Region's electrical grid feeling strain of cold-weather demand
Cold weather is straining the New England power grid, as demand for electricity on Tuesday was expected to break the winter record for 2013 set in January.
Peak demand was expected to reach 21,400 megawatts Tuesday night, compared to the previous winter peak for the year of 20,887 on a frigid Jan. 24, according to ISO-NE, the independent system operator.
The all-time winter record was set on Jan. 15, 2004, when peak demand hit 22,818 megawatts.
At one point during the day on Tuesday, ISO-NE asked for a delay in routine maintenance or testing that could affect power generation or transmission on the grid.
On Saturday, grid operators had to implement more drastic measures, using emergency reserves and buying power from the New York ISO for several hours in the late afternoon and early evening, according to ISO-NE spokeswoman Ellen Foley.
Peak use on Saturday hit 20,180 megawatts, lower than Monday and Tuesday, but 630 megawatts more than the ISO-NE forecast for that date, prompting severe conditions in the ISO control room and a temporary spike in electricity prices on the spot market.
Foley speculated that the high demand on Saturday was due at least in part to the pending snowstorm, which kept many people — who would otherwise be out and about — at home using electricity.
The price for one megawatt hour of electricity in the real-time power market hit $1,000 at one point early Saturday evening, compared to a 12-month average of $36 in 2012. Fortunately for consumers, utilities that provide electricity for residential use purchase long-term contracts for electricity and do not rely on the spot market.
The peak for Tuesday on the spot market was just over $340 per megawatt hour, as of 3 p.m.
"The only consumers who end up paying that spot price are large industrial or commercial facilities that decide to ride the spot market," said Dan Dolan, president of New England Power Generators Association.
A year of close calls
While not affecting consumers in the short term, such spikes in the cost of electricity on the wholesale market do affect the averages that determine utility pricing in the long run, which is one reason all three regulated utilities in the state have raised their energy supply charge for 2014.
The close call on Saturday was not as severe as conditions earlier in the year, when a cold spell in late January and Winter Storm Nemo in February prompted what ISO-NE President Gordon van Welie called "precarious operating conditions."
"Despite significant challenges, our system operators were able to manage without resorting to formal emergency procedures, but the margin was razor thin," van Welie wrote in an article published earlier this month in Transmission and Distribution World magazine.
The region barely avoided roving blackouts or mandatory conservation measures during some periods of peak demand in January and February, as the cold weather struck and two of the region's largest power plants briefly lost transmission capability. The loss of one more major power plant at that time could have been catastrophic.
Why is New England skating on such thin ice in the coldest weather? ISO has been sounding the alarm for more than a year.
"Investment in the gas pipeline infrastructure that brings cheap Marcellus (shale) gas into the region has not been sufficient to cope with the increased demand from natural-gas-fired generators, creating serious risks to grid reliability," wrote van Welie.
New England now relies on power plants fueled by natural gas for more than 50 percent of its electricity, but at the moments of peak demand on Saturday, many of those plants could not get natural gas because there was no space on the five pipelines that serve the region.
Standoff over pipelines
Utilities that provide gas to heat homes and businesses buy up the space on those pipelines. Most of the year, there is enough room left over for the gas-fired power plant owners to get the gas they purchased on the spot market delivered into New England.
But when the demand by utility customers is high, there is no room on the existing pipelines for the gas needed by power plant operators. "There are some periods on the system when natural gas is simply not available at any price," Dolan said. It's been widely reported that the pipeline companies would build more pipe into New England if the power plant owners would buy long-term contracts for pipeline space. The current structure of the wholesale electricity market does not encourage power plant owners to take those risks — something ISO-NE is trying to change with a new set of incentives.
Even that might not be enough, according to van Welie, who says the region is facing serious long-term threats to grid reliability if the natural gas transmission issue is not addressed.
"Enhancements to the short-term ISO markets alone won't necessarily spur pipeline construction, because pipeline developers require long-term contractual commitments," he wrote. "New England's state regulatory bodies are keenly aware of these issues, and are discussing a range of solutions, including the possibility of a regional investment in additional pipeline infrastructure."