electric energy issues and the region connecticut business and industry association stamford,...
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Electric Energy Issues and the Region
Connecticut Business and Industry Association
Stamford, ConnecticutDecember 2, 2004
Kevin KirbyVice President, Market Operations
ISO New England Inc.
2
Regional System Planning
• ISO New England’s role in the restructured electric industry
• Planning Horizon: 10 Years• Geographic Scope:
– New England– Connecticut, Southwest CT
and Norwalk-Stamford sub-areas
– Coordination with neighboring control areas
• Regional Transmission Expansion Plan for 2004
What are the region’s energy needs today and through 2013?
3
Long-term Planning
• Long-term planning is important because:– Identifies areas of the system that are projected to have
inadequate resources and/or reliability problems– Provides a timetable for when new resources need to be
available– Signals where investment in energy infrastructure is
most valuable– Short-term fixes are costly
“The objective is to have a plan that adequately meets projected system and local needs.” (RTEP 04)
4
Net Generating Capacity 90/10 Load + Operating Reserves
50/50 Load + Operating Reserves
10,000
15,000
20,000
25,000
30,000
35,000
-
5,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Su
mm
er M
egaw
atts
New England’s Capacity Situation Today’s surplus capacity situation will be short-lived
5
Major Concerns
• Transmission investment lags– Transmission constraints
have created load pockets– Threatens regional
reliability
• Certain resources are critical
• Even with planned transmission upgrades, additional resources will be needed
• Existing generation at risk • Fuel diversity
6
Connecticut: Overview
• Capacity is inadequate to serve demand and meet reliability requirements – Special measures (emergency
resources and operating procedures) are needed to keep the lights on now in Southwest Connecticut
• Existing generation is needed to provide bulk power system support
• More than 2,800 MW projected to be operating under reliability agreements in 2005
• Connecticut incurs avoidable costs because of inadequate energy infrastructure
7
Emergency Actions
Southern New England Reinforcement
Current Import Limit
Net Generating Capacity
-
2,000
4,000
6,000
8,000
10,000
12,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Su
mm
er
Me
ga
wa
tts
NOTE: Transmission project in-service dates are subject to delay
Connecticut Capacity Situation
90/10 Peak Load + Reserves
50/50 Peak Load + Reserves
8
-
1,000
2,000
3,000
4,000
5,000
6,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Su
mm
er
Me
ga
wa
tts
Southwest Connecticut Capacity Situation
Emergency Actions
SWCT Phase II
Current Import Limit
Net Generating Capacity
NOTE: Transmission project in-service dates are subject to delay
90/10 Peak Load + Reserves
50/50 Peak Load + Reserves
SWCT Phase I
9
0
250
500
750
1,000
1,250
1,500
>40 31-40 21-30 11-20 0-10
Age of Generators - Years
Ca
pa
cit
y (
MW
)
0%
10%
20%
30%
40%
50%
60%
Pe
rce
nt o
f To
tal C
ap
ac
ity
Megawatt Percent
Age of Generators in Southwest Connecticut
10
Post-Contingency ViolationsCurrent System Thermal Overloads
New Have
n
Stamford
Norwalk
Bridgeport
Milford
11
Wholesale Electricity Price Driver
• Fuel-adjusted wholesale electricity prices in 2003 were the lowest of the last four years– Clearing prices in the wholesale electricity market
rise and fall with changes in fuel costs, particularly for natural gas
• Electricity prices will continue to reflect fuel costs
12
Locational Capacity Market
• Purpose: To get new capacity into areas such as Southwest Connecticut that have limited local resources and limited import capability
• Problem: Energy infrastructure won’t be built in areas where market rules don’t allow for recovery of investments
• Fact: Connecticut is paying significant avoidable costs today for an inefficient power system
• Benefits: Locational capacity markets provide greater incentives for alternative resources (distributed generation, demand response, conservation)
13
Conclusions and Required Actions
• Capacity in Connecticut is inadequate to serve demand reliably– Special measures keep the
lights on now in Southwest Connecticut
• Timely approval and operation of transmission infrastructure is needed
• Market enhancements are needed to encourage investment where it is needed:– New generation resources– Re-powering of older units – Increased demand response
and conservation