The Mid-Atlantic and New England power grids were able to hold their own during a recent cold weather event that snapped winter peak demand records in part due to lessons learned from a cold snap that occurred in 2014 known as the Polar Vortex, panelists told a Senate hearing on Jan. 23.
The Senate Energy and Natural Resources Committee held a hearing in Washington, D.C., to examine the performance of the electric power system in the Northeast and mid-Atlantic during recent winter weather events, including what has been referred to as the “Bomb Cyclone.”
Kevin McIntyre, chairman of the Federal Energy Regulatory Commission, said that FERC is still receiving and reviewing the data related to the performance of the bulk power system during the cold weather event that has taken place over the past month.
“Based on what we know to date, it appears that, notwithstanding stress in several regions, overall the bulk power system performed relatively well amid challenging circumstances,” he said.
“Looking forward, we must both learn from this experience and remain vigilant with respect to challenges to the reliability and resilience of the bulk power system,” the FERC chairman told the hearing.
McIntyre said that the performance of the bulk power system during the 2014 winter event known as the Polar Vortex offered “useful context for understanding the performance of the bulk power system under the more recent winter weather events of the past month.”
He noted that during the Polar Vortex, much of the United States experienced sustained and, at times, extreme cold weather. “The challenges presented by these conditions and high electric demand were compounded by unplanned generator shutdowns of various fuel types. These combined circumstances tested grid reliability and power supplies and contributed to high electricity prices,” the FERC chairman noted.
Drawing on that experience, FERC took numerous actions to address reliability and resource performance issues. Among other things, McIntyre noted that the commission directed regional transmission organizations and independent system operators to report on fuel assurance issues and FERC revised its regulations to enhance coordination between the natural gas and electric industries in light of the increasing use of natural gas as a fuel for electric generation.
Recent cold weather event
Circling back to the recent cold weather event, the FERC chairman noted that there were “no significant customer outages that resulted from failures of the bulk power system, generators or transmission lines.”
He said that while there were no significant reliability problems during the recent cold weather event, wholesale energy prices were high, “reflecting the stress on the system. Higher wholesale energy prices that accurately reflect fuel costs and current system conditions can be beneficial, sending important signals that drive operational and investment decisions for both utilities and consumers.”
McIntyre said that “we also recognize that higher wholesale energy prices are also ultimately borne by retail customers and so the commission is attentive to the potential for behavior that takes advantage of extreme weather events.”
Just as FERC and the ISOs and RTOs “drew lessons from the Polar Vortex in 2014 and applied them in ways that better prepared us for this recent cold weather event, we will examine these more recent events very carefully and seek to learn from them.”
Recent FERC order
McIntyre also used his testimony to emphasize several points that FERC made in a Jan. 8 order. In that decision, the commission said that it was terminating a proceeding it initiated in order to address a proposed rule on grid reliability and resilience pricing submitted to the commission by Secretary of Energy Rick Perry last year.
At the same time, FERC initiated a new proceeding (Docket No. AD18-7-000) to specifically evaluate the resilience of the bulk power system in the regions operated by RTOs and ISOs. In the order, the commission listed a number of questions that it wants grid operators to answer in filings to be submitted at the agency.
McIntyre noted that one of the goals of the new proceeding is to develop a common understanding among FERC, the power industry and others “as to what resilience of the bulk power system actually means and requires.”
Risk to grid from plant retirements?
During the Q&A portion of the hearing, Sen. Lisa Murkowski, R-Alaska, and chairman of the Senate Energy and Natural Resources Committee, asked McIntyre his personal opinion about what he believes the risk to the grid is from ongoing coal and nuclear generation retirements.
On a scale of one to 10, “with 10 being the most severe risk to the grid, where do you put us?,” she asked the FERC chairman.
Conceptually, “we’re probably clearly at a five,” the FERC chairman responded. “I say that on the basis just of what we know today of the resilience challenges that have presented themselves in prior weather events and other circumstances. And I say that because of the potential irreversibility of the situation of unit retirements -- an individual unit retirement of a particularly sizable plant is a serious matter to the grid, let alone an entire class of power plants.”
