Electric Markets Ruffled
Posted in the Brattleboro Forum
#1 Sep 6, 2013
Plant Closures to Ruffle New England's Energy Market
By Matthew Rocco
Published September 06, 2013
Read more: http://www.foxbusiness.com/industries/2013/09...
Entergy cited lower natural gas prices, a result of a glut in supply, in its decision to shut down its Vermont facility in the fourth quarter of 2014.
The company also cited the costs of operating the plant. Entergy operated Vermont Yankee as an independent power producer, also known as a merchant generator, so the cost of running it cannot be recovered through regulated cost-of-service rates.
“This was an agonizing decision and an extremely tough call for us,” Entergy CEO Leo Denault said in a statement.“We recognize that closing the plant on this schedule was not the outcome they had hoped for, but we have reluctantly concluded that it is the appropriate action for us to take under the circumstances.”
In addition, Dominion Resources (D) plans to shut down all four units of its Salem Harbor coal- and petroleum-fired power plant in 2014, saying the cost of complying with environmental regulations and declining profits in the coal industry spurred the decision.
New England is expected to see a total 1,369 megawatts of generation retired between 2013 and 2016, the EIA said.
About 1,193 megawatts of capacity is expected to come on line during that same span, with half of the new additions coming from natural gas and another 34% from planned wind turbines.
Entergy’s (ETR) pending closure of the 41-year-old Vermont Yankee nuclear power plant will likely affect the natural gas and electricity markets throughout New England, as 4% of the region’s total annual electricity supply is set to come off line.
According to a report from the Energy Information Administration, New England imports significant amounts of electricity from Canada’s Hydro-Quebec Energy Services. That inflow could increase as utilities look to offset the loss of regional capacity.
Meanwhile, New England has already become more reliant on cheap natural gas, following a nationwide trend amid booming U.S. shale production. Natural gas fueled less than 30% of the electricity generated in New England in 2001. By 2012, gas accounted for 52% of total electricity sales.
This increase in gas use for power generation has led to constraints on pipeline transportation in the regional natural gas market, especially in winter months when it’s also used to heat homes and businesses.
These supply constraints caused significant price spikes in spot natural gas prices in New England, most recently in January and February.
On the same day Entergy announced the Vermont Yankee closure, the Algonquin Citygate basis futures contract for the January 2015 contract rose 50 cents per MMBtu. The Algonquin Citygate is a key delivery point and natural gas trading hub in Boston.
#2 Sep 9, 2013
Vermont Yankee closing will push us closer to energy cliff
Entergy's recent decision to decommission Vermont Yankee's 620 megawatts of nuclear electricity generation by the end of 2014 brings to light a growing problem for New England's electricity grid — reliability.
Since 2003, New England has increased its reliance on natural gas for electricity generation by 30 percent. The Vermont Yankee announcement means that New England ratepayers will be even more beholden to the fluctuations of the natural gas markets and the intermittency of when the wind blows. More fuel diversity for reliable, affordable base-load power is needed.
The New England Independent System Operator (ISO-NE) recently stated: "The retirement of this large nuclear station will result in less fuel diversity and greater dependence on natural gas as a fuel for power generation…ISO has identified New England's dependence on natural gas for power generation and the potential retirement of generators as key strategic risks, and is developing solutions to address these and other strategic challenges."
Compounding the problem is the limited natural gas pipeline capacity in New England. Right now, most of the firm supply for natural gas capacity is contracted to local distribution companies (LDCs) for home heating fuel. This means that in the winter when the thermometer drops, LDCs are first in line for natural gas and electricity generators are left to fight over what is left — often at a price premium.
That price premium is passed onto the utilities, competitive suppliers and ultimately the ratepayers. This past winter, due to tight restrictions on natural gas supply, marginal rates for electricity soared to 20 cents per kilowatt-hour. Even this summer, during a July heat wave in the Northeast, marginal rates soared to 40 per kilowatt-hour — all because of our overreliance on natural gas that is magnified by New England's geographical location near the end of the pipeline. At least in the near term, the possibility of supply disruptions, electricity price spikes and blackouts is going to go higher until natural gas pipeline capacity is expanded — and even then it may not be enough.
#3 Sep 9, 2013
In 2012, natural gas and nuclear generation accounted for approximately 80 percent of electricity generated in the region. If nuclear plants continue to close, coal plants shutter and we can't gain access to natural gas supply — where is inexpensive and reliable power going to come from? Some will argue for increased renewables — namely solar and wind projects, but they are very expensive resources, requiring massive taxpayer subsidies.
Not only is the cost prohibitive, but they are intermittent power sources — not the base-load power we need to replace sources like Vermont Yankee. The intermittent nature of wind and solar also require natural gas combustion turbines to be on "spinning reserve," which does nothing to mitigate the natural gas supply shocks that plague New England.
Compounding the problem is that those reserve units still have to be paid to be ready, which means ratepayers get hit twice — once for expensive wind power and then again for the "spinning reserve" charges.
One generation source that can provide us with affordable and reliable base-load electricity is large-scale hydropower. States like Washington, Oregon and Idaho, which have large-scale hydro as a prominent generation source in their electricity portfolios have some of the lowest electricity costs in the country — in some cases less than half of what New England ratepayers pay.
One project that could provide this type of relief to the region is the proposed Northern Pass project, which will bring 1200 megawatts of reliable, affordable, base-load hydroelectric power from Canada.
There are still many questions officials need to ask about the project such as: What is the status of the power purchase agreement between PSNH (New Hampshire's largest electric utility) and Hydro-Quebec? Do we know what ratepayers will pay for this agreement? Are ratepayers at risk for the cost of construction for the project? Will Northern Pass benefit ratepayers throughout New England by lowering the marginal rates paid by the New England Independent System Operator?
These questions notwithstanding, those who oppose Northern Pass would be remiss to overlook the potential benefits to not only reliability, but also the affordability of hydroelectricity provided by the project.
The likelihood of new nuclear or coal plants being built in New England is slim-to-none. Combine that with a restricted pipeline capacity that will handcuff natural gas generators and you have limited options to a dwindling base-load power supply that has become over-reliant on natural gas. ISO has gone on record as stating that we are going to have to replace an expected 8,000 megawatts of retired capacity in the not-too-distant future. With the closing of one of the last nuclear plants in the region, Northern Pass is going to have to be part of the solution.
Marc Brown is the executive director of the New England Ratepayers Association, a nonprofit dedicated to protecting ratepayers in New England.
#4 Sep 9, 2013
What might be around the corner, they shutdown permanently Pilgrim…
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