ISO New England Expects Adequate Electricity Supply This Winter; Market Enhancements Improve Power Supply Availability By Up to 2,000 Megawatts Under Tight Conditions

Business Wire, Dec 9, 2004

HOLYOKE, Mass. -- ISO New England Inc., operator of the region's bulk power system and wholesale electricity markets, today said the region's power supply should be adequate to meet projected electricity use this winter.

"We expect sufficient power supply to meet New England's electricity needs this winter," said Stephen G. Whitley, ISO New England's Senior Vice President and Chief Operating Officer. "However, we have taken additional proactive steps to enhance system operations and ensure reliability should an extreme weather event occur."

ISO New England projects the 2004-2005 winter peak demand to reach approximately 22,370 megawatts (MW) during normal winter weather conditions. This projection is 448 MW lower than the standing record for winter electricity use of 22,818 MW set on January 15, 2004. If extreme weather conditions occur this winter season, there is a 10 percent chance that New England's winter electricity use could reach 23,255 MW, which would set a new seasonal record. ISO New England expects adequate supply to be available meet electricity use this winter. New England's all-time record for electricity consumption was set in the summer of 2002, with electricity use reaching 25,348 MW on August 14.

"Planning is a critical element in maintaining a reliable system. By forecasting the region's expected electricity use for the upcoming winter season, steps can be taken so that the needs of consumers and businesses across the six-state region can be reliably and efficiently met," Whitley said.

Last winter, the region experienced unprecedented weather conditions resulting in record-breaking electricity demand on the bulk power system. New England's bulk power system and wholesale electricity markets operated reliably despite the combination of extreme cold, an unprecedented number of power plant outages, and record high electricity use during the January Cold Snap. However, ISO New England has since undertaken a thorough review of the events and has implemented both short and long-term remedial actions to improve reliability and market efficiency during the winter months.

ISO New England has worked closely over the past ten months with electric and natural gas industry representatives, as well as public officials and market participants, to refine forecasting procedures, introduce new electric market enhancements and coordinate gas and electric system communications. New initiatives implemented to date should improve power supply availability by up to 2,000 MW in the event extreme cold weather conditions occur. These enhancements include:

--Adjustment of the wholesale electric market bidding deadlines to ensure power plants are informed of the need to be available the following day, which should enable them to secure fuel supplies in a timely manner;

--Elimination of all generator outages requested for economic reasons during extreme winter conditions, which should increase the availability of power plants;

--Requesting power plants that are capable of switching from natural gas fuel to an alternative fuel to do so for the duration of the weather event;

--Notification to all demand response resources to be prepared to reduce electricity consumption upon the ISO's notice;

--Increased communications between ISO New England and the regional natural gas industry; and

--Coordination with neighboring power systems to determine their ability to export power supplies to New England in the event of a power supply shortage.

"Lessons learned from last winter's extreme weather has led to the implementation of several enhancements for this winter season that will better prepare the region and maintain reliability should similar conditions occur," said Whitley. "While these enhancements will provide significant benefits for this winter season, our work continues. Longer-term efforts, such as reviewing market rules to ensure the right incentives are in place for power plants to operate under tight conditions and expanding dual-fuel capability, will help to improve reliability for the six New England states."

Additional Steps for Balancing Supply and Demand

Although New England is expected to have adequate power supplies this winter, ISO New England has long-standing measures it can take to avoid electricity shortages on days of projected power supply deficiencies. If supply deficiencies are projected, ISO New England will implement a series of actions known as the New England Power Pool's "Operating Procedure No. 4" (OP-4), to help maintain the reliability of the bulk power system. For example, one measure allows ISO New England to purchase emergency generation from neighboring power systems if the bulk power grid's reserves fall below levels needed to ensure reliability.

Another OP-4 measure calls upon the public to temporarily conserve its use of electricity and help reduce demand on the power grid. For the eighth straight year, ISO New England will be using this program when issuing requests to conserve, which is modeled on the National Weather Service's storm advisory system. The emergency warning system has two levels of public appeal: Power Watch and Power Warning.