ISO - Special Reports on Lack of Gas Infrastructure/Winter 2013-14

ISO New England "ISO New England is the independent, not-for-profit company authorized by the Federal Energy Regulatory Commission (FERC) to perform three critical, complex, interconnected roles for the region spanning Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, and most of Maine. Together, these three responsibilities help protect the health of the region’s economy and the well-being of its people by ensuring the constant availability of competitively-priced wholesale electricity—today and for future generations. The ISO’s unique mission requires active stakeholder involvement, as well as a highly skilled workforce across a wide range of disciplines. One goal lies at the heart of this mission: reliability.”

“Gas pipelines were constrained even without significant use by gas-fired generators, and more constrained than we expected … Oil-fired generators were vitally important to reliability this winter.”

“The region is in a precarious operating position for the next several winters (and any periods of high gas demand or gas pipeline interruptions)…”

“On certain cold days, the pipelines from the north were full, but the system had very few gas-fired generators on-line - so it appears that gas was being consumed by other parties”

“For the first time in more than 10 years, average daily real-time prices exceeded $250 (9 times)”
“In particular, can the region: meet the energy needs of a severe winter (like 2013-14 or 2003-04), and fill the deficit resulting from the shutdown of Vermont Yankee and Salem Harbor?”

“New England experienced sustained high natural gas prices ISO frequently operated with little or no gas-fired generation. High natural gas prices made many oil-fired generators economic. Gas pipelines were constrained even without significant use by gas-fired generators.”

“Conclusions: New England has a growing reliability problem due to gas pipeline constraints, poor performance by system resources, retirements of non-gas generation, a constrained oil supply chain, and a growing need to balance an increasing amount of intermittent renewable energy New England will face high prices and reliability challenges over the next several winters until market enhancements are implemented and additional infrastructure is built in the region”

“Demand for gas in New England has risen significantly over the past several years, driven by residents and businesses converting to natural gas for heating purposes and the increased use of the fuel to generate electricity. However, the existing natural gas pipeline infrastructure was not designed to serve this increasing demand, which has resulted in pipeline constraints at times of heavy demand.”
“The heavy demand for natural gas combined with a constrained delivery system caused extreme volatility in gas prices. Gas prices during December, January and February averaged $19.33 per million British thermal units (MMBtu) at the Algonquin pipeline delivery point in Massachusetts—almost double what they were during the 2012/2013 winter when the average price for gas was $11.28/MMBtu. In January, the average natural gas price rose to $24.19/MMBtu at the Algonquin delivery point, the highest average price in more than 10 years. The daily gas price spiked to a high of more than $78/MMBtu on a day in January.”
“Throughout the winter, much of the oil fleet was running at full capacity, even through the nighttime hours when demand is lower. Coal-fired-generators were also running more often than usual. While oil-fired generation produced much more electric energy than in recent years, and other non-gas generators neared their capacity limits, natural-gas-fired power plants produced far less than their total capacity.”