New England Roundtable Fuel Diversity Issues in New England ISO-NE Phase II Report April 12, 2002 Richard Levitan Levitan & Associates, Inc.
Historical Energy Production by Fuel Type 1990 1995 2000 33.4% 37,489 GWh Nuclear 31% 35,715 GWh 26.8% 34,345 GWh 15% 16,876 GWh Coal 15.5% 17,892 GWh 19,769 GWh 5.5% 6,128 GWh Gas 17.9% 20,596 GWh 18.5% 23,710 GWh 30.9% 34,689 GWh Oil 10% 11,426 GWh 12.9% 16,485 GWh 112,500 Total 115,400 127,500 ISO-NE ** “Other” includes hydro, pumped storage, and net interchange.
Age of New England Conventional Steam Units (Winter) Old plants: Blackstone 1, constructed in 1930, 9 MW West Springfield 1, constructed in 1949, 49 MW Holyoke/Cabot 6, constructed in 1949, 6 MW Holyoke/Cabot 8, constructed in 1949, 9 MW In 1952, 261 MW were added with West Springfield 2, Salem Harbor 1 and 2, and Schiller 4. The 1960s and 1970s saw the addition of over 4000 MW of new generation each decade. ISO-NE CELT Report 2002
Average / Peak Loads in New England 30,000 25,000 20,000 MW 15,000 Peak Load Average New England’s peak electricity demand in the summer of 2001 shattered previous record electricity use. The summer peak demand of 24,967 MW eclipsed the prior record of 22,544 MW set in July 1999. [As shown in later slides, New England’s power plant building boom is expected to result in total generation additions of 10,766 MW (Reference Case) and as much as 12,542 MW (High Case) over the period 1999-2005 to meet this growing demand.] Load 10,000 5,000 - Feb-01 Apr-01 Jun-01 Aug-01 Oct-01 Dec-01 Feb-02
Average / Peak Loads in New England 30,000 25,000 20,000 Peak Load MW 15,000 Average Load NEPOOL Capacity, Winter 2000-2001 Coal Steam = 2709 MW + Hydro = 1389 MW + Nuclear = 4395 MW 8493 MW + NUGs = 3948 MW (non-participant hydro & thermal) 12,441 MW Oil-fired and oil generation (steam units) = 7,409 MW 10,000 5,000 - Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- 01 01 01 01 01 01 01 01 01 01 01 02 02
Net Interchange in ISO-NE
5 x 16 Spark-Spreads in New England Spark Spread = Power Markets Weekly On Peak index Monthly Boston City Gate Monthly Boston City Gate=average of Bloomberg weekly Volatility increased after market opening in April ’99 New CC’s would have been in the money for 5x16’s except in Jan. 2000 and Dec. 2000 Existing steam plants (Heat Rate > 10,000) have material margins (spark spread > 12,000) only about 1/3 of the 5x16 blocks since market opened Power Markets Week, Bloomberg
Recent Natural Gas and Residual Fuel Oil Prices 10.00 9.00 8.00 7.00 6.00 $/MMBtu Gas (Henry Hub) 5.00 RFO 0.3% (NYH) 4.00 At its maximum, the Henry Hub price was $9.13 in Jan. ’01; the price of oil at that time was $4.74. The price of oil hit its peak in Sep. ’00, at $5.70. 3.00 2.00 1.00 0.00 Jan- Mar- May- Jul- Sep- Nov- Jan- Mar- May- Jul- Sep- Nov- 00 00 00 00 00 00 01 01 01 01 01 01 Natural Gas Week
Forecast of Energy Production by Fuel Type 2002 2006 2010 Nuclear 25% 21% 20% Coal 15% 13% Gas 32% 50% 55% Oil 10% 1% 3% ** All nuclear units have applied for license renewals, so none will be going offline through 2010.
ISO-NE Phase II Gas Study Study time frame: Winter 2001-02; Winter 2002-03; Winter 2004-05 Incorporate new pipeline projects in supply mix Revise Reference and High Case natural gas demands Quantify amount of “at-risk” gas-fired generation Conduct steady-state and transient electric and gas system contingencies
Merchant Plant Capacity Additions
Merchant Plant Entry in New England
Phase II Steady-State Modeling Results Winter 2002 Peak Day At-Risk 1,352 MW Winter 2002-03 Peak Day At-Risk 3,101 MW Winter 2004-05 Peak Day At-Risk 2,814 MW No delivery constraints in any summer thru ‘05 Mitigation through distillate oil, in particular
Contingency: Postulated Line Break on Algonquin Transient Analysis 4 hours Fore River IDC Bellingham ANP Bellingham NEA Bellingham 5 hours BURRILLVILLE Cleary Conclusions: Increasing reliance on gas is a logical market response to technology improvements, stringent emissions requirements, and plentiful gas resource base. Intra-day transient effects appear manageable. Lake Road Dighton Manchester 2 hours Canal Tiverton