Grid chief warns of future NE power problemsBy JAY LINDSAY , Associated Press
Mar. 19, 2013 10:16 PM ET
BOSTON (AP) — The chief executive of New England's power grid manager warned Tuesday that a growing regional dependence on natural gas, combined with supply constraints, is threatening its ability to guarantee electricity whenever and wherever it's needed.
Gordon van Welie of ISO New England testified in Washington, D.C., before a House subcommittee that "the status quo is unsustainable."
Van Welie said the region now gets just over half its power from natural gas and nearly a third from nuclear power. That's a shift during the last decade from more reliance on oil and coal sources, which have been squeezed out by cheaper gas and tight environmental rules.
A switch to lower-cost, lower-emission natural gas — which also is widely used regionally for heat — has major economic and environmental benefits, he said. But it's straining the existing pipeline infrastructure, which isn't sufficient to allow New England full access to abundant gas supplies from the west and south.
The effect of the bottleneck was seen this winter in a price increase. Van Welie noted that in late January, New England was paying more than eight times what other regions were paying for natural gas, even though temperatures weren't especially low and power demand wasn't high.
"Wholesale electricity prices rose significantly during this period because of physical constraints moving the lowest-priced natural gas into New England," he said, according to prepared remarks.
A massive storm in February, which was accompanied by widespread power outages, also highlighted problems, he said.
Van Welie said at one point, 6,000 megawatts of electricity — about a fifth of the region's total capacity — wasn't available, in part because gas generators couldn't find fuel.
That showed a clear need for more flexibility in the gas supply system, since the gas market operates only on weekdays, and it was a weekend storm, van Welie said.
But he also emphasized the need to beef up fuel inventory, such as by building more storage facilities, making contracts with liquid natural gas suppliers and investing in pipelines.
"It is clear that the gas system is inadequate to meet the demands of electric generators during peak periods," van Welie said.
Van Welie suggested some of the roughly $7 billion in wholesale power costs that New England saved with increased natural gas use in the last five years could be used to expand infrastructure.
Other solutions the ISO is pursuing include changing market rules so natural gas-fired generators have more time to get the fuel they need on a given day. Other rule changes could aim to increase private investment in the needed infrastructure.
Also, the ISO said installing "pay-for-performance" incentives could increase financial rewards for those that provide energy reserves when the system is under the most pressure.