Timeline: Historical Efforts to Address Fuel Security Issues in New England
For the past two decades, ISO New England 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 will continue until a robust regional solution is determined to address the vulnerable energy supply chain.
This timeline reflects the ISO’s efforts to address regional energy adequacy concerns and related events or developments in this timeframe.
2017–2022: Extended Cold Weather Emphasizes Risk, Results in Additional Measures
2022
FERC hosts a forum in Burlington, Vermont, to discuss the electricity and natural gas challenges facing New England. In a joint statement and in testimony, ISO New England and several gas and electric distribution companies emphasize the need to stabilize the region’s liquefied natural gas (LNG) supply chain to guard against winter fuel shortages.
2022
The ISO and the region’s electric utilities also prepare for the possibility of a winter energy emergency with a tabletop exercise scenario modeled after the ’17–’18 cold snap.
2021
In February, prolonged cold leads to controlled power outages in Texas and several neighboring states. In response, the North American Electric Reliability Corporation (NERC) continues to highlight reliability challenges in New England. NERC for many years has identified New England as a region of particular concern relating to fuel supply infrastructure.
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.
2020
The ISO files Energy Security Improvements (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.
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, Massachusetts) announces in late March that it plans to retire 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 country's independent system operators.
2017
A two-week cold snap creates operational difficulties similar to those experienced in early 2014. The period from December 26, 2017, to January 8, 2018, stresses 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.
2010–2016: A Focus on Solutions
2015
President and CEO Gordon van Welie presents the ISO’s first State of the Grid report at a media briefing to identify and discuss issues affecting New England’s bulk power system. This and subsequent presentations, available on the ISO website, include 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 Quadrennial Energy Review (QER) includes discussion of the ISO’s concerns over the lack of sufficient fuel supply infrastructure. The department's 2017 QER echoes these same concerns.
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 Transmission, Markets, and Services Tariff, recovering the cost of the additional capacity through regional network service rates. The ISO and New England Pool 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, initiates 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 event. 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 reaches $2.2 billion and the average price of natural gas exceeds $24 per million British thermal units (MMBtu). In the seven Januarys that follow, market values and natural gas prices average less than 30% of these 2014 figures.
2014
The ISO changes its Information Policy (Section 2.2 of the Tariff) to share information on scheduled output of natural-gas-fired generators with interstate 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 regional transmission organizations, including ISO New England, engage 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.
2013
ISO-NE President and CEO Gordon van Welie testifies twice before the U.S. Congress on the growing interdependency of 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 his May testimony is before the U.S. Senate Energy and Natural Resources Committee. He appears again before these committees in July 2017 and January 2018 to voice similar concerns.
2013
The ISO testifies at a 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 interdependence of 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. In the following years it adds incentives for LNG storage and demand response resources.
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.
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.
2004–2009: Identification of Fuel Security Risks
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 use of 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.
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 dating from the 1970s oil embargo to address modern energy security threats.
