On May 20, 2010, the Federal Energy Regulatory Commission’s (“FERC” or the “Commission”) Staff presented the “Summer 2010 Energy Market and Reliability Assessment” report. The assessment relied on data from the North American Electric Reliability Corporation’s (“NERC”) assessment of demand and capacity forecasts and data from several reliability regions.
FERC Staff reported that forecasted 2010 demand is comparable to last summer’s actual demand. Staff also reported that wind capacity for this summer is expected to increase nearly seven gigawatts since last summer, bringing the total nameplate wind capacity to 34 gigawatts.
Along with lower overall expected demand, the report also found that changes in natural gas markets are affecting forward power prices in the electric markets this summer. The FERC report stated that May 1, 2010 prices compared to May 1, 2009 are mixed, depending on the region. Electric prices in the West were higher, but about the same in the East. As of the same date, July and August forward electricity prices were 38 percent higher in the Northwest and 1 percent higher in PJM. FERC said that the higher Northwest prices are a consequence of lower hydro-electric generation in that region.
NERC Summer Reliability Assessment Report
On May 26, 2010, NERC released its comprehensive “Summer 2010 Assessment” report. The NERC report predicts an overall 2.2 percent reduction in forecasted summer peak demand from 2009 levels. In addition, NERC reported that the total available capacity will be 7,500 MW, or 0.7 percent, higher than last summer. NERC expects this to result in overall reserve power supplies in the U.S. and Canada of 28.6 percent over projected peak Summer 2010 demand. This is 3.2 percent higher than reserve levels in 2009 and 7.9 higher than those in 2008.
Additionally, NERC reported that wind generation is increasing and demand response continues to be available for emergency procedures and to offset peak demand when needed. However, demand response participation has dropped for the first time in four years, and NERC attributes this to the higher reserve margin and the economic recession.
New York ISO
NERC’s Summer 2010 Assessment reported a 4-percent drop in reserve margins in the New York ISO region due to recent generation retirements and a reduction in power imports. However, the New York ISO expects generation capacity to be adequate, with an 18-percent reserve margin for the summer. Although the New York ISO reports that generating capacity is expected to be 775 MW lower, due to recent generation retirements, demand is also expected to be lower than last summer.
California ISO
On May 17, 2010, the California ISO reported to its Board of Governors that the state will have enough electricity to meet the summer’s peak demand, largely because of three new gas-fired power plants in Southern California, a modest increase in demand, and higher participation in demand response programs. Overall, a total of 1,760 MW of new generation has been added since last summer. Additionally, the peak demand forecast for California ISO is only 2.9 percent above last summer’s actual peak demand. The forecast also includes 2,403 MW of demand response and interruptible programs, which is 15 percent more than Summer 2009. As a result, the California ISO has a planning reserve of 34.5 percent for Summer 2010.
PJM
NERC projected the Summer 2010 peak demand in the PJM Interconnection to be 1.5 percent higher than last summer’s peak demand. This is due in part to 1,500 MW of generation capacity that has been added in the past year. NERC also forecasts a 1.5-percent increase in summer peak demand in PJM. Overall, NERC projects a reserve margin for Summer 2010 of 26.7 percent.
ISO-NE
NERC’s Summer 2010 Assessment reported an additional 225 MW of new generation capacity in the ISO-New England (“ISO-NE”) region. In addition, the new Forward Capacity Market is predicted to add demand-side resources and energy efficiency to the supply mix, accounting for more than six percent of the regional capacity to serve summer loads. NERC also projects peak demand to be 2.5 percent lower than 2009 summer peak demand. As a result, NERC reported a forecasted reserve margin this summer of 19.6 percent.
FERC’s Summer 2010 Energy Market and Reliability Assessment is available at:
http://www.ferc.gov/market-oversight/mkt-views/2010/05-20-10.pdf
NERC’s Summer 2010 Assessment is available at:
http://www.nerc.com/files/2010%20Summer%20Reliability%20Assessment.pdf
The Cal ISO report is available at: http://www.caiso.com/2793/2793ae47395f0.pdf