Winter 2013-14 by the Numbers

Load

New Electric Winter Peak Demands Set During Polar VortexPJM wasn’t the only place the winter of 2013-14 made its mark in the record books.

MISO, the Southwest Power Pool and NYISO also hit all-time winter peaks during January’s polar vortex, while ISO New England came up just short.

January 2014 holds eight of PJM’s top 10 winter demand days, including the top spot, 141,846 MW, set Jan. 7. Many areas in MISO, meanwhile experienced their coldest winter in two decades.

PJM and other regions called on demand response, emergency energy purchases, and public appeals for conservation. On Jan. 7, PJM dispatched about 2,000 MW of DR during the morning and evening peaks while NYISO called on 900 MW. PJM also called on more than 2,500 MW of DR Jan.  23 and 28.  ISO-NE’s winter procurement program provided 21 MW of demand response on five occasions.

None of the RTOs or ISOs cut firm load.

Natural Gas Prices

 Gas Prices in Eastern U.S.While power demand wasn’t as high later in January, natural gas prices hit record highs in some eastern markets that supply PJM, New York and New England. On Jan. 22, prices at Transco Zone 6 (non-NY) peaked at $123/MMBtu, while prices at Transco Z6 NY and Transco Z5 reached $120/MMBtu.

Most other U.S. gas price hubs traded below $6/MMBtu during the coldest days, although Henry Hub hit $7.92/MMBtu in February, the highest since Hurricane Ike in September 2008.

Generator Outages

Generator Outages Add to Market StressThe RTOs struggled not only because of record demand but also because of mechanical failures and fuel supply problems. More than one-quarter of the installed capacity in PJM and MISO was idled on Jan. 6 and 7.

Fuel supply problems were responsible for more than half the outages and derates in NYISO, three-quarters of those in SPP and all of those in ISO-NE, according to FERC.

In contrast, lack of fuel was responsible for only one-quarter of the lost generation in PJM. About 5,000 MW of combustion turbines failed to start when called in early January.

Late in January, gas curtailments and start failures for combustion turbines both declined in PJM. Frozen coal and a lack of gas and oil caused outages of as much as 8,000 MW, however.

In much of the country, insufficient fuel oil and coal supplies kept plants from operating.

Barge deliveries were hampered by weather and an inability to transport through shallow water. Ice and sustained cold closed barge operations for a time on the Allegheny River.

Trucks and drivers were also in short supply. At ISO-NE’s request, the governor of Massachusetts approved extended hours for truck drivers transporting fuel.

MISO was challenged by an explosion on the TransCanada pipeline Jan. 25 and limited rail capacity, which pinched coal supplies.

“Some [coal] companies said they were only getting half of what they ordered,” Eric Callisto, chairman of the Wisconsin Public Service Commission, told the FERC technical conference. Some plants “were down to a 10- or five-day supply this winter.”

Rail deliveries “were an ongoing concern years ago,” he added. “It still is.”

Commissioner Tony Clark suggested that one reason that railroads are struggling to complete coal deliveries “is directly related to the lack of pipeline capacity for oil products. Railroads are using all their power to getting oil out” of the region from increased oil production. “It is all interconnected,” Clark said.

Drivers of High Prices Changed

RTO and ISO Prices Winter 2014In early January, high prices were driven primarily by record loads, which forced PJM and other operators to dispatch their most expensive generators.  LMPs crested at $2,000/MWh for some hours in PJM and MISO while average real-time prices during ranged between $300-$700/MWh during peak hours.

ISO New England had energy market costs of $5.05 billion this winter, almost equal to the $5.2 billion spent in all of 2012. Almost two-thirds of average daily real-time prices were above $100/MWh, versus less than 30% in the winter of 2012-13.

Like PJM, NYISO also won FERC approval for a waiver to lift its $1,000/MWh energy offer cap. Although natural gas prices in NYISO quadrupled from December to January, power prices increased only 176% as oil displaced gas.

Rarely used oil-fired generators were called into service and some dual-fuel units switched to oil due to high gas costs or uncertain supplies.

On many days, oil-fired generation was more economical to dispatch than natural gas units, a rare occurrence since the arrival of cheap shale gas.

In New England, where natural gas prices nearly doubled from the previous winter, oil was ISO-NE’s fuel of choice for more than half of the winter, including 23 days in January. The ISO’s “winter reliability program” funded inventories of 2.7 million barrels of oil, and the ISO burned 1.9 million barrels of that. “We ran oil units hard,” said Peter Brandien, vice president of system operations.

In NYISO, oil-fired generation was cheaper than gas for eight days in December and 18 in January. Oil-fired generation was able to obtain sufficient fuel deliveries at rates close to their oil-burn rates for only short periods, however.

The phenomenon was seen across the country as well. NRG Energy reported burning 1.1 million barrels of oil in January versus 800,000 in all of 2013.

Uplift

Uplift is High in JanuaryIn addition to high LMPs, the severe weather was reflected in uplift as generators sought reimbursement for costs not captured in energy prices and ancillary product sales.

In PJM, uplift for January totaled about $540 million, more than two-thirds what the RTO spent in all of 2013. Most of the uplift came between Jan. 21 and 29.

ISO-NE had uplift of $73 million in January, more than half its 2013 total.PJM Uplift - January 2014 (Source: PJM Interconnection LLC)

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