Winter 2017-18 and the New England electric grid

With measures in place to ensure the reliability of New England's electric grid for the coming winter season, grid operator ISO New England, Inc. expects to have adequate electricity supplies this winter -- but according to a recent presentation to federal regulators, the biggest challenges could come in the form of extended cold weather when fuel inventories are already depleted or a day when gas supplies are constrained and suddenly a large non-gas resource is lost.

According to an October 19, 2017 presentation by ISO-NE to the Federal Energy Regulatory Commission, in 2016 nearly half of the electricity produced in New England came from natural gas, and the availability of gas impacts both grid reliability and production costs.  At the same time, the gas pipeline infrastructure serving New England is limited, with pipelines reaching their maximum capacity at times including winter months when demand peaks for gas for heating.

In response to concerns over reliability and past events like the January 2004 "cold snap" and the 2014 "polar vortex", ISO-NE has taken steps including developing operating procedures, a Winter Reliability Program and "Pay for Performance" changes to market rules that incentivize investment in operational improvements and secure fuel arrangements, as well as improving communication and coordination with generators, pipelines, and other stakeholders.

With those measures in place, ISO-NE recently told the Commission it expects to have adequate electricity supplies this winter, but that gas pipeline constraints continue to be a concern.  ISO-NE noted that while Spectra Energy placed its Algonquin Incremental Market project in service providing some relief last winter, that relief "was short-lived due to the retirement in 2017 of more than 1,500 MW of non-gas units (Brayton Point Power Station)."  The grid operator also noted that "LNG shipments are unknown" and that "Non-gas resources will continue to play a vital role in maintaining reliability."

Citing the biggest challenges this winter as extended cold weather when fuel inventories are depleted or a day when gas supplies are constrained and the region is using primarily nuclear, coal, and oil resources and suddenly a large non- gas resource is lost, ISO-NE noted that while the region has adequate generating capacity to serve load under those conditions, "the ability to meet energy needs is at risk if gas cannot be supplied to gas-fired generators."

FERC issues EIS for Algonquin Incremental Market gas project

Staff of the Federal Energy Regulatory Commission have issued a final Environmental Impact Statement for a proposed natural gas transmission project connecting New York and New England.  In that report, Commission staff found that Algonquin Gas Transmission, LLC's Algonquin Incremental Market Project would result in some adverse environmental impacts, but that most of these impacts could be mitigated and reduced to less-than-significant levels.

A marker for the Williams Northwest Pipeline in Arches National Park, Utah.

 Algonquin Gas Transmission, LLC -- a subsidiary of Spectra Energy Partners, LP -- already owns a natural gas pipeline and transmission network running from the Texas Eastern Transmission system in New Jersey to the Maritimes & Northeast system near Boston.

In 2014, Algonquin proposed the Algonquin Incremental Market project.  The AIM project's would provide firm transportation service of 342,000 dekatherms per day of natural gas to local distribution companies and municipal utilities in Connecticut, Rhode Island, and Massachusetts.  Algonquin’s stated objectives for the Project are:

• to provide the pipeline capacity necessary to transport additional natural gas supplies to meet the immediate and future load growth demands of local gas utilities in southern New England;
• eliminate capacity constraints on existing pipeline systems in New York State and southern New England;
• provide access to growing natural gas supply areas in the Northeast region to increase competition and reduce volatility in natural gas pricing in southern New England;
• improve existing compressor station emissions through the replacement of existing compressor units with new, efficient units; and
• provide the additional service by November 2016.

As envisioned by Algonquin, the project will include the construction and operation of about 37.4 miles of natural gas pipeline in New York, Connecticut, and Massachusetts.  The project entails replacing some segments of existing pipeline, extending an existing loop pipeline to increase the system's capacity to ship gas, and installing some new pipeline.  It also includes modifications to six existing compressor stations, modifying existing meter and regulating stations, and the construction of 3 new meter and regulation stations.

Under federal law, Algonquin needs authorization from the Federal Energy Regulatory Commission to construct and operate the AIM project.  Algonquin filed its application to the FERC on February 28, 2014.  As part of the FERC's review process, the National Environmental Policy Act requires the agency to analyze and document the environmental effects of proposed federal actions such as granting Algonquin's application.

In Algonquin's case, that documentation took the form of a Final Environmental Impact Statement issued by the FERC staff today. In the final EIS, FERC's environmental analysts conclude that construction and operation of the AIM project would result in some adverse environmental impacts. However, FERC staff found that most of these impacts would be reduced to less-than-significant levels with the implementation of mitigation measures and plans proposed by Algonquin, along with additional measures recommended by the FERC staff.  Staff pointed to factors including the degree to which proposed AIM project pipeline facilities would be within or adjacent to existing rights-of-way, the planned use of the horizontal directional drill method to cross the Hudson and Still Rivers, which would avoid any direct impacts on these resources, as well as plans to minimize impacts on natural and cultural resources during construction and operation of the Project.

With the final Environmental Impact Statement issued, the FERC Commissioners will consider its staff's recommendations in making a final a decision on the AIM project.  Multiple studies have highlighted the need for up to 2 billion cubic feet per day (Bcf/d) of new pipeline capacity into New England and neighboring markets to improve reliability and reduce the cost to consumers of electricity and natural gas.  At a planned size of 342,000 dekatherms (or 0.342 Bcf) per day, the AIM project is relatively small in capacity compared to other proposed projects such as Tennessee Gas Pipeline Company, L.L.P.'s proposed Northeast Energy Direct Project, which is designed to be scalable up to 1.2 to 2.2 billion cubic feet per day of natural gas capacity.  Which pipelines end up being approved and built will shape the New England energy landscape in the coming years.