Northeast Prepared for Winter Whacking

Regional Power Planners Have Enough Fuel and Technology

Ken Silverstein | Feb 08, 2013

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The Northeast is expected to get hit with extreme cold and piles of snow this evening. But the electric transmission system will probably hold up. 

Boston and New York State will feel it the most. For all regions of the country, though, it’s about how well they are able to meet their energy needs when the demand for services is at its pinnacle. To do so, they are asking folks to conserve power or to give their utility providers the leeway to help out.

“The development of demand response programs, addition of new generation, and expansion of transmission have contributed to a more reliable system,” says the New York State Independent System Operator in its 2012 annual report. “Growth in the demand for electricity has been trimmed by the effects of recession and investments in energy efficiency, while peak-shaving demand reduction programs have contributed to a surplus in supply.”

Instead of building costly and often contentious new power plants to meet the 100 or so hours a year when energy demand is highest, utilities are turning to their customers to reduce energy usage during these peak hours. Demand response is giving commercial and industrial concerns more insight into the energy that their facilities consume. By knowing this, they can run specific applications at times of the day that are more favorable to the utilities' rate structure.

Changes in consumption patterns could have a huge affect on the electric utility industry, which takes in annually about $224 billion. But forward looking utilities are motivated to control peak load -- a force that controls their generating capacity as well as the cost of their power generation. The Federal Energy Regulatory Commission says that demand response resources contributed 72,000 megawatts last year, or 9.2 percent of the U.S. peak demand.

Enlisting Customers

In the case of New York State, the transmission operator, or the NYISO, says that the state is expected to have sufficient power supplies for years to come. However, the regional planner adds that the state’s infrastructure is aging, requiring various components of it to be upgraded or replaced. It adds that the state has a reserve of 13,000 megawatts to meet the forecasted peak demand this winter.

“Our markets continue to function very well by sending the proper price signals to promote the development and use of the most efficient generation resources,” says NYISO Chief Executive Stephen G. Whitley. “While the abundance and low price of natural gas are major factors in the current price of electricity in New York, our competitive wholesale markets continue to drive efficiency and produce benefits for consumers.”

The need for demand response is more apparent than ever. Much like airlines offer passengers incentives to switch flights when one is overbooked, utilities are paying customers to reduce or to shift their energy use to off-peak hours. Many commercial and industrial customers have flexibility as to when they use power. For example, agricultural customers can often adjust water pumping schedules without adversely affecting their operations. And even retail stores are participating by dimming sections of lights.

The PJM Interconnection, for example, says that demand response will cut peak electricity usage by 11,600 megawatts, or about 8 percent of its total load. Such an energy-saving technique has increased more than five-fold in PJM's Mid Atlantic territory since 2006.

The proliferation of energy-saving tools is becoming more common. Consider: The Midwest Independent System Operator has demand response programs that contribute 8,000 megawatts, or the equivalent of 8 percent of it peak demand. New York and New England, by contrast, have about 2,100 megawatts each of those resources, all according to the North American Electric Reliability Corp.

That's why both utilities and regional transmission organizations are authorizing companies that specialize in demand response technologies to enlist customers who are willing to participate. The Brattle Group is reporting that automated technologies can cut energy consumption by 40 percent during peak demand. Itron, for example, installs smart energy devices -- a technology that it says will gain wider market acceptance because utilities must deliver ever-improving services.

Superior grid-based technologies are cutting into power usage. Over time, though, the nation will need more efficient power plants as well modern transmission services. For now, it appears that the utility asset base, especially in the Northeast, will be able to handle the impending whopping winter storm.

UPDATE: Saturday February 9, 2013 at 9.01 a.m.: 650,000 New Englanders without power after two feet of snow fell on parts of the region.

EnergyBiz Insider has been awarded the Gold for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been honored as one of MIN’s Most Intriguing People in Media.

Twitter: @Ken_Silverstein

energybizinsider@energycentral.com

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