ISO New Englands Winter 20052006 Assessment

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ISO New EnglandsWinter 2005/2006 Assessment
Action PlanPreparing for Cold Weather
Reliability

• October 6, 2005

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Needs Assessment
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New England Faces a Potential Shortfallin
Electricity Supply this Winter

• ISO-NE believes that there is a significant risk
  that there will be insufficient availability from
  gas-fired generating units to meet peak
  electrical demands this winter
• A shortfall in gas-only generating unit
  availability would be a system-wide resource
  issue as opposed to a specific load pocket issue
  
• ISO-NE is proposing a number of remedial action
  to reduce this risk

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January 2004 Cold Snap Experience

• During the January 2004 Cold Snap, all of the
  natural gas pipelines firm customers were served
  in accordance with their tariffs
  
• 9,000 MW of generation was out-of-service in
  New England
  
• 7,200 MW of this capacity consisted of gas-only
  units that were unavailable due to fuel and
  weather related outages/reductions
  
• The damage to the gas and oil production
  infrastructure inflicted by the recent Gulf
  hurricanes poses an increased risk to the
  availability of gas-fired generation this winter
• 25 of New Englands peak-day natural gas comes
  from Gulf sources

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Cold Snap Process Improvements

• Since 2004, ISO New England has implemented a
  number of process improvements that should
  improve the availability of New England
  generation
• Increased Coordination
• Gas/Electric Operations Committee
• Day Ahead Market timing
• Improved Availability
• Timely switching to alternate fuels
• Improved winterization of generating units
• Additional dual fuel units

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Summary of Problem Issues

• New England is subject to great uncertainty/high
  risks in the price, availability and
  deliverability of natural gas during Winter 05/06
  due to the impacts of Hurricanes Katrina and
  Rita
• The regional gas pipelines have indicated they
  are well prepared to serve firm customers
  
• New England LDC storage is on track
• Because the majority of the New England
  generation sector does not have firm gas
  entitlements, it is exposed to high risk because
  of limitations on both gas supply and
  transportation

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Summary of Problem Issues (cont.)

• Generators have the choice to use gas to generate
  electricity or sell gas back into the market
  based on economics
  
• LDCs have an obligation to serve firm customers
• Recent experience during periods of volatile gas
  prices shows that generators have limited
  incentives under the current market rules to turn
  gas into electricity during the most critical
  winter periods
• The major planned market enhancements that will
  address this problem will not be in place for
  this winter
  

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What are the Contingency Concerns?

• Increased quantities of gas-only generation are
  likely to be out of service during a Cold Snap
  period
  
• Forecast peak electricity demand for Winter 05/06
  is about 1,000 MW greater than January 2004
  actual Cold Snap peak
  
• Multiple Cold Snap events would exacerbate supply
  and price issues for New England generators
  
• Ability to withstand the loss of a major
  generating unit during a Cold Snap event without
  invoking load shedding may be at risk

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Risk Analysis

• The following charts depict the risk exposure New
  England has to unit availability and electricity
  supply shortages during this winter based on a
  range of potential impacts
• Total gas pipeline import capability is 3.5
  Bcf/d
  
• Based on firm pipeline transportation contracts
• 3.0 Bcf/d to the LDCs and other end users
• 0.5 Bcf/d to the electric generators
• Based on the above entitlements, a maximum of
  3,000 MW of gas-only units can be supported from
  pipeline deliveries during a Cold Snap event (See
  Bar 1 of Supply Scenarios Chart)
• This is approximately equal to what was available
  during the January 2004 Cold Snap
  
• It is assumed that Mystic generation will be
  available because it has a separate supply source
  (i.e. LNG)

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Risk Analysis

• The other supply scenarios depicted in the chart
  describe the hypothetical reduction in gas supply
  to 90 of pipeline capability and its impacts on
  LDC and power generation availability
• Bar 2 assumes a pro-rata share of supply to the
  LDC and generation sectors
  
• Bar 3 assumes a market response where the LDC
  acquires the requisite volumes of gas to fulfill
  their obligations
  
• The last scenario shown in the Operable Capacity
  Analysis depicts the New England power supply
  situation if all gas-fired generation (except for
  Mystic) becomes unavailable, which could happen
  if there is an extreme gas shortfall or gas price
  instability

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Supply Scenarios
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Winter Peak Operable Capacity Analysis
Includes 900 MW of ICAP Sales to NY
(currently 640 MW scheduled) Assumes only 3
,000 MW of the 8,700 MW of gas-only generation
has firm pipeline transportation contracts
Includes increase in 90/10 peak load due to
increase in electric heating load (400 MW)
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Contingency Plans
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ISO-NE Contingency Plan Summary
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Actions Needed to Protect Reliability for Winter
2005/06

• Communications/Conservation
• Reduce consumption in all hours to conserve fuel
• Secure Additional Dual Fuel Capability
• Via change to MR1
• Demand Side Management/Load Management
• Expand DSM programs in New England
• Add capacity resources to help maintain 30-minute
  reserves
  
• Develop/Implement Energy Emergency Procedures
• Cold Weather Event Operations (Appendix H)
• Expand Actions During a Capacity Deficiency
  (OP4)
  
• Develop new operating procedure and/or change to
  MR1 for multi-period energy shortfall conditions

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Upcoming Dates

• We propose the following dates for working on the
  Contingency Plan
  
• Thursday, October 13 joint Markets/Reliability
  Committee meeting (Marlboro)
  
• Materials to go out on Friday, October 7
• Friday, October 14 NPC meeting (Boston)
• Wednesday, October 19 joint Markets/Reliability
  Committee meeting (Marlboro)
  
• Materials to go out on Monday, October 16, or
  sooner if possible
  
• Friday, October 21 Special NPC meeting
  (teleconference)
  
• Friday, October 28 Target date for FERC filings