He said that he will have a “better informed personal opinion after we have heard from the RTOs and ISOs about what specific needs they see and concerns they have in their respective footprints.”
ISO New England, PJM experiences during recent cold weather event
Andrew Ott, president and CEO of the PJM Interconnection, and Gordon van Welie, President and CEO of ISO New England, also appeared before the committee.
Ott said that during the recent cold weather, PJM experienced three of its top 10 winter peak demand days of all time. “Overall, the grid and the generation fleet performed very well. We had very sustained high performance throughout the cold snap,” he said.
Ott noted that with the support of FERC, PJM had previously instituted reforms in its capacity market regarding “pay for performance” based on lessons learned from the Polar Vortex. “We did see significantly improved performance during this cold weather event. All resource types – coal-fired generation, gas-fired generation, nuclear generation, renewable generation – all performed better in this cold weather event than what we” saw during the Polar Vortex.
Ott said that “one of the most important things that we’ve been focused on is how does our electricity market actually compensate for resources that are providing reliability services.” PJM has proposed “key reforms and have engaged in discussion about key reforms about what we call price formation.”
Van Welie said that in late December and early January, the New England region experienced the impacts of current fuel constraints as bitter cold temperatures drove an increase in demand for natural gas in the region.
He said that “so far this winter, we’ve been fortunate not to experience any major contingencies that we could not handle and the bulk power system has operated reliably. That said, we know that winter is far from over and we will continue to carefully monitor regional fuel availability.”
Van Welie said that regardless of the outcome of the remainder of the winter, he believes that “the last few weeks validate our concerns and underscore the importance of a study that we released last week.”
ISO New England on Jan. 17 released a study assessing whether possible future resource combinations would have enough fuel to ensure bulk power system reliability throughout an entire winter. The results indicate that maintaining reliability is likely to become more challenging, especially if current power system trends continue, the grid operator said.
NERC CEO notes lessons learned from Polar Vortex
Charles Berardesco, interim president and CEO of the North American Electric Reliability Corporation, told the hearing that during the extreme cold, “the primary challenge was reliably serving electricity demand during a period of near and in some cases record setting winter loads.”
To manage the situation, reliability coordinators implemented conservative operations, emergency procedures and began heightened planning, communications and preparation.
“Throughout, the bulk power system remained stable and reliable,” he said. “A diverse generation mix, with adequate flexibility and backup fuel was key to meeting increased electricity demand and all forms of generation contributed to serving load.”
Berardesco said, “based on the information we’ve reviewed to date, we are seeing improved performance this winter compared to past winters of similar or worse severity. In part, this is due to actions taken from the lessons of the 2014 Polar Vortex.”
DOE official proposes agency undertake detailed analysis
Bruce Walker, Assistant Secretary for the Department of Energy’s Office of Electricity Delivery and Energy Reliability, said that the resilience and reliability of the energy sector are top priorities of Perry and a major focus of the DOE.
Walker noted that during the recent cold snap from late December 2017 to early January of this year, the Northeast saw record low temperatures for several days, but customer outages were minimal.
“What was apparent during this weather event was the continued reliance on baseload generation and a diverse energy portfolio. Without action that recognizes the essential reliability services provided by a strategically diversified generation portfolio, we cannot guarantee the resilience of the electric grid,” the DOE official said.
Walker said that the grid's “integrity is maintained by an abundant and diverse supply of fuel sources today, especially with onsite fuel capability. However, the real question is whether or not this diversity will be here tomorrow.”
He said that resilience for the country’s electricity infrastructure has become more important than ever as major parts of the economy “are now totally dependent on electricity. Even momentary disruptions in power quality can result in major economic losses. At the same time, we are in the early stages of a large transformation of our electricity supply system, with this process of change likely to continue for many years. Keeping the lights on during this transformation will require unprecedented coordination and collaboration amongst many parties.”
