Timeline: Historical Efforts to Address Fuel Security Issues in New England

For the past two decades, ISO New England (ISO) has raised concerns about fuel supply issues limiting electricity production during periods of extreme cold weather.

Many actions have been taken over the years by the New England states, the Federal Energy Regulatory Commission (FERC), and the ISO in attempts to address our region’s energy adequacy risks. Nevertheless, New England remains vulnerable to fuel supply shortages. These challenges during extended cold snaps will continue until a robust regional solution that addresses the vulnerable energy supply chain to the region is determined.

This timeline reflects the ISO’s efforts to address regional energy adequacy concerns and related events or developments in this timeframe.

liquid natural gas barge

2004–2009: Identification of Fuel Security Risks

2004

An extended January cold snap constrains pipelines, driving price volatility in natural gas and wholesale electricity markets. New England’s fuel security risks become apparent, spurring studies and proposed solutions such as collaboration with state environmental agencies to enable dual-fuel use at gas-fired generators during emergencies, and updates to operating procedures from the 1970s Oil Embargo to address modern energy security threats.

2005

The ISO evaluates dual-fuel capabilities and environmental constraints at gas/oil-fired generators.

2005

Abundant natural gas supplies become accessible in the Marcellus Shale region of the Northeast, driving increased dependence on natural gas for heating and electricity generation in New England.

2005

Hurricanes Katrina and Rita damage gas and oil infrastructure in the Gulf of Mexico, disrupting fuel supplies to New England—revealing again New England’s vulnerability to natural gas supply constraints.

Lighthouse

2010–2016: A Focus on Solutions

2010

The ISO launches its Strategic Planning Initiative (SPI), which highlights New England’s increasing reliance on natural gas for power generation and the potential for “reduced operational performance during stressed system conditions.”

Following the public rollout of the SPI, the ISO initiates numerous discussions on the inadequacy of New England’s energy supply infrastructure in stakeholder meetings, with individual states, in regional forums, and with the New England congressional delegation.

2013

In both March and May, ISO-NE President and CEO Gordon van Welie testifies before the U.S. Congress on the growing interdependency between the electric and natural gas industries in New England and the critical need for the region to invest in fuel infrastructure. His March testimony occurs before the U.S. House Energy and Commerce Committee and the May testimony before the U.S. Senate Energy and Natural Resources Committee. Gordon appears again before these committees in July 2017 and January 2018, respectively, to voice similar concerns.

FERC illustration

2013

The ISO testifies at a Federal Energy Regulatory Commission (FERC) technical conference, one of a number of conferences over the last decade, on the critical need for fuel supply infrastructure. This particular conference focuses on the growing interdependencies between the natural gas and electric industries.

2013

In the absence of investment in fuel supply infrastructure, the ISO designs and implements programs to provide economic incentives for generators to physically store sufficient quantities of oil and subsequently, liquefied natural gas and demand response resources in the following years.

Winter Reliability Programs run for five consecutive winters from ’13–’14 through ’17–’18.

2013

Improved generator performance is the focus of several ISO proposals resulting in adjustments to wholesale market rules, including changes to better align natural gas and electricity market timelines, providing generators additional time to procure natural gas; to provide an opportunity to recover fuel costs when an “abnormal conditions alert” is declared; and to expand the definition of “shortage hours” to enhance the incentives for capacity resources to perform during times of system stress.

Gas pipeline illustration

2014

The New England states formally request ISO-NE support for a proposal to flow the “cost of firm natural gas pipeline capacity” through the ISO’s tariff, recovering the cost of the additional capacity through Regional Network Service rates. The ISO and NEPOOL consider this approach; however, the concept meets resistance within New England. This effort, combined with several unsuccessful proposals for natural gas infrastructure by private pipeline developers, initiated a highly visible regional conversation about fuel infrastructure and constraints in New England.

2014

In January, New England experiences difficult operational conditions, as well as extraordinarily high wholesale energy prices, due to severe cold weather from a polar vortex. This is one of several winters in the previous decade when constrained fuel supply infrastructure resulted in both operational challenges and significant price volatility.

For the month of January 2014, the energy market value in New England reached $2.2 billion and the average price of natural gas exceeded $24/MMBtu. In the seven Januarys that followed, market values and natural gas prices averaged less than 30% of these 2014 figures.

2014

The ISO changes its Information Policy in ISO tariff (section 2.2) to share information on scheduled output of natural gas-fired generators with interstate natural gas pipeline operators. This change provides greater accuracy on unit availability and operational capabilities, improving regional reliability.

