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COLUMN-FERC reveals extent of U.S. winter power crisis: Kemp

Source: Reuters - Fri, 4 Apr 2014 10:20 GMT
Author: Reuters
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(John Kemp is a Reuters market analyst. The views expressed are his own)

By John Kemp

LONDON, April 4 (Reuters) - Exceptionally cold weather coupled with fuel shortages and equipment failures pushed the U.S. electricity grid close to emergency conditions repeatedly during January and February, according to a bleak assessment issued by regulators.

In its report on winter operational performance, published on Tuesday, the Federal Energy Regulatory Commission (FERC) paints a picture of a gas and electricity system which struggled to cope.

The electricity grid came perilously close to an emergency that would have cut energy to homes and businesses across large sections of the country during some of the coldest weather on record.

"Widespread low temperatures, high winds and snow drove U.S. natural gas demand to reach an all-time peak of 137 billion cubic feet on January 7," according FERC. Other cold snaps on Jan 22, Jan 27, Feb 6 and in the first week of March also stressed gas and power supplies.

Electricity consumption hit record or near-record levels across the Northeast and Midwest during Jan 6-7, and was far above normal levels in many parts of the country during January and February.

According to FERC, power producers were forced to turn to coal and fuel oil as they struggled to get hold of enough gas to meet demand. Gas-fired generation actually fell slightly between December and January as gas shortages forced generators to switch to other fuels, with coal making up most of the shortfall.

Forced generation outages and cutbacks reduced the availability of generating capacity by as much as 30 percent of peak demand in some areas during Jan 6-7. A significant number of the generation outages were caused by fuel issues "including gas curtailments, no fuel, oil delivery and frozen coal," according to FERC.

PJM, the transmission operator in the Mid-Atlantic area, lost more than 41,000 megawatts of generating capacity on Jan 6-7, almost 30 percent of its peak load.

More than 9,000 megawatts were lost as a result of fuel issues. In addition, 5,000 megawatts of combustion turbines failed to start when called on by the grid.

The Midcontinent Independent System Operator (MISO) reported 33,000 megawatts of generating capacity were lost on Jan 6-7, of which almost 7,000 megawatts were related to fuel problems.

And the New York Independent System Operator (NYISO) recorded 4,000 megawatts of capacity lost, of which 2,000 were due to fuel issues.

Some generators were unable to obey dispatch instructions from the grid because they could not obtain enough extra gas on the intra-day market - underscoring the need for improved coordination between the gas and electricity industries .

With the grid under extreme stress, transmission operators declared power emergencies on several occasions. Contingency plans were activated including voltage reductions, emergency energy purchases, emergency demand response, and appeals for conservation.

On Feb 6, the California Independent System Operator (CAISO) issued an appeal for conservation when cold weather elsewhere in the country pulled gas supplies away from the state and left generators scrambling to obtain sufficient supplies.

Across the country this winter, generators able to secure adequate fuel supplies received "maximum generation" instructions and were ordered to generate flat out - above their normal operational limits - to offset outages elsewhere.

The winter of 2013/14 posed a severe test for U.S. gas and electricity networks. On this occasion, the system was able to cope, just.

Remarkably, no customer with guaranteed power supply ("firm load") had to be disconnected during the winter cold, though the system came worryingly close to rolling blackouts on a number of occasions.

But the extent of the problems will intensify FERC's determination to make the gas and electricity industries to coordinate more closely to avoid fuel delivery issues in future. (Editing by William Hardy)

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