DULLES, Va.–()–Low natural gas prices are expected to continue to exert downward
pressure on electricity prices this summer, although there could
potentially be more volatility in Southern California, Texas and Boston,
where power generation capacity reserves are tighter, according to the
Federal Energy Regulatory Commission’s (FERC) summer assessment.
“ISO New England is reaching out and working with asset owners in North
East Massachusetts and the Boston area to alert them to the situation
and is working with local generation and transmission companies to
develop special operating plans that can be used to manage a shortage
situation.”
The natural gas surplus and sub-$2-$2.50/MMBtu prices are expected to
step up the switching of generation facilities from coal-fired to
gas-fired, according to FERC’s “Summer
2012 Energy Market and Reliability Assessment” report, which
was presented Thursday at the Commission’s regular meeting, Natural
Gas Intelligence reported.
The reserves of power generation capacity to meet normal electricity
demand this summer appear adequate, but there are three potential
trouble spots — Southern California, Texas and Boston, the Commission
staff report said. Summer outages could cause price volatility in these
power markets, but in general the market will be dominated by low
natural gas prices.
“The most prominent market driver for energy markets this summer will be
the cost of natural gas, which has fallen to prices last seen a decade
ago…Gas prices at the recent lower level can be expected to have a
significant impact on electric markets.” FERC expects the gas surplus
condition to continue through the summer, causing gas prices to stay
near their present levels.
In addition to the low prices, “the ability of the natural gas-fired
plants to obtain sufficient fuel does not appear to be a significant
factor or a market concern during the upcoming summer. In particular,
capacity in long-haul pipelines is generally sufficient to avoid
disruptions in the use of natural gas for electric generation for this
summer,” FERC noted.
Pointing to the possible problems this summer, FERC staff said that twin
units of Southern California Edison Co.’s 2,200 MW San Onofre Nuclear
Generating Station (SONGS) in San Clemente, CA, which have been shut
down for three months, warrant close attention if they should remain
offline during high-load periods this summer.
The situation in Texas may be strained if the state experiences another
hot summer like last year, according to the FERC report. The Electric
Reliability Council of Texas (ERCOT) projects that load could exceed
projected capacity (70 GW) during an extreme heat wave with
higher-than-normal forced general outages.
If weather conditions are normal, “New England’s electric power supplies
are expected to be adequate this summer. However reduced and uncertain
supplies of liquefied natural gas to fuel [Exelon Power’s Mystic
Generation Station in Charlestown, MA] could result in an inadequate
supply to the Greater Boston area during extremely high-loading periods
and multiple contingency conditions,” the report said.
“ISO New England is reaching out and working with asset owners in North
East Massachusetts and the Boston area to alert them to the situation
and is working with local generation and transmission companies to
develop special operating plans that can be used to manage a shortage
situation.”
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