In his prepared remarks, Walker proposed that the DOE undertake a detailed analysis that integrates into a single North American energy infrastructure model of the ongoing resilience planning efforts at the local, state, and regional levels, including the interconnections that reach into Canada and Mexico. Such an analysis would also fill any gaps and harmonize any inconsistencies in various efforts at those same levels, he said.
While Walker said he understands “that we currently do not have funds appropriated for such a task, so I am taking this opportunity to make my position clear: I believe that building this resiliency model should be the top priority for DOE’s Office of Electricity Delivery and Energy Reliability over the coming years, as does the leadership of the Department of Energy.”
Senators focus on generation used during recent cold weather event
Several senators at the hearing focused their lines of questioning on what types of fuel resources were utilized during the recent cold weather event.
“What would this country have done without the backup coal-fired plants in the Polar Vortex” and the Bomb Cyclone? Sen. Joe Manchin, D-W.Va., asked McIntyre.
The senator also asked the FERC chairman if the system would have been able to be flexible enough to provide the energy that was needed during these periods of time.
“I think in this recent weather event we wouldn’t have seen any widespread outages absent coal,” McIntyre said. “That said, coal was a key contributor.” He said that coal “wasn’t exempt from operational problems – there were some issues as I understand it with frozen coal piles on certain sites…but it was, no question, a key contributor.”
The FERC chairman said that “I share your overall view that all of the above needs to be our philosophy” in terms of the resource mix, including coal.
“For this past event, 45,000 megawatts of the electricity that we delivered, which is 40 percent or more, was coal-fired,” PJM’s Ott said. “We could not have served customers without the coal-fired resources. That’s the reality. The point is – are the prices reflecting the fact that those resources are running? My answer is no it’s not – we need to fix that.”
Ott said that “clearly, some coal plants don’t run, they never run, they don’t produce electricity. They’re just hanging on. They should go. The ones that are running and online every day to serve customers should be reflected in the price, so we need those. Some can go, some have to stay.”
Responding to a question from Sen. John Barrasso, R-Wy., van Welie said, coal and nuclear “definitely contributed” during the recent cold weather event. But he also said that the prospect for coal in New England “is limited.” He noted that there are two coal-fired power stations “left on the system, one of which will retire fairly soon.” The region has four nuclear reactors, one of which retire soon, van Welie said.
“What was surprising to us was 35 percent of the energy was coming from oil burn in the region and many of those oil units are forty years old,” he said.
“The issue for us in New England is that we are definitely transitioning to a different power system as the region strives to decarbonize,” van Welie said. “By definition, we have to reduce the amount of fossil fuel burned in the region. The question is, what’s the game plan looking forward” in order to do so reliably.
The idea behind the recent ISO-NE study is to “demonstrate the consequences of doing nothing in the first instance, which we think are severe, and to lay out for policymakers the various paths forward and I think we’re looking forward to engaging a conversation on how best to orchestrate that transition.”
EIA says Bomb Cyclone resulted in record levels of gas demand
The bomb cyclone weather event in early January resulted in record levels of U.S. natural gas demand and elevated wholesale natural gas and power prices around the country, the Energy Information Administration said on Jan. 23.
A constrained natural gas pipeline network led to a significant increase in oil-fired and dual-fuel generation in New England and New York, and, to a lesser extent, in the Mid-Atlantic, EIA said in its Today in Energy report.
Day-ahead daily average peak-period power prices for January 5, 2018, one of the coldest days of the weather event, reached $247 per MWh in New England and New York and $262/MWh in the Mid-Atlantic, compared with $30MWh–$50/MWh average prices in the preceding six weeks.
EIA noted that power markets in the Northeast and Mid-Atlantic have become more reliant on natural gas over the past several years following the retirement of electricity generators that use fuels other than natural gas. “However, the relative moderation in power price spikes during this year’s cold snap—despite higher natural gas prices—reflects a host of market rule changes and winter preparedness actions taken by the region’s grid operators to improve winter reliability.”