This is one of a number of improvements to communications protocols between the ISO’s control room and natural gas pipeline owners and operators. For example, several RTOs, including the ISO, have engaged with gas pipeline operators in training exercises. Enhanced communications allow improved insight and understanding when natural gas supply issues may adversely affect the bulk power system.

2014

The ISO files substantial changes to its Forward Capacity Market with FERC (approved in May 2014) to provide stronger incentives—known as “Pay-for-Performance”—for resources to undertake investments that ensure they can perform during stressed system conditions.

The ISO expects market-driven investments in dual-fuel resources will result from the Pay-for-Performance changes. However, permitting for dual-fuel resources proves to be extremely difficult.

2015

Gordon van Welie presents the ISO’s annual State of the Grid report, initiating an annual media briefing to identify and discuss issues affecting New England’s bulk power system. These presentations, available on the ISO website, have included numerous discussions of the importance of alleviating the region’s fuel constraints and investing in energy infrastructure.

2015

The U.S. Department of Energy’s (DOE) Quadrennial Energy Review (QER) includes discussion of the ISO’s concerns over the lack of sufficient fuel supply infrastructure. DOE’s 2017 QER echoes these same concerns.

thermometer graphic

2017–2021: Extended Cold Weather Emphasizes Risk, Results in Additional Measures

2017

A two-week cold snap in late December 2017 through early January 2018 results in operational difficulties similar to those experienced in early 2014. The period from December 26, 2017 to January 8, 2018 stretches operations, with oil supplies at New England generators dwindling to very low levels and leading to a $750 million year-over-year increase in the wholesale energy market due to high natural gas and oil prices.

2018

The ISO releases its Operational Fuel Security Analysis (OFSA), which studies whether the region has enough fuel to ensure bulk power system reliability through an entire winter under a wide range of scenarios. The study design quantifies the region’s energy-security risk, specifically “the possibility that power plants won’t have or be able to get the fuel they need” to meet demand and maintain reliability. At the same time, the ISO initiates stakeholder discussions to consider long-term solutions to the energy-security risk.

2018

In March, the ISO files its response to FERC’s January 2018 Resilience Order, detailing the scope and depth of the fuel-security challenge facing the region and highlighting the recently released OFSA. In its response, the ISO specifies that it “recognizes that fuel security is just one aspect of the bulk power system’s resilience; however, it is the most significant challenge for the New England bulk power system’s resilience, and it currently has no defined in-market long-term solution.”

2018

The owner of the Mystic Generating Station (the primary customer for the Distrigas LNG facility in Everett, MA) announces in late March that it is retiring several units in 2022. After studying and identifying the resulting adverse consequences for New England’s energy security, the ISO moves to retain the Mystic units for an additional two years, giving the region time to implement reliability solutions before the units’ eventual retirement in 2024.

Over the next year, the ISO conducts stakeholder discussions and submits several filings to increase the ISO’s tools to retain resources seeking to retire, to address energy security in the short term and to begin development of a long-term in-market solution.

2018

Following the operational experience from the cold snap earlier in the year, the ISO creates and publishes an ongoing 21-day Energy Assessment Forecast that provides advance notice of potential fuel-scarcity conditions during the winter season, allowing generators to make fuel arrangements when necessary. This forward-looking planning tool is unique among the ISO regions.

2019

In April, the ISO publishes a discussion paper outlining principles for Energy Security Improvements (ESI), an in-market approach to mitigating the energy security risks. Later in 2019, FERC holds a technical conference on ESI and hears from the ISO, the New England states and NEPOOL stakeholders.

2020

The ISO files ESI, a plan to incentivize—through wholesale markets—actions by resources to secure fuel supplies. ESI proposes new products in the ancillary services market to incentivize the region’s fleet to invest in the energy-supply arrangements and technologies needed to run the grid reliably and efficiently.

However, FERC rejects the ISO’s proposal in October 2020 and terminates the requirement for the ISO to put forward such a proposal. The ISO believes the underlying design is sound, and based on further input from FERC, plans additional discussions with stakeholders.

2020

FERC approves the ISO’s Inventoried Energy Program, a short-term interim measure filed in 2019 to cover the winters of ’23–’24 and ’24–’25. This measure will recognize the value of resources that can store fuel for use when winter energy security is most stressed.

2021

For many years, the North American Electric Reliability Corporation (NERC) identifies New England as a region of particular concern relating to fuel supply infrastructure. In February 2021, NERC continues to highlight the reliability challenges in New England following load shedding events in Texas and several neighboring states.

2021

In its annual Winter Reliability Assessment, NERC warns of regional reliability risks, stressing the need for readiness; the ISO communicates fuel security risks posed by an extended cold snap with key stakeholders and the media.

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