FERC lauds grid performance in bomb cyclone; PJM pushes price formation in hearing
- The bulk power system performed well during the bomb cyclone in early January that sent temperatures plummeting to near-zero on the Eastern seaboard, stakeholders testified in a hearing on Tuesday. The testimony came as part of a two-and-a-half hour hearing held by the Senate Committee on Energy and Natural Resources to assess the grid's performance during the cold snap.
- The witnesses, which included PJM Interconnection CEO Andrew Ott and ISO-New England CEO Gordon van Welie, noted that the wholesale market performance improved significantly since the last notable cold weather event — the polar vortex of 2014. Even so, lawmakers raised questions over the need to adequately compensate "baseload" resources for running 24/7 to provide reliability, and address natural gas constraints in the Northeast.
- PJM's proposed price formation and ISO-NE's recent report assessing the reliability of its service territory were at the center of the conversation.
"Although we are still receiving and reviewing data, it appears that, notwithstanding stress in several regions, overall the bulk power system performed relatively well," said FERC Chairman McIntyre in his opening testimony.
McIntyre was one of five who testified before the committee. Others included PJM CEO Andrew Ott; ISO-NE CEO Gordan van Welie; Bruce Walker, assistant secretary of the Energy Department's Office of Electricity Delivery and Energy Reliability; Charles Berardesco, interim president of the North American Reliability Electric Corporation; and Allison Clements, president of Goodgrid. For the most part, they agreed that the lessons learned during the 2014 polar vortex showed forth in the system's recent performance as a whole.
Baseload resources made up the majority of fuel resources in the two regional markets affected by the storm. Coal production exceeded expectations, stakeholders testified, prompting Sen. Joe Manchin (D-WV) to lay out concerns that the resource wasn't properly compensated in markets.
But McIntyre noted that coal isn't without its problems.
"In this recent weather event, we wouldn't have seen widespread outages absent coal," he told Manchin. "Coal was not exempt from operation problems."
Committee Chair Lisa Murkowski (R-AK) asked his personal opinion of the risks posed to resilience by the impending nuclear and coal retirements on "a scale of 1 to 10."
"We're probably clearly at a five," McIntyre told her, underscoring the more optimistic tone about the grid's performance this winter.
But while the power system performed well, many brought up ongoing pain points, including PJM's price formation proposal, the performance of coal plants, particularly in the PJM Interconnection and gas constraints in the Northeast.
PJM price formation
Throughout the hearing, PJM CEO Ott emphasized the need to price "online" generation adequately. Essentially, the grid operator's proposal would raise prices across the RTO to provide incentives to "inflexible" generating units such as coal and nuclear.
Critics have said the proposal is just a backdoor way into preserving those struggling plants, previously the target of the DOE's failed cost-recovery rulemaking. But Ott said that down the road, the price formation would apply to renewable energy resources as well.
Even so, he stressed the need to ensure fair compensation for plants that ran for extended periods of time, but whose value is not reflected in their prices.
"Each of these [coal, nuclear and gas] bring to the table reliability characteristics," Ott noted, but "pricing doesn’t always reflect that. I think really this debate, there are coal plants that didn’t run much and those needs to retire. But there are those that are online running every hour and we need to keep those."
ISO-New England report
New England faced capacity challenges this month when the Pilgrim nuclear facility went offline. The outage stemmed from the loss of one of two power lines feeding into the plant, though there were not local reliability issues. In response, the region ramped up its oil-fired plants and imports from New York to compensate for the loss of power.
The grid operator testified that "wholesale energy prices and emissions will rise when extreme weather results in natural gas pipeline constraints – driving up the price of natural gas (and wholesale energy) and forcing New England to rely on oil- and coal-fired generation for multi-day (or multi-week) periods."
These concerns were outlined in a report released last week. The report considered nearly two dozen scenarios that included winter-long outages at four major energy facilities, concluding that all but four scenarios resulted in fuel shortages and rolling blackouts.
The region could face roughly 4,600 MW of retirements by 2021, representing more than 10% of its total capacity. As the region shifts to cleaner resources and potentially energy storage, it needs to address how to make that transition without losing reliability or relying heavily on natural gas as a main resource, van Welie said.
New DOE analysis on the horizon?
Meanwhile, the DOE remains busy finding ways to address "resilience" issues in the nation's grid. DOE's Bruce Walker warned that the grid is still at risk from nuclear and coal retirements.
"Without action that recognizes the essential reliability services provided by a strategically diversified generation portfolio, we cannot guarantee the resilience of the electric grid," Walker said in his opening testimony. He continued to hit key DOE talking points, including the importance of onsite fuel resources to grid security.
"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."
One way to tackle that issue is to fund an analysis that sought to integrate "resilience efforts" from local, state and regional stakeholders into one comprehensive model, Walker suggested.
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