New England Resource Adequacy Massachusetts Electricity Restructuring Roundtable
New England Resource Adequacy Massachusetts Electricity Restructuring Roundtable September 23, 2005 Gordon van Welie ISO New England, Chief Executive Officer 1
ISO New England Overview • Real improvements to the region’s electric system – Over $1. 5 B in long-needed 345 k. V transmission projects in four states have siting approval • Massachusetts, Connecticut, Vermont, Maine – Approximately $6 B in private investment – 30% increase in new, cleaner generation • Over 9, 000 MW of new generation – Significant reductions in regional air emissions – Wholesale market efficiencies: Savings $700 M/yr (2000 -2004) • Congestion cost reductions: $170 M/yr – Single, independent point of control over management and outage scheduling of regional transmission system have reduced congestion costs $40 M/yr (2000 -2004) © 2005 ISO New England Inc. 2
Ingredients of Successful Power System 1 • Four pillars of a balanced and reliable power system: 1. Supply: Resources to meet peak demand 2. Transmission: Adequate power delivery system 3. Conservation and Demand Response: Incentives for reduced use 4. Market Structure: Accurate price signals to promote efficient operation and investment • Comprehensive planning provides a roadmap to achieve the four pillars © 2005 ISO New England Inc. 3
Resource Adequacy: System Needs Ten-Year Plan 4
Planning For A Reliable Power System: Regional System Plan (RSP) • ISO-led regional system planning process since 2001 – Comprehensive assessment of power system needs annually • Ten-year planning horizon • Information for market responses – Regular stakeholder meetings – Transmission plan to ensure a reliable system • Backstop to market solutions – Basis for transmission projects eligible for regional funding – Independent analysis informs state siting – Process recognized as one of best in nation (US DOE) © 2005 ISO New England Inc. 5
Recent Operational Experience • New, all-time peak demand record set on July 27, 2005 (26, 921 MW) – Operable Capacity Margin of 739 MW – Led to OP 4 Actions 1 -5, 7 -10, and 12 in SWCT • Load Relief actions estimated at 220 MW – Led to high Real-Time LMPs in NEMA/Boston and CT • Highest Saturday peak load on August 13, 2005 (24, 038 MW) – Had it been a week day, it would have likely been our all-time summer peak • Prices driven by: – Weather and demand – Fuel costs © 2005 ISO New England Inc. 6
Key Findings – RSP 05 • Transmission upgrades must be completed on schedule – Major 345 k. V projects and other upgrades • Greater Connecticut is short of resources now under highdemand conditions • Additional capacity required to reliably meet system-wide demand as early as 2008, and no later than 2010 • Addition of 1, 100 MW of incremental quick-start resources needed now (in Boston and Greater Connecticut) to satisfy CT and systemwide needs • Without increasing dual-fuel capability of gas-fired capacity, system reliability is at risk – Convert 400 MW by winter 2006/7; 250 MW more each year through winter 2008/9; 500 MW more in winter 2009/10 © 2005 ISO New England Inc. 7
Resource Adequacy: Transmission Solutions 8
RSP 05 Projects in Massachusetts • Northeastern Massachusetts (NEMA)/BOSTON – 345 k. V project under construction – Voltage-control issues being addressed – North Shore improvements under construction with long-term plans being finalized • Projects in other parts of Massachusetts – Central Massachusetts Project and Auburn Projects under construction – Improvements made to Cape Cod load pocket (2 nd Canal-Bourne project) and studies for long-term reliability are underway – Springfield and Western MA improvements are needed • Reduce Springfield dependencies on single 345 k. V line and two generators • Reduce CT dependencies on Springfield capabilities © 2005 ISO New England Inc. 9
Transmission Solutions: Status of Major Projects • Progress since 2004 – 18 projects placed in service – 36 new projects added – 272 projects needed • Major 345 k. V projects – Southwest Connecticut Reliability Project – under construction – Southern New England Reinforcement Project – under study – NSTAR 345 k. V Transmission Project – under construction – Northwest Vermont Reliability Project – under construction – Northeast Reliability Interconnect Project – permit applications under review • 2005 Transmission Project Plan Grand Total: $2. 4 - $4. 3 Billion © 2005 ISO New England Inc. 10
Resource Adequacy: Market Solutions 11
Wholesale Market Plan Goals • Efficiently price products and services needed to reliably operate power system • Enable efficient short-term consumption and production decisions • Ensure sufficient long-run investment decisions • Complete the wholesale market design – Capacity Market reform – Ancillary Services Market – Fully integrate demand response • Updated Wholesale Market Plan available in October 2005 © 2005 ISO New England Inc. 12
Criteria for Resource Adequacy Solutions • Objectives – Retain and attract appropriate resources to ensure reliability in all areas of the region – Reduce or eliminate Must-Run contracts that dampen market signals – Continue cap on generator offers in energy market that protect against market power – Ensure that consumers do not pay for bad investment decisions – Ensure resource availability in times of greatest need – Encourage customer participation (demand response) © 2005 ISO New England Inc. 13
New England Needs Action • Completion of Transmission Projects • Reliability of Fuel Supply – Dual fuel capacity in Boston and Connecticut now – LNG supplies • Assurance of Resource Adequacy – – Connecticut needs additional resources now Connecticut and Boston need quick-start generation now Region needs new resources between 2008 and 2010 Need market-based, long-term, resource adequacy solution © 2005 ISO New England Inc. 14
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