Natural gas – often touted by the gas industry and its supporters for its reliability – failed miserably during the 2022 Christmas weekend Winter Storm Elliott in the nation’s largest wholesale electricity market, PJM, and “tested the reliability of much of the Eastern Interconnection.”
The failure also cast doubts on PJM’s important capacity market, designed to prevent against system outages during extreme weather, although PJM was able to maintain overall system reliability despite some localized outages. PJM provides electricity to 13 eastern states and the District of Columbia.
That’s the bottom line from PJM’s analysis of the event, released on Monday. The report found, “When examined over the entire generation fleet, gas generators accounted for 70% of the outages on Dec. 24. Most outages were caused by equipment failure likely resulting from the extreme cold, though broader issues of gas availability also contributed to the outages.”
PJM acknowledged, “Despite numerous refinements to both the capacity market rules and winter preparation requirements that came out of the 2014 Polar Vortex, Winter Storm Uri in 2021, and other recent examples of increasingly extreme weather patterns, Winter Storm Elliott created a convergence of circumstances that strained the grid.”
The mammoth storm led to outages in some of PJM’s neighboring electric systems: “The Southwest Power Pool (SPP) set a new winter peak that day; the Tennessee Valley Authority (TVA) experienced the highest 24-hour electricity demand supplied in its history. PJM exported energy to TVA, Duke Carolinas and Duke Energy Progress before having to curtail most exports during peak conditions in the face of emergency conditions.”
December 24 posed the greatest challenge to PJM. The analysis states, “Complications arose on Dec. 24 resulting from the unanticipated failure of generation resources that were called into the operating capacity on that day. At one point, almost a quarter of the generation capacity – 47,000 MW – was on forced outages. While generators are required to provide updates on their operating parameters, including operating status, ramp times and fuel availability, in 92% of generator outages, PJM operators had an hour’s notice or less – in most cases, PJM was informed of outages when dispatchers called generators to request them to turn on.”
In 2016, PJM adopted changes to its capacity market a result of the 2014 Polar Vortex – “a similar event characterized by extreme cold weather and high forced outage rates.” The 2016 reforms included provisions for penalties for non-performance by generators awarded payments in the capacity market auctions, with the penalties going to generators that performed as promised. PJM said it “estimates there are approximately $1.8 billion in Non-Performance Charges based on the current rules. Those charges are allocated to suppliers that exceeded their committed capacity level.”
Companies hit with penalties are petitioning PJM and the Federal Energy Regulatory Commission for relief. But generators who met their obligations are arguing against relief for those who failed.
PJM’s performance during Elliott prompted several tough critiques of the regional transmission organization’s capacity market, chief among them Federal Energy Regulatory Commissioner Mark Christie and Joseph Bowring, PJM’s independent market monitor. At FERC’s March meeting, Christie said the “capacity reform adopted 9 years ago, after the polar vortex of 2014 was a failed experiment, as we saw during Elliott,” which “came close to rotating outages.” He said the PJM capacity market is on the way to losing 50 gigawatts of capacity by 2030. “Most is dispatchable capacity.”
PJM’s report offers 30 recommendations, in five basic categories:
“• Addressing winter risk with enhancements to market rules, accreditation, forecasting and modeling.
“• Improving generator performance through winterization requirements, unit status reporting and testing/verification.
“• Tackling long-standing gaps in gas-electric coordination, including timing mismatches between gas and electric markets, the liquidity of the gas market on weekends/holidays, and the alignment of the electricity market with gas-scheduling nomination cycles.
“• Evaluating how the Performance Assessment Interval (PAI) system of rewarding or penalizing generator performance is impacted by exports of electricity to other regions, whether excusal rules can be simplified, PAI triggers need to be refined, and if the contributions of Demand Response and Energy Efficiency are accurately valued.
“• Pursuing opportunities with Generation Owners, other members and states to improve education, drilling and communication regarding PJM’s emergency procedures, Call for Conservation and PAIs.”
PJM is holding a teleconference this morning from 9 a.m. to noon on the report from its headquarters in Valley Forge, Pa.
In a related development, Politico reports that the Texas Railroad Commission, which regulates the Lone Star State’s gas companies, has doled out only wrist slaps to gas companies that failed in a deadly 2021 winter storm. The elected commission meted out only $30,500 in fines, mostly for paperwork problems. In contrast, the Electric Reliability Council of Texas, which regulates electric companies, fined six gas-fired generators $900,000, and ordered four of them to invest some $1.2 million to upgrade their facilities.
What accounts for the difference. Politico commented, “Independent observers say the divergent levels of scrutiny for utilities and gas companies is largely because of Texas leaders’ lingering skepticism of renewable energy.” Texas is the nation’s largest oil and gas producer, and also the nation’s largest wind power electric generator, which bailed out the failed gas plants in 2021. But oil and gas, big contributors to Texas politicians (including Railroad Commission members), still get favorable treatment in the state.
–Kennedy Maize
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