coal, oil, and nuclear) toward a system much more dependent on 'just-in-time" fuel delivery and weather-dependent resources (e.g. wind and solar).”
• “However, in New England, increasing pressure on an already-constrained natural gas infrastructure is our most pressing and urgent challenge. As the demand for natural gas for power generation continues to grow, the region has not seen the commensurate and necessary growth in the pipeline infrastructure.”
• “The natural gas pipeline constraints are particularly acute during cold weather. During the winter months, the firm capacity taken by LDCs severely limits the natural gas supply available to power generators and reduces their output to minimal levels. … These natural gas resources are particularly important because they are fast-ramping resources that can balance an increasingly variable resource profile in New England (which I discuss below) and fill shortages left by older, less efficient resources that are at times unable to operate. In addition, these circumstances will only worsen in upcoming summers as the gas pipelines remove facilities from service for maintenance and, more significantly, for the already planned expansion outages that are supported by LDC contracts.”
• “New England's pipeline infrastructure is inadequate to serve demand by local distribution companies (for home heating) and power generators in the winter period. This constraint has led to significant electric reliability challenges.”
• “Finally, emissions have increased in the winter because pipeline constraints and economics require the dispatch of the system to shift from natural gas to oil and coal resources. These challenges result in the region entering the next few winters under very precarious operating conditions.”
• “In the three-month period December 2011 to February 2012, when New England's pipeline system was less constrained, natural gas prices averaged $4.39/MMBtu. During that same three-month period during the Winter 2012-2013, the price jumped to $11.28/MMBtu and kept rising during the Winter 2013-2014 to $19.33/MMBtu ($24.19/MMBtu in January 2014). And the significant increase in the price of natural gas was reflected in the price of wholesale electricity. In calendar year 2012, the electric energy market in New England cleared $5.2 billion. In the period from December 1, 2013-February 28, 2014, the same market cleared $5.05 billion. Without new pipeline infrastructure to meet the growing demand for natural gas from power generators, we expect to see similar results this winter season and in future periods of high gas demand.”
• “New England needs to solve the challenge of how to develop adequate natural gas infrastructure. Unlike the regulatory framework for electric transmission (which is designed to serve peak demand), additional pipeline infrastructure will not be built without customers entering into long-term contracts for firm capacity. It remains to be seen if the wholesale electricity and natural gas markets will drive the necessary investments in pipelines or if individual or a collection of states will act. How successfully the region and its stakeholders meet this challenge will determine the strength of the electric grid for many years, as well as the ability to successfully integrate greater levels of renewable energy and distributed resources.”

 

ISO New England, “Managing the Reliability of the Electric Grid While the Power Industry Undergoes Rapid Transformation” (Van Welie presentation at the Massachusetts Restructuring Roundtable) (9.19.14).

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• “Gas pipelines are severely constrained when weather is cold, limiting gas generation to minimal levels … The region is very vulnerable to the loss of large non-gas generators during cold weather (e.g., nuclear units)."
• “Current Pipeline Infrastructure is Inadequate to Serve Region’s Natural Gas-fired Generation”

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• “The New England states are frustrated by the economic disadvantages and environmental consequences resulting from pipeline constraints, and are concerned about the potential reliability implications”
• “We are in a precarious operating position for several winters due to inadequate gas pipeline infrastructure and retirements that have already taken place … Further non-gas generator retirements and/or outages will exacerbate reliability concerns.”

ISO New England, “2014 Regional System Plan (RSP14)” (Rourke presentation at 2014 Public Meeting) (9.11.14)

• “Studies show the fuel-reliability concerns, especially for natural gas, will grow increasingly severe without infrastructure additions”

ISO New England, "ISO New England Update” (George presentation at Consumer Liaison Group meeting) (9.24.14)  

 

Analysis Group, “Consumer, Markets, and Infrastructure: New England at a Crossroads” (Hibbard presentation at ISO New England Consumer Liaison Group meeting) (9.24.14) 

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