Coal

NERC reports electricity reliability adequate this winter

16 November 2006 — North America’s electricity generating capacity, transmission systems and generation fuels will be adequate this winter, Rick Sergel, president and CEO of the North American Electric Reliability Council (NERC) announced today, in conjunction with the release of NERC’s 2006/2007 Winter Assessment.

Generating capacity margins have not changed significantly since last winter, according to Sergel, with winter 2006/2007 margins judged to be adequate across North America. Transmission reinforcements in southwestern Connecticut and Boston also will result in significant improvements to reliability in these areas, which NERC had previously placed on its reliability “Watch List.” Coal deliveries from the Powder River Basin, which were cited as an issue in NERC’s 2006 Long-Term Reliability Assessment, have improved significantly and coal stocks are increasing.

Peak demands for this winter are forecast to be higher than actual peaks recorded last winter in all areas except New England, Texas, the Southwest, and parts of Missouri. In New England, electricity price increases in 2005 and in 2006 were the biggest factors in the lower peak demand forecast for this winter. Colder-than-normal weather last winter in the other areas is the primary reason this winter’s forecasts are lower than last year’s actual demands.

Transmission systems will be adequate for reliability purposes, but some constraints may reoccur that may limit desired market transactions. The TVA transmission system and critical flowgates in the ReliabilityFirst region have experienced large and volatile power flows in recent years due to large power transfers across and through these systems. If such flows occur again this winter, operators may be required to limit power exchanges to maintain system reliability.

Because home-heating use places higher demands on winter natural gas supplies and the gas transportation system, the availability of natural gas for electricity generation is always a greater concern during the winter than during the summer, said Sergel. Texas has the highest dependence on natural gas for electricity generation (70 percent), with about one-fourth of gas-fueled capacity possessing the ability to switch to oil for limited periods if natural gas supply is interrupted or unavailable. New England and Florida, which also have a high dependence on natural gas, have taken steps to avoid problems by coordinating more closely with natural gas pipeline operators. New England has also converted about 1,700 MW of natural gas-only capacity to dual-fuel capability since last winter.

NERC, in its role as the Electricity Reliability Organization (ERO), conducts three annual reliability assessments: short-term assessments look at the upcoming summer and winter peak demand seasons, and a long-term assessment looks at the next ten years. This 2006/2007 Winter Assessment is the second reliability assessment developed by NERC in its capacity as the ERO. The first was the 2006 Long-Term Reliability Assessment, released in October 2006.