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NERC Expects Generating Capacity to be Adequate for Winter

Absent some unforeseen fuel supply or delivery constraints, electric generating capacity this winter should be adequate to meet the demand for power throughout North America, according to the latest winter assessment report by the North American Electric Reliability Council (NERC).

NERC projects peak demand across North America this winter will be about 15,000 MW higher than last winter, while generating capacity is projected to increase by about 10,000 MW. As a result, the available capacity margins are slightly lower overall compared with last winter, with some regions showing small increases and others showing small decreases in margins.

However, NERC noted a significant amount of natural gas production may not be available this winter to interstate pipelines serving the Atlantic seaboard because of the lingering effects of hurricane damage on the Gulf Coast. Preparations are underway to address this possibility, NERC wrote. Additional delivery or supply curtailments could occur, however, individual regions don't expect to see significant reliability problems from these fuel supply issues, except for the potential concerns noted by ISO New England.

"This season's hurricanes significantly reduced Gulf of Mexico natural gas and oil production and refinement capabilities," said NERC CEO Rick Sergel. "ERCOT [Electric Reliability Council of Texas] and ISO New England rely heavily on natural gas for generating electricity, and NERC will monitor these areas closely this winter. In areas where gas shortages could affect electricity generation, the regions have assured us that they are putting emergency procedures in place to maintain reliability."

Utilities have repaired most of the hurricane damage to the bulk electric system, and NERC said the transmission system is "sufficiently robust" to deliver electricity to customers under normal winter conditions. More than 500 miles of new, high-voltage transmission lines are expected to be added this winter. These and several other system enhancements are expected to relieve some constraints on the system.

The report also notes that NERC does not expect delays in the delivery of coal from the Powder River Basin to affect fuel supply adequacy unless those delays extend "well into 2006."

By region, NERC said there are only a few problems anticipated. In ERCOT, there is concern about adequate fuel supplies this winter. More than 60% of installed capacity is fueled by natural gas and only a fraction of that capacity has oil-burning capability and oil inventory. ERCOT does not have market or regulatory rules requiring generators to maintain backup fuel capability.

Following the storms, the Florida Reliability Coordinating Council is closely monitoring fuel supplies and transmission system repairs and if necessary, plans to issue appropriate appeals for public conservation. And in Midwest Reliability Organization, a strong south-to-north power flow across the transmission system in Iowa is expected, which may require calls to maintain the system within operating limits. Temporary operating guides will be in place to deal with these conditions.

The Northeast Power Coordinating Council's ISO-NE is preparing for possible fuel supply interruptions to some gas-fueled generators, and "significant" enhancements to emergency procedures are being put in place before the winter season. These include increased reporting of fuel availability by generators, coordinated agency communications during cold weather events, demand reduction programs and proposed market-rule changes to increase flexibility.

The demand and energy data for the Southeastern Electric Reliability Council region, specifically the Entergy and Souther subregions, "do not reflect the reduction and reallocation of loads due to Hurricanes Katrina and Rita," NERC noted. Entergy is currently evaluating unanticipated load growth in portions of its service territories (e.g., Baton Rouge, LA and Jackson, MS) because of the influx of people seeking long-term accommodations. The increases may "accelerate the need for infrastructure enhancements" already planned for those load centers.

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