Real-time power prices topped $2600/MWh in ISO-New England on Monday after unplanned generation outages and higher-than-expected power demand from a Labor Day heatwave triggered emergency procedures from the grid operator.
ISO-NE accessed emergency generation reserves and imported power from surrounding regions on Monday to meet demand, said spokesperson Marcia Blomberg. The grid operator did not issue a request for voluntary power conservation.
The high prices come as ISO-NE works to revamp its capacity market to value resources with uninterruptible fuel supplies. Large generators that the ISO says are essential to maintain reliability warn they may go offline if they do not get compensated for the attribute.
ISO-NE's Monday conditions show how quickly errors in load forecasting and unplanned outages can translate into price spikes in the region's real-time market.
The ISO planned for 22,800 MW of demand at 4:30 p.m. on Monday, but real demand topped 23,100 MW, according to the grid operator's posted data. When some generators were unavailable to provide service, the ISO resorted to emergency power imports as prices spiked.
ISO-NE did not detail which power plants were unexpectedly offline, but they appear to be natural-gas fired plants, judging from a dip in gas generation around the time of the price spike.
While the ISO declared an emergency power watch, the system was not brought to the absolute brink. Operators were not forced to ask consumers for voluntary conservation measures, Blomberg said, though they monitored the situation and "could have issued an appeal if conditions had deteriorated."
"Conditions improved rapidly as demand began to decline in the late afternoon and offline generators were able to come online," Blomberg wrote in an email.
The tight conditions in New England come as the region reshapes its capacity market, which allocates plant availability years in the future. In May, the Federal Energy Regulatory Commission approved a two-part capacity auction for ISO-NE to handle state subsidized resources, and the grid operator is now trying to devise new payments for fuel secure resources.
Last week, ISO-NE asked FERC to allow those large generators to be "price-takers" in next year's capacity market auction, rendering them unable to set market prices. One of the region's largest generators, Exelon's Mystic gas plant, is separately asking FERC to allow New England ratepayers to subsidize its continued operation.