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NERC sees adequate power supply for summer peaks, but lower reserve margins in Texas and the Midwest

From the May 19, 2014 issue of Public Power Daily

Originally published May 19, 2014

By Jeannine Anderson

Every region in the U.S. and Canada is expected to have enough power supply resources to meet demand for electricity this summer, the North American Electric Corporation said in its 2014 Summer Reliability Assessment, released on May 14. However, NERC said it is concerned about "potential challenges" in Texas and in the Midwest.

While peak demand forecasts have remained flat from last year, NERC said it remains concerned with "the ongoing resource mix changes, the changing operational characteristics of resources, and the continued retirement of generation across the bulk power system."

"Reserve margins across North America appear to be sufficient for the upcoming summer," said John Moura, director of Reliability Assessment at NERC. In the Electric Reliability Corporation of Texas (ERCOT) area, "new capacity resources coming online in early August will significantly improve the declining reserve margin trend observed over the last several years," he said.

Four combined-cycle plants will be added, but ERCOT may face challenges in maintaining sufficient reserves if the summer peak hits before this new capacity is available, NERC said.

In the Midwest, power plant retirements and other developments have whittled down the Midcontinent Independent System Operator's anticipated reserve margin to only slightly above the NERC "reference margin level" of 14.8 percent for the summer. NERC flagged this as a concern.

The North American bulk power system is changing, with a resource mix that has been leaning "toward a generation base that is now predominately (i.e., almost 40 percent) gas-fired generation," NERC said. "The continued wide-scale retirement of coal, petroleum, nuclear, and other baseload generation is largely being addressed by the addition of gas-fired and variable (e.g., wind, solar) resources."

In the U.S., the Environmental Protection Agency's Mercury and Air Toxics Standards (MATS) regulations have contributed to a speed-up in retirements of coal-fired units, especially for older plants for which retrofits are not economically viable, NERC said. Several Canadian provinces, particularly in the Ontario region — where the last coal-fired plant (Thunder Bay Generating Station) was closed in April — have implemented similar environmental regulations, the report said.

Four nuclear plants have been decommissioned since 2012, NERC noted, and a fifth closure (Vermont Yankee) is expected late this year.

Despite the ongoing retirements, coal-fired generation is projected to account for about a third of the total on-peak resource mix this summer. Since most coal-fired power plants depend on coal deliveries by railroad from distant mines, NERC said it is monitoring potential coal supply problems that might be caused by disruptions with rail service, as happened this winter.



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Vice President, Integrated Media and Communications
Meena Dayak

Editorial Director
Robert Varela

Editor, Public Power Daily
Jeannine Anderson

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Fallon W. Forbush

Manager, Integrated Media 
David L. Blaylock

Integrated Media Editor 
Laura D’Alessandro