Friday, April 18, 2014
(Continued from page 1)
Tom Welch, chairman of the Maine Public Utilities Commission
Staff file photo by Joe Phelan
Welch said he'll be looking at questions of balance. Could the same measure of reliability be gained by dialing in more emergency power cutbacks, a strategy known as demand response? Could more LNG, as the Conservation Law Foundation suggests, also lessen the need for oil?
"For the next two to four years, we're going to be fighting this battle," Welch said.
In the short term, this proposal is good news for Wyman Station in Yarmouth, Maine's largest power plant. The plant's owner, NextEra Energy Resources, has put the unit up for sale, and this plan could increase Wyman's value.
Steve Stengel, a NextEra spokesman, declined to answer a question about the effect on the power plant. He said the ISO's proposal still is developing, and the company doesn't want to comment. Stengel did note that Wyman ran on roughly half the days last January and February.
New England has 117 oil-fired power plants, most of them at least 30 years old.
Oil units such as Wyman represent more than 20 percent of New England generating capacity. Because oil is so much more expensive these days than natural gas, however, the fleet actually provides only 1 percent of electricity needs. The plants run only on the coldest days of the year, when demand for natural gas is at its peak for both heating and electricity.
The shortage of gas on those frigid days sent gas prices soaring last winter, which in turn increased wholesale electric rates. The ISO calculates that wholesale electric prices during the six weeks following Jan. 1 climbed to $1.9 billion, compared to $676 million for the same period in 2012.
In its summary, the ISO makes the point that last winter's cold was far from the worst possible. The days from Jan. 21 to 25 were the coldest since 2009 but not nearly as low as a cold snap in 2004, when the power system set a record for peak demand.
Because oil is expensive and the plants are needed infrequently, their owners are reluctant to fill the tanks. An ISO survey found that, on average, tanks are kept only one-third full, and inventories could be depleted quickly in severe weather.
To ensure that doesn't happen this winter, the ISO proposal would set up a competitive bid process to stockpile 4.2 million barrels, or 176 million gallons, of oil. This amount was calculated to satisfy a projected amount of energy demand in December, January and February.
The bidders could include oil-fired plants, and ones that can burn both oil and gas. If selected, the plants would face financial penalties if they didn't have the oil stockpiled by Dec. 1 or couldn't generate power when needed.
Even so, stockpiling oil is an expensive approach that will increase air pollution, and is really about making a case for new gas pipelines in New England, according to Jonathan Peress, director of clean energy and climate change at the Conservation Law Foundation.
"You never want a serious crisis to go to waste," Peress said, quoting President Barack Obama's former chief of staff, Rahm Emanuel.
The ISO is using the fear of blackouts as a way to build support for pipelines, Peress said. As an example, he cited Maine's pending law that would give the state the authority to contract for millions of dollars' worth of pipeline capacity, which would be funded partly by ratepayers. A cheaper fix, he said, is to arrange for more LNG to move through the existing interstate Maritimes & Northeast Pipeline, which runs through Maine from Nova Scotia to Massachusetts.
Repsol, the lead owner of the underused Canaport LNG terminal in Saint John, New Brunswick, says it can fill in the gas gap with imports. In a document related to the pending case with federal regulators, Repsol says it can supply gas to New England during peak demand periods this winter, at competitive prices.
The ISO is rejecting this solution, however. Blomberg, the ISO spokeswoman, said the organization has a "level of confidence" about oil storage but can't say the same about LNG.
Regarding conservation, Blomberg said the ISO is working to boost the level of demand response, but the complex software and rules won't be in place until 2017. For this winter, a bid process similar to the oil stockpiling would be conducted for demand response, seeking companies that can cut the power use to certain standards within 30 minutes of being notified. This would expand an existing program, in which businesses are paid to curtail demand in a power pinch.