The US Federal Energy Regulatory Commission's assessment of market readiness for the winter is "cautiously optimistic," with energy markets well supplied despite some vulnerabilities in the Northeast and California.
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In a presentation at the agency's monthly open meeting Thursday, FERC staff pointed to forecasts for normal to above-normal temperatures and new infrastructure coming online that would alleviate price differences and mitigate spikes.
Hillary Huffer of FERC's Office of Enforcement said increased reliance on gas for generation can pose challenges for winter operations, especially in ISO New England, where gas-fired power makes up 44% of the generation mix. Nonetheless, agency staff estimated that on average new gas transport capacity will lower New England basis prices, with Algonquin city-gates prices between $4/MMBtu to $5/MMBtu lower than they would be without the pipeline additions.
FERC staff said futures markets are signaling New York City will see the US' highest gas prices, peaking at around $9/MMBtu in January, which will be higher than Boston or surrounding demand hubs.
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Executives from six regional transmission operators and independent system operators also gave commissioners their views, by and large presenting themselves as fairly comfortable heading into the winter, with some concerns from ISO New England and California ISO.
Peter Brandien, ISO New England vice president of system operations, was the most cautious of the group. As long as LNG continues to come to three facilities that ultimately serve New England, he said the region would be in "pretty good shape to get through the winter."
"It's really going to depend on how cold the temperatures get and how much LNG is injected into the system" to serve generators, he said, noting the region is seeing flat, if not declining load.
ISO-NE is closely monitoring levels at LNG facilities, he said, with the greatest uncertainty surrounding shipments that largely responding to prices.
Brandien described this coming winter as his "last best year," as pipeline constraints are eased by the expected startup of the Algonquin Incremental Market project, and before upcoming generation retirements.
"Our region doesn't seem to be motivated to go down a path to expand the gas infrastructure. ... What I see in the coming years is more and more reliance on LNG and on ensuring the replenishment. It's not the best picture when you look at 1,500 MW retiring May 31 of non-gas resources," he said.
By contrast, Wes Yeomans, vice president of operations for New York Independent System Operator, was more confident about the prospects for the coming season than he was a year ago, saying that if infrastructure performs as expected, "our view is we are comfortable that we will be able to meet reliability criteria throughout the winter."
When it came to California, the FERC staff's outlook said low storage levels leave the state susceptible to upstream supply issues like freeze-offs or operating problems for pipeline and that Southern California could face added challenges, particularly during evening ramps. California Independent System Operator Executive Director Nancy Traweek noted the state was a summer peaking footprint and was facing predictions of above normal temperatures.
It is unclear whether the Aliso Canyon storage facility will be available, she said, although she said the lower demand in the coming season would allow greater flexibility for moving gas out of the Southern California Gas service territory.
Added coordination put in place for the summer, as well as advanced planning should help mitigate risks for the winter, she said. "For me, the biggest takeaway is that progress has been made and there is more work to be done" following the 2013-4 polar vortex, said FERC Chairman Norman Bay told reporters after the meeting.
Bay said it was useful to see the many different approaches implemented by the regions to handle challenges serving load in the winter time, such as market enhancements, improved operational procedures, improved training and situational awareness, and better gas-electric coordination.
Significant progress has been made on gas-electric coordination, Bay said, while also highlighting comments by PJM Vice President for Operations Michael Bryson that more could be done in that regard.
Bay also called attention to his own letter earlier in the week, nudging National American Energy Standards Board to accelerate work on electronic scheduling issues to see whether additional efficiencies could be achieved.
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--Edited by Keiron Greenhalgh, firstname.lastname@example.org