PA Environment Digest Blog: PUC Invites Stakeholder Comments On The Issue Of The Adequacy Of Electricity Supplies In Pennsylvania

As a follow-up to a November 25 Technical Conference held by the Public Utility Commission, the Commission is inviting comments from all stakeholders on the adequacy of electricity supplies in Pennsylvania. The deadline is January 9. [Docket No. M-2024-3051988]

The PUC is gathering information and solutions to the problem of dramatically increasing electricity demand in the PJM electric grid region from data centers and bitcoin mining operations at a time when traditional coal-fired and other thermal baseload generation units are retiring and not being replaced quickly enough with renewables, storage and other generation to address existing and future electricity demand.

These trends are raising concerns about electric grid reliability and cost to energy consumers, in particular during the more frequent extreme weather conditions being experienced due to climate change.

In its November 15 winter reliability assessment, the North American Electric Reliability Corporation expressed significant concerns about natural gas-fired generation in particular saying natural gas electric generation “is threatened this winter by ongoing concerns with natural gas production and delivery in extreme conditions and a potential regional pipeline capacity issue in the US Mid-Atlantic and Northeast.” Read more here.

PUC Questions

The PUC’s Technical Conference asked panelists to address three issues--

-- What are the right mix of resources and how do we get them online? Will effective load carrying capacity (ELCC), properly designed, accomplish this?

Click Here for a video of opening comments and this session.

-- How do we facilitate completion of the construction of those generation resources?

Click Here for a video of this session.

-- What can the PUC do to ensure resource adequacy for electric distribution customers?

Click Here for a video of this session.

Any questions regarding this Technical Conference should be directed to: PCRATechConference@pa.gov.

Submitting Comments To PUC

Comments should be