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NERC Keeps Eye on Parts of CA, CT and PRB Coal Deliveries This Summer

Electricity supplies will be tighter than last summer across much of North America, especially in Southern California and southwestern Connecticut, Rick Sergel, CEO of the North American Electric Reliability Council (NERC), said last Monday as NERC issued a 75-page summer power assessment for North America.

The report also cites continuing concerns with reduced coal deliveries from the Powder River Basin (PRB) as a result of last year's railroad track damage.

"NERC has added Southern California, southwestern Connecticut, and the Powder River Basin coal delivery issue to its watch list for this summer, and we will monitor these situations closely," said Sergel. In related news, the NERC chief appeared before a U.S. Senate Energy and Natural Resources Committee hearing on Monday afternoon examining the impact of the Energy Policy Act of 2005 on electricity reliability (see related story).

The report said that Southern California will have smaller capacity margins than most other areas in North America this summer. "This area relies on significant amounts of imported power, which will keep transmission lines into southern California heavily loaded much of the time."

Although transmission capability into the area has been increased by 400 MW since last summer, some constraints remain, NERC said. "Extreme weather conditions, which can significantly increase demand, or the sudden unplanned loss of large amounts of resources, would require the California Independent System Operator (CAISO) to implement demand response procedures and curtail interruptible loads to maintain required operating reserves. If extreme weather and loss of resources occur simultaneously, the CAISO may also need to shed firm load to balance resources and demand."

Meanwhile, while electricity supplies are forecast to be adequate overall for New England, transmission constraints may hinder electricity delivery into and within southwestern Connecticut, and have the potential to create reliability problems, the report said.

New England utilities expect to complete several transmission projects during 2006-2009 that will alleviate some of these constraints. In the meantime, utilities will rely on a combination of new generating units, demand response resources, and conservation and load management projects totaling approximately 250 MW to provide emergency support during the summer of 2006, NERC noted.

The report said that two new projects will increase transfer capability into the Boston area. Completion of the NSTAR 345 kV transmission reliability project, planned for this summer, will provide the ability to transfer approximately 24% more power into the Boston load pocket and help to alleviate some of the past reliability concerns.

In North America, this summer's projected peak demand is 0.5% higher than last summer's actual demand. Last summer's actual demand, which occurred during above-average temperatures in most regions, exceeded projections by about 1.7%. Demand projections are based upon historical average weather data, while actual demand reflects actual weather conditions. The demand projections are created by aggregating regions' member demand forecasts, which use different load forecasting methodologies.

Although North American electricity resources will increase 1.4% over last summer, capacity margins are decreasing in most regions, except for the Southeastern Electric Reliability Council (SERC) and the Northeast Power Coordinating Council (NPCC). "While generating resources and transmission capability will be adequate to serve the demand for electricity for this summer under normal weather conditions, extreme weather continues to present a significant reliability risk in those areas with lower margins," NERC warned.

For the peak month of July 2006, the Northwest Power Pool and Arizona-New Mexico-southern Nevada subregions of the Western Electricity Coordinating Council (WECC), and the Entergy and Gateway subregions of SERC are projected to have the highest overall capacity margins, while lowest capacity margins are projected in the Ontario and New England subregions of NPCC, the Midwest Reliability Organization (MRO) region, and the TVA subregion of SERC. The overall U.S. and Canada capacity margins for July 2006 are projected to be 17% and 23.3%, respectively.

Natural gas-fired units comprise more than 8,000 MW of the approximately 11,800 MW of generation being added this summer. Other large amounts of new generation include more than 1,800 MW of wind, 500 MW of coal-fired, and 300 MW of oil-fired generation.

WECC is projected to add nearly 4,000 MW of natural gas-fired units, while NPCC, ReliabilityFirst Corp. (RFC), and SERC will each add more than 1,000 MW of natural gas-fired units. RFC is a new regional electric reliability council that replaces three former NERC reliability councils in the Mid-Atlantic and central U.S. The majority of the new wind generation, 1,100 MW, is scheduled to be added in WECC.

Nearly 1,200 miles of new or upgraded transmission lines will be added to North America, with more than 400 miles in SERC, and more than 100 miles in each of MRO, NPCC, RFC, and WECC.

As for coal delivery issues, the report points out that last year, railroad track damage due to flooding and derailments limited delivery of coal from the PRB (north-central Wyoming and southeast Montana area) to a number of generating plants. The railroads have taken part of the line out of service as they undercut and replace the ballast and this project is expected to be completed by the end of 2006.

"PRB deliveries are increasing, but not enough to restore coal inventories to pre-curtailment levels," NERC said. "Coal delivery limitations do not appear to present a reliability problem for this summer. However, some utilities will need to purchase electricity or use alternate fuels to conserve their coal supplies to ensure that the coal generating units will be available at peak."

The electric reliability entity said that if coal delivery problems worsen, the ability of some entities to continue to meet electricity demand might be reduced. "NERC has placed the PRB issue on its 'Watch List' and will continue to closely monitor developments, both for the coming summer and for the longer term."

In a recent letter sent to FERC commissioners, top officials with associations representing public power, investor-owned utilities and rural electric cooperatives voiced concerns over railroad coal delivery problems and the possibility that those difficulties could have a negative impact on U.S. power grid reliability. The head of the Electric Power Supply Association (EPSA) has also communicated EPSA's concerns to FERC related to the state of coal deliveries by rail.

Looking at Canada, Ontario forecasts that there will be periods this summer when generating resources within Ontario will not be sufficient to meet projected demand, and the province will need to rely on electricity imports from other areas to maintain reliability. The Independent Electricity System Operator (IESO) is in the process of implementing a day-ahead commitment process to address this issue. Ontario also added 632 MW of generating capacity.

Transmission capability into the greater Toronto area has been improved with the addition of a second autotransformer and shunt capacitor and an increase in the ratings on other autotransformers, NERC said. "The situation has also improved since last summer because the IESO implemented a number of emergency control actions. In addition, demand management of Ontario resources will be increased."

Meanwhile, the report addresses potential fuel impacts from summer hurricanes. "Experts have predicted another active hurricane season, which could periodically curtail Gulf of Mexico production of natural gas and oil," NERC said. "Although fuel deliverability problems are possible for limited periods of time due to hurricanes in some areas, the immediate impact will likely be economic as some production is shifted to generating units using alternative fuel(s)." Secondary impacts could involve changes in emission levels and increased deliveries from alternate fuel suppliers.

"Regions cannot predict whether and to what extent weather extremes such as tropical disturbances may affect the fuel supply infrastructure or cause fuel delivery problems, but will take steps to mitigate the impact of those types of events."

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