ISO New England report outlines power-gas concern from last winter

The lack of natural gas supply for power generation at certain points in the winter of 2012-2013 is a cause for concern in the ISO New England region, according to a May 20 report on first-quarter 2013 results from the ISO’s Internal Market Monitor (IMM).

The monitor analyzed the performance in the first quarter of the region’s wholesale electric energy, reserve and capacity markets using supply offers, demand bids, fuel prices, market results, and other economic data. Overall, market prices reflected the cost of providing energy and ancillary services and energy and ancillary market outcomes have been competitive.

“However, price signals in the wholesale market are not yet sufficient for resources to put in place arrangements to assure fuel is available to follow dispatch instructions at all times,” the report added. “There were two periods of unusual weather, a cold snap from January 21 to January 28 and a winter blizzard on February 8-9. There were four instances in which resources failed to follow dispatch instructions because of a lack of fuel supply during the cold snap and there were 6 such instances during the blizzard. During both periods, natural gas prices spiked to levels above the cost of #6 oil.”

ISO New England and its increasing reliance on natural gas as a power generation fuel has been a key focus during the Federal Energy Regulatory Commission’s recent effort to work out the kinks between the natural gas and electricity markets.

A combination of cold temperatures, severe weather, and high natural gas prices during two periods in the reporting period created unusual operating conditions. The IMM concluded that the system operated as expected and the markets were competitive during these extreme weather events, but, as noted in the 2012 Annual Markets Report, issues regarding fuel procurement and availability, especially during the weekend blizzard, continue to be of concern. “The IMM continues to recommend a number of market rule changes to address this problem,” the report added.

New England experienced two extreme weather events in the winter of 2013. The first event, Jan. 21-28, was New England’s coldest multiple day stretch since 2009. The second event, occurring two weeks later in February, was a weekend blizzard that left record snowfall across the region.

During the first event, there were no major power outages reported, however, Operating Procedure #4 (OP4) emergency actions were required on Jan. 28 to manage unplanned generator outages and load forecast errors following the stretch of cold weather. During the second event, a blizzard began on Feb. 8 and continued into Feb. 10, knocking out power to more than 645,000 retail electricity customers. Despite the number of power outages effecting retail customers, wholesale power system conditions did not require the ISO to implement any emergency procedures.

During the two events, 10 units did not provide energy when called upon by the ISO.

During Jan. 21-28, low temperatures throughout New England contributed to an increased demand for natural gas for commercial and residential heating, which contributed to increased natural gas prices. Natural gas prices in New England during this period reached a high of $35/MMBtu. In contrast, natural gas prices across much of the country were in the range of $4/MMBtu. On Jan. 23-25, the price of natural gas in New England surpassed the approximately $18/MMBtu price of 0.3% sulfur No. 6 oil. These higher fuel prices were directly reflected in the wholesale Day-Ahead and Real-Time electricity prices.

Because of the increase in gas prices, economics caused some dual fuel generators to burn oil, which reduced already-low oil inventories. Some natural gas-fired resources were needed earlier in the day than planned and became unavailable for extended operation later in the day because they had not made arrangements to procure all of the natural gas that would have been needed for the entire operating day. As a result of these events, the ISO committed additional generation, the report said.

Anatomy of an unexpected day

During the afternoon and through the early evening of Jan. 28, New England experienced lower than forecasted temperatures. In HE 16, the average hourly New England temperature was approximately 4 degrees F below the forecasted value of 30 degrees F, and the actual system load was higher than the forecasted system load by about 630 MW, the report said. In addition to the electric load exceeding the forecasted load, the following operational issues with generators occurred that resulted in system operating reserves falling below the required amount occurred that resulted in system operating reserves falling below the requirement.

  • At about 16:00, a 250 MW generator experienced a forced outage.
  • At 17:00, the ISO curtailed real-time only transactions to mitigate an imminent operating 
reserve deficiency.
  • At about 17:17, a 450 MW generator tripped.
  • In response, at 17:30 the ISO declared M/LCC 2, and OP4 Actions 1 and 2 to manage a 
reserve deficiency.
  • The implementation of Action 2 of OP4 dispatched all of the real-time demand resources (RTDR) with a positive net capacity supply obligation (CSO) estimated to be 373 MW. The RTDR activation resulted, on average, in 353 MW of total load reduction.
  • At about 17:45, a large fast start resource was postured to prevent further depletion of the operating reserve.
  • By 21:00, sufficient resources were available which allowed for the cancellation of OP4 Action 2. As load continued to decrease, the ISO cancelled OP4 Action 1 and M/LCC2 at 21:30.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.