Panelists address New England’s ‘witches’ brew,’ effects of natural gas on grid

In comparing the cost and benefits of transmission options to other potential reliability solutions, transmission is critical to the discussion, according to Barbara Kates-Garnick, undersecretary for energy at Massachusetts’ Executive Office of Energy and Environmental Affairs.

Speaking at a Feb. 25 panel discussion at Infocast’s 16th Annual Transmission Summit 2013 in Washington, D.C., Kates-Garnick noted that in New England, questions include, is transmission a substitute for in-state capacity, what are some of the environmental issues and can it be used to bring in more green resources?

“[T]he struggle is the timing of many of the studies that we’re doing to make sure that we do it right, and I think that’s really the challenge that we face,” she said.

Stuart Nachmias, vice president of energy policy and regulatory affairs with Consolidated Edison’s (NYSE:ED) Consolidated Edison Company of New York, said ultimately it goes back to planning, including considering what resources will be available in the future and where they will be located. “We’re going to have to move gas and electricity around and there’s going to be increasing intermittency if we have more renewables,” he said, adding that battery storage may help, “but otherwise, you’re going to be using gas generation to sort of balance the system out.”

Kates-Garnick said there is a “witches’ brew” occurring in New England, pointing to a mixture of gas, transmission and power plant issues.

Referring to shale gas production, she said New England has had no new pipeline capacity and has had a decline in liquefied natural gas (LNG) to the region. “[O]ur pipelines are constricted both during the summer and in the winter,” she said, adding that more than 50% of New England’s generation is now gas.

“Our challenges are to create services that increase supplies and enhance flexibility for gas generators, to establish a methodology to pay for these new services [and] to determine the best short-term, medium-term and long-term fixes and solutions,” she said.

Solution options that can be discussed, she said, include dual-fuel capability and interstate pipelines.

“We can discuss LNG into the region, for example; that would be an interesting perspective, but what we’re seeing is, for a whole series of reasons, our LNG deliveries into the region are declining,” she added. “That’s because the world market is operating against our prices in New England, so therefore, we have a lot of interesting challenges. We have to look at costs for our solutions, both life cycle and annual operational costs; we have to look at feasibility and development time frames; we have to look at operational characteristics [and] the ability to ensure fuel diversity.”

ISO New England is doing a series of studies, including on reliability, she said, adding that the region has to better align the gas and electric markets.

Among other things to consider, she said, is that under Gov. Deval Patrick’s administration, the state is very supportive of renewable energy. “[O]ur utilities, by law, have to go out and procure a set of renewable energy resources as well, so, we also have to figure out how to make that compatible with natural gas as well.” Furthermore, strong greenhouse gas requirements, as well as demand response and energy efficiency must also be considered, she said.

Bruce Henning, vice president of energy regulatory and market analysis at ICF International, said fundamental changes are occurring in the natural gas industry because of the resource’s use in power generation and the drivers associated with it.

He noted that from 2000 to 2008, natural gas went through periods of three separate and severe price spikes involving, for instance, the California energy crisis as well as Hurricanes Katrina and Rita.

Henning also said that post-2007, the amount of natural gas deliverability continued to increase year after year, “so, we wound up having tremendous volumes of natural gas now available at prices that people didn’t think were possible before.”

He added, “[W]e always knew that gas was in the shale rock, that it existed there, but the drilling levels and the technologies of horizontal drilling and the hydraulic fracturing have really fundamentally changed the nature of it.”

ICF’s independent analysis shows that at this point, there are 150 years’ worth of gas resource available at current consumption levels, he said.

In New York, Nachmias noted that in the 1970s, there was a concerted effort to require the burning of low-sulfur fuel oil, so coal-fired units were switched from coal to low-sulfur fuel oil.

“In the late 1970s into the early 1980s … those units were switched to take advantage of the fact there was a good amount of natural gas available in the summer time, and so on an interruptible basis, those units would be able to, economically at the time, burn natural gas instead of oil, so units were switched, but maintained their fuel oil capabilities as well,” he said. “[T]he optionality of many of those units being able to burn both natural gas and fuel oil remains today and in fact, that’s been converted, for new units, into a requirement for dual-fuel capability.”

He said the synergy with gas heating customers and electric customer needs is important to note, adding that the usage of natural gas by Con Edison’s customers for heating purposes is expected to increase “somewhere north of 50% of what the usage is today” in the next few years.

“[T]hose customers, for the most, will be moving to … gas primarily because the economics is so favorable and the forecasts are favorable into the future, and that has resulted in new gas capacity pipeline being built into New York City,” he said.

Paul McGlynn, director of system planning with PJM Interconnection, pointing to some of the issues New England is experiencing, said that PJM is “very fortunate that we’ve got a much more significant pipeline infrastructure.”

“[W]e’re basically sitting right on top of the Marcellus Shale, so it’s, certainly, a great thing from our perspective,” he said. “That all being said, it is something that we want to, that we need to keep an eye on. The amount of gas that’s being used in PJM for electric generation continues to increase.”

He also noted that in PJM’s last base residual auction, for the first time, PJM cleared more gas-fired generation than it did for coal-fired generation for the 2015-2016 delivery year. “So, it is something, certainly, that we’re interested in, that we need to pay attention to, but it’s not quite the same witches’ brew that the folks up in New England are dealing with,” he said.

Fuel supply reliability should be included in resource adequacy analyses

Nachmias said fuel supply reliability needs to be included in resource adequacy analyses, adding, “It’s very important, and I think it’s really considering what are the gas demand needs, what are the electric demand needs and … doing a study that overlays both and looks at the interdependencies and cross-commodity requirements.”

Kates-Garnick agreed, noting that each region has its own cultural imperatives. For instance, while New York City has dual-fuel requirements, none exist in New England. “[T]here are so many changes that are happening that for us not to overlay reliability would be wrong for planners and companies and everything else,” she said.

McGlynn also agreed but said the same answer does not exist everywhere. “What New England may need to do, or want to do, perhaps look different than what I might do in PJM, which may look entirely different than what somebody in the Southeast may want to do,” he said. “So, I think it depends on who you are and where you’re situated.”

Kates-Garnick said politics play a role. “[W]hen people in the public hear that we are coming very close to contingency points on our system and having had the experience recently of all of these storms, the public gets much more concerned,” she said.

The pocketbook issue and what people are willing to pay must also be considered, she said.

Nachmias said it is important that the studies get done to drive policy and lay out what the policy options are so one can identify the issues and options. While there is one regulator at the wholesale level for electric and gas, studies have traditionally been done separately. “[W]e look at what is the future of the gas industry, what is the future of the electric industry and we do not do a good job at overlaying them and that is, I think, what’s new and different, and will help drive additional policy options, which could vary by region,” he said.

Among other things, he said communication between the industries is important, noting that when there are forced outages involving a coal unit, for instance, and the region will have more natural gas needs, “does the gas industry understand that operationally and what that will mean to their system?”

He added, “[T]hose back and forth communication issues and clarity is really critical to being able to operate a system where there’s increasingly heightened dependencies [between] the two industries.”

About Corina Rivera-Linares 3152 Articles
Corina Rivera-Linares, chief editor for TransmissionHub, has covered the U.S. power industry for the past 15 years. Before joining TransmissionHub, Corina covered renewable energy and environmental issues, as well as transmission, generation, regulation, legislation and ISO/RTO matters at SNL Financial. She has also covered such topics as health, politics, and education for weekly newspapers and national magazines. She can be reached at