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FERC summer outlook flags California, Texas as posing potential reliability problems


Pipe outages, constraints in West could raise gas, power prices

Strong hydropower output may offset price increases

Washington — The Federal Energy Regulatory Commission will maintain its watchful eye on the West this summer as the risk for wildfires adds to stresses on that system. It also intends to monitor the Texas grid for reliability challenges stemming from that region's tight power supplies, staff said in their summer outlook Thursday.

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Even with the West, Southwest and Northeast regions of the US expected to experience higher than average temperatures this summer, staff in FERC's offices of Electric Reliability and Enforcement found the power system to generally be in a better position than last year, they said in their annual summer assessment of reliability and the natural gas and power markets.

For instance, heavy snowfall in northern California over the winter created an above-average snowpack that is expected to boost hydropower output and displace higher-priced natural gas generation during peak load periods this summer. By contrast, summer 2018 saw the lowest hydropower output since 2015, staff said.

The limited availability of the Aliso Canyon natural gas storage facility continues to be an area of concern for the Western Interconnection. But "preliminary estimates suggest that higher available hydropower plant production this summer will reduce the reliability risk of insufficient operating reserves occurring due to a gas curtailment in California," FERC staffer Alan Phung told commissioners during the agency's monthly open meeting Thursday.


The Electric Reliability Council of Texas anticipates an 8.5% reserve margin for this summer, falling short of its 13.75% reference margin level. The region faced a similar scenario last year but maintained system reliability through the use of ancillary services, load control measures, voluntary load reductions and other tools at its disposal.

FERC staffer Sedina Eric said those same tools would again be available to ERCOT to mitigate capacity shortages, and the region would be aided this summer by the expected return to service of a 365-MW natural gas-fired unit and increased output from other generators undergoing equipment upgrades.

Commissioner Cheryl LaFleur said the changing resource mix was likely to make "running the system a little tighter" and greater reliance on behind-the-meter and demand-side management tools necessary in more regions. Noting that FERC oversees reliability in Texas but not the ERCOT market, she said it was "very interesting" to see how ERCOT was handling the new dynamic.

Commissioner Richard Glick asserted that, outside of Texas, the US does not have a resource adequacy problem, with every other region, per FERC staff's report, anticipating reserve margins above -- in some cases significantly above -- their reference margin levels.

"It suggests, at least in part, that the way some of these regions are procuring capacity is worth taking another look at," he said.

Staff added that net demand for electricity is forecast to tick downward 0.3% from last year thanks to energy efficiency measures and greater penetration of behind-the-meter systems.


"My takeaway from the report is that we're in good shape for the coming summer but we need to be vigilant regarding discrete issues," Chairman Neil Chatterjee told reporters after the commission's meeting.

Still, with the risk for wildfires seen as above normal for California, Oregon and Washington state, localized threats to reliability persist in the West.

Additionally, pipeline outages and constraints in the Pacific Northwest could drive gas prices in that region and California up, staff said.

"Projected strong hydroelectric power production in California could partially offset potential increases in power prices due to higher natural gas prices; however, moderate and below-average hydroelectric production in the Pacific Northwest could limit options for low-cost electricity imports into California during the summer," James Burchill, a staffer in FERC's Office of Enforcement, said.

-- Jasmin Melvin,

-- Edited by Rocco Canonica,

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