The ‘bomb cyclone’ is contradicting Rick Perry’s argument for coal

https://www.washingtonpost.com/news/energy-environment/wp/2018/01/05/t
Pedestrians pass a car buried by the snow on Thursday, in Atlantic City. A winter storm caused every East Coast state, from Maine to Florida, to declare at least one weather advisory, winter storm watch, winter storm warning or blizzard warning. (Mark Makela/Getty Images)
Pedestrians pass a car buried by the snow on Thursday, in Atlantic City. A winter storm caused every East Coast state, from Maine to Florida, to declare at least one weather advisory, winter storm watch, winter storm warning or blizzard warning. (Mark Makela/Getty Images) By Steven Mufson Steven Mufson Reporter covering energy and other financial matters Email Bio Follow January 5

The cold weather and swirling winds gripping the northeastern United States have created the sort of winter scenario that Energy Secretary Rick Perry has cited as a reason to bolster the reliability of the grid by boosting coal and nuclear power plants. Perry said that only those power plants could assure reliability because only they could keep 90 days’ fuel supply on site.

But so far in this windy two-week cold snap, the region’s electricity grid has responded with little disruption, and without any need to rev up aging coal plants, which supplied 6 percent of electricity in New England on Thursday.

And the biggest failure Thursday came from a power line failure that forced Entergy Corp. to shut down its 688 megawatt Pilgrim nuclear power plant in eastern Massachusetts. No homes were affected, however, because the grid reserve was three times as big.

“We are less concerned about the problem of maintaining resiliency due to on-site fuel storage,” said Rich Dewey, executive vice president of the New York Independent System Operator, which manages and monitors the region’s electricity grid. “We have a diverse fleet not linked to any one fuel.”

He said the New York regional grid has 38,777 megawatts for power generation capacity — more than enough to handle anticipated peak demand of 24,340 megawatts on Friday.

The organization that runs the PJM regional grid, which stretches from Chicago to New Jersey, has opposed Perry’s proposal to the independent regulators at the Federal Energy Regulatory Commission.

On Thursday it asserted in a blog post that the storm was not posing any power supply problems. “During the cold weather, PJM has had adequate power supplies and maintained operating reserve margins,” the group said in its “Inside Lines” blog. “There have been no concerns with fuel availability. No reliability issues are expected through the weekend.”

PJM added that it was managing the highest winter load since 2015.

Malcolm Woolf, senior vice president for policy at Advanced Energy Economy, a business group, said that PJM has 40 percent excess generation capacity, “so there is no reliability challenge on generation.”

The cold weather has had an impact, however. Natural gas demand has jumped more than 20 percent from the average of the previous 30 days, according to S&P Global Platts.

Harsh weather has frozen wellhead equipment and dented production, which fell about 5 percent in northeastern Pennsylvania, a major supplier for the area. Spot prices for natural gas nearly tripled overnight, reaching record levels in the New York City area.

But the overwhelming majority of natural gas is purchased on long-term contracts, and consumers will not see any impact from the high spot prices.

Dewey said that, so far, many power plants in the region have responded to the cold snap by switching to oil, which is cheaper. And thanks to rules already in place, those power plants have the oil needed to last while operating at full capacity.

About 34 percent of power plants in the New York region can burn either natural gas or oil. Those with ready access to oil supplies might keep as little as three days’ supply on their sites, but others keep enough oil on hand to last as long as 30 days, Dewey said.

In New England, oil was fueling 26 percent of the electricity needs on Thursday, according to the New England independent service operator.

“The high price of natural gas has led us to using oil as an alternative fuel and many of our stations are running on oil at this moment to keep the lights on for our customers in New Jersey” and the PJM regional grid, said Joe Delmar, spokesman for PSEG Power. PSEG’s three nuclear units also have been running at full power and, he added, “they are much cheaper than using natural gas or oil as fuel right now.”

“Electricity markets in the Northeast U.S. are currently facing cold weather reminiscent of the winter 2013/14 ‘Polar Vortex,’ ” S&P Global Platts Analytics said. “This time around — even with more efficient gas capacity installations, robust gas production nearby and recent gas pipeline expansions — we are seeing similarly high oil-burn for power generation, considerably higher than what we would expect to see in a normal winter in the U.S. at this time of the year.”

Some analysts worry that some power plants burning oil will hit the environmental permit limits for emissions, but Dewey said that was not an issue.

AEE’s Woolf said that the winter cold and storms could cause outages but that would be linked to failures in transmission lines. E ven then, however, the regional grid operators tapped available hydropower supplies instead of coal.

“I wouldn’t be surprised if the cold affects distribution, but that doesn’t have anything to do with Perry’s points about generation,” Woolf said.

FERC is scheduled to examine Perry’s proposal this month.