ISO New England Will Implement Winter Reliability Program

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The six states that make up the New England region rely on the function of the ISO New England in order to uphold efficient electricity flow and maintain a competitive edge in the wholesale pricing of electricity.  The corporation recently declared that electricity resources will be plentiful in meeting demand for this upcoming winter.  Regardless of this claim, those who forecast the electricity to stay economically priced as well as trustworthy around the clock, should express signs of worry.

The leading choice of electricity generation throughout the region is undoubtedly natural gas.  Recent findings show that 40% of energy users benefit from natural gas heating and it has continually become a top choice resource.  Even businesses and manufacturing companies depend heavily on the production of natural gas for things such as industry services and inside company heating.  The demand for natural gas within region boundaries continues to maintain a substantial amount of growth each year.

The difficultly with the demand growth is that the groundwork behind natural gas production struggles to keep pace.  The colder temperatures cause restraints on pipelines that ultimately lead to increased energy costs which have reached heights of more than $7 billion.  These price spikes hit customers purchasing space heating as well as power generators.  Nearly 3,450 MW of capacity of generated natural gas could be in potential danger in regards to a lack of access to fuel this winter, which in total resides to being about a quarter of the all capacity.

To ease this concern, ISO has implemented their fourth consecutive Winter Reliability Program which was designed to compensate power plants for their purchase and storage of oil and LNG (liquid natural gas).  The storage would be a fall back if natural gas production is unable to uphold the fuel demand this winter.  Although this would help with a better assurance of reliability, last year’s $38 million cost effect raises fear that theses quick fixes potentially won’t be enough.

LNG is traded across the global, boosting an increase in potential price fluctuations as well as suspension in deliveries and availability due to unpredictable weather conditions.  Just in the region alone, about 30% of all natural gas required is made up from imported LNG.  Other energy productions, such as burning oil, can also be costly for companies to continually use.  Not to mention the continued use of it would cause a regression in the elimination of carbon emissions, which has seen a significant 26% downfall.

Even though the Winter Reliability Program provides a safety belt during winter months, alternative plans may need seeking in order to stabilize reliability in the event a mixture of emergencies occurs.  These emergencies could be any combination of extremely cold temperatures, interruptions within power plants and/ or restrictions on deliveries of natural gas.  Regarding months after winter, more uncertainty is expected due to the fact that the region will drop 1,500 MW of capacity.  This will be the result of coal and oil firing generators being restored with newly improved natural gas generators.  These transformations will be carried out even with the knowledge that there will still be a deficiency in having extra natural gas infrastructures.  ISO New England expresses their concern for futures years where reliability will be uncertain because of limitations on resources.

A change to a more optimistic direction shows a path for New England through the newly completed Algonquin Incremental Market Project which aims to provide a supplementary of natural gas to the region.  The extra natural gas from the Appalachian Basin will aid in production demand for the upcoming winter.  The only slight alarm is that customers are part of residential gas companies rather than power plant owners, who are the ones ISO looks to compensate with through their Winter Reliability Program.

Tremendous amounts of pipeline storage for power generation is needed in order to certify delivery around the clock.  This objective looks to be the result of a blend between more pipelines, sustainable LNG, as well as storage resolutions.  In long term efforts, New England is focused on minimizing climate change which delegates decades of the region’s future.  However, what’s most alarming are the challenges receiving less recognition such as the short term ones that pertain to retired power plants and deficiencies in adding more natural gas infrastructures.  These concerns could cause society to see even worsened price fluctuations, minimal reliability and a decline in financial growth.

Further concerns for short term challenges are that they could cause New England to have less recognition from advanced focused driven industries.  If the region fails to address these concerns, the industries will take their business elsewhere.  In the event all of these things are carried out, energy productions could face costly consequences.  ISO has plans to raise fear throughout the region as to what could happen but their efforts alone will not suffice.  This needs to be a region wide recognition, otherwise the hope for an extension of renewable energy use will be a lost cause.  The region needs to seek unity in a common understanding that carrying out this mission is vital in meeting future energy demands.

 

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