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December 18th, 2015

Winter Reliability 2015: Addressing Limited Natural Gas in New England

by Andrew Price, President & COO

Pursuant to order of the Federal Energy Regulatory Commission, ISO-NE will continue its Winter Reliability Program for the upcoming 2015-2016 winter season in substantially the same form as the 2014-15 program

PROGRAM OVERVIEW

ISO-NE is estimating the charge for this program during the 2015-2016 winter season will be approximately $0.0025/kWh, which is the same as the rate for 2014-15. The Winter Reliability Program will run from December 1, 2015 to February 29, 2016.  Those customers whose contracts do not specifically include the Winter Reliability Program in the price should be prepared to see this charge on their monthly invoices for those three months.

HOW IT WORKS

This program, first implemented in the 2013-14 winter, was created to address concerns that the limited natural gas availability in the region due to insufficient natural gas pipeline capacity poses a serious threat to the reliability of the electric grid, especially on the coldest days during the winter.  The program provides incentives to generators to ensure that ISO-NE is prepared to meet consumer demand for electricity. Under the program, compensation is paid for: (1) oil and dual-fuel electricity generators to increase oil inventories to make sure that they have oil on-hand when they are required to run, (2) natural-gas-fired generators to contract for liquefied natural gas (LNG) for the same reason, and (3) new demand response resources to be available.  The costs of the Winter Reliability Program will be charged to all retail suppliers (including those utilities in New England that offer standard offer or default service to customers) based on the amount of retail load the supplier serves. ISO-NE will utilize this model for the next three winters through March 15, 2018, at which time a permanent performance-based incentive program will go into effect.  This won't end the problem, it will just change the way in which generators will be permitted to recover reliability costs.

WILL I BE AFFECTED?

Most electricity suppliers are invoking their Change-In-Law provision to pass this cost through to their customers.  Some customers may already have Winter Reliability included in their fixed price (if so, this would be noted in CES analyses and supplier contracts), and thus, as noted earlier, will not see an added charge.  Please consult your CES account manager if you have any questions on whether this charge is included in your electricity price or will be a pass through charge.

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