Update on the 2016/2017 Winter Reliability Program
Tuesday, January 17, 2017 at 3:14PM
ISO New England in Industry News & Developments, capacity, demand resources, natural gas, winter

For the fourth year in a row, a winter reliability program is in effect to help augment fuel adequacy in New England. In September 2015, the Federal Energy Regulatory Commission approved a program for the winters of 2015/2016 to 2017/2018 to address seasonal reliability challenges created by constraints on New England’s interstate natural gas pipeline system. The previous programs proved to be cost-effective, short-term solutions to help keep the lights on in New England during very cold winter days.

Program objective

New England’s winter reliability programs are designed to incentivize eligible power resources to secure sufficient fuel at the beginning of winter. Developed collaboratively through the ISO’s stakeholder process, the programs serve as a stop-gap measure until longer-term capacity market changes—Pay-for-Performance (PFP) incentives—go into effect on June 1, 2018.

About 45% of the total generating capability in New England uses natural gas as its primary fuel. However, multiple studies and the ISO’s operating experience show that the pipelines carrying natural gas into the region are running at or near full capacity to serve heating demand during most of the winter. Particularly on the coldest days, there is little to no remaining pipeline capacity available for sale to power generators. Per the ISO’s 2016/2017 winter outlook, about 3,450 MW of natural-gas-fired generation is at risk of not being able to get fuel when needed (not counting generators already scheduled to be out of service). Liquefied natural gas (LNG), which is brought into New England on tanker ships, may also not be available unless generators contract for it ahead of time. And while resources that run on oil can help pick up the slack, this is only true if they have sufficient on-site fuel supplies.

Eligibility and program caps

Eligibility, qualification, and compensation caps are the same as last year’s program:

Participation update

The table below reflects program participation as of 1/17/17, which may have changed from earlier reports. See the program rules in Market Rule 1, Appendix K for details on eligibility requirements at various stages, inventory caps, etc., as well as for the factors that go into the calculation of program payments. Compensation is based on the carrying costs of fuel oil that is unused at the end of the winter, unused LNG contract volumes, or supplemental demand response provided. All participants are also subject to nonperformance charges. For results of last year’s program, see the Winter Program Payment Rate webpage.

Type Participants Amount
eligible for compensation
Payment rateProgram usageProgram costs
Oil 85 units
3.052 million barrels
$10.21 per barrel December: 76,967 barrels
$31.16 million anticipated
LNG 2 units 171,000 MMBtu $1.70 per MMBtu December: None $291 thousand anticipated
DR 6 assets 23 MW $1,021 per MW-month, plus energy payments if dispatched
December: None $70.5 thousand anticipated

Dual-fuel commissioning update

Continued from the 2014/2015 program were incentives for natural-gas-fired generators to add dual-fuel capability and also have sufficient oil in the tank at the start of each winter through December 1, 2017. (The date for establishing eligibility has passed, and no new dual-fuel commissioning is being accepted.) The cost incurred for this facet of the program was $1.54 million, of a total cost cap of $5.7 million. Six units commissioned dual-fuel capability, for a total winter seasonal claimed capability addition of 1,774 MW:

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Article originally appeared on ISO Newswire (http://isonewswire.com/).
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