New England grid operated reliably through 2012/2013 winter despite resource performance challenges

Two weather-driven events exemplified concerns identified through the Strategic Planning Initiative

Although this winter didn’t prove to be the coldest or stormiest on record, New England endured a one-two punch with a stretch of frigid temperatures in January and then Winter Storm Nemo in February that caused generator, transmission, and distribution system outages. While the ISO was able to maintain reliability throughout these weather events, operators faced significant challenges managing the system with generating resources that were at risk of not being able to produce electricity when and as needed.

Resource performance risks: Natural gas dependence and inadequate fuel security

New England has become highly dependent on natural gas to produce electricity—today, more than half of our power is generated by natural gas power plants. Natural gas is also used to heat many New England homes and businesses. At times during winter, the pipelines from the south and the west that transport natural gas into the region cannot carry enough fuel to satisfy both electric demand and heating requirements. In these situations, the priority delivery goes to the heating industry because the utilities and other suppliers that procure natural gas for heating purposes have firm contracts in place. Natural gas power plants typically do not have firm contracts and operate on a “just in time” delivery system. When these plants encounter limited fuel supply, they cannot always perform as needed.

This risk requires the ISO to call on coal and oil units more frequently. However, these generators can take 12 to 24 hours before they can produce electricity—which means they cannot always operate when called upon by the ISO. And because the current price of oil is high relative to price of natural gas, these generators are not used as frequently to provide power to the region. As a result, some oil power plants have very limited fuel stored on site, thus restricting their ability to produce electricity when called on.

January cold spell

The week of January 21 to January 25 was the coldest five-day stretch in New England since 2009, with temperatures averaging 17 degrees. During this spell, demand for natural gas shot up, and the pipelines from the west and south serving New England became constrained. ISO New England committed additional oil- and coal- fired generation to meet electricity demand and to hedge against potential issues on the natural gas system. Running these oil units further reduced fuel inventories at some plants.

The high demand for natural gas significantly increased the price of gas, which in turn pushed up wholesale electricity prices. Read the January Monthly Market Report article, to learn more about prices that month.

Winter Storm Nemo

Winter Storm Nemo dropped record snowfall in New England over the course of February 8 and February 9, with some areas receiving up to 40 inches. The blizzard affected both transmission and generation facilities with its strong wind and fast-accumulating snow. The majority of the damage and resulting outages occurred during the overnight hours of Friday, February 8, creating extremely volatile system conditions.

During this time, a number of generators did not have adequate fuel supply to produce electricity. Because of the structure of the natural gas market, which operates during regular business hours, some natural gas power plants had difficulty purchasing fuel over the weekend and could not produce power. In addition, some oil-fired power plants that ran during the January cold spell had depleted or had come close to depleting their fuel inventory, which limited the amount of electricity they could supply.

Strategic Planning Initiative: Working toward solutions

Despite these significant challenges, ISO New England was able to manage the high-voltage power system without having to resort to emergency procedures. Nevertheless, these events underscore several challenges the ISO and stakeholders have identified and are beginning to solve though the Strategic Planning Initiative (SPI).

Many of the solutions to the SPI challenges involve changes to wholesale electricity markets. For example, the current wholesale electricity markets are not providing adequate incentives for generators to perform when called on by the ISO during stressed system conditions, in particular for natural gas generators that have not made adequate arrangements for fuel supply. ISO New England is considering changes to the Forward Capacity Market that will create stronger performance incentives. And, the ISO has filed a proposal with the Federal Energy Regulatory Commission that seeks to shift the day-ahead wholesale electricity market timeline to more closely align with the natural gas market timeline.

While these solutions will take time to advance, the operational challenges experienced this winter have demonstrated a need for more immediate action. Therefore, ISO New England and regional stakeholders are working to develop a set of interim solutions that can be implemented for next winter. The goal is to develop and file plans with the Federal Energy Regulatory Commission by this summer.

Read the following ISO documents to learn more:

• Winter Operations Summary describes in detail the operational challenges faced during the winter events of January-February 2013
• 2013 Regional Electricity Outlook provides an easy-to-understand summary of the issues identified through the Strategic Planning Initiative and presents the immediate-, short-, and long-term solutions the ISO and stakeholders are pursuing to solve these challenges.
• Interdependencies of Market and Operational Changes to Address Resource Performance and Gas Dependency, further explains the interplay among forthcoming market changes and describes how they will collectively result in improved power system reliability and market efficiency.