After this past winter saw the highest wholesale electricity prices in the region’s recorded history, power grid administrator ISO New England has filed to expand its program to offset these issues for next winter.
ISO on Monday filed with the Federal Energy Regulatory Commission to continue the Winter Reliability Program for the upcoming winter. Under the program, power plants are encouraged to have extra fuel on hand – particularly oil and liquid natural gas – in case the natural gas that typically power the majority of the region’s power plants starts becoming in short supply.
This is a reliability program, meant to keep the power on, and not a cost-control program. However, by making sure the region’s power plants have adequate fuel to keep generating electricity, that can prevent ISO from needing to seek more costlier options to meet the region’s power needs.
Because natural gas power plants generate more than half of the region’s electricity, the price of electricity is driven by the commodity cost of natural gas. That cost spiked in December, January, February, and March as constraints in the pipeline delivering natural gas to the region limited the amount of fuel available to the plants.
Because of the reliance on natural gas, ISO implemented its first Winter Reliability Program to make sure other options were available to keep the power on. Notably, oil plants were paid to stock up on extra oil and large energy users from around the region were compensated if they shutdown during periods of high demand.
The program is changing this year, so power plants that buy extra oil and liquid natural gas are paid for any amount that is unused at the end of winter. This year, natural power plants also are incentivized to recommission any dual-fuel capacity so they can run on oil as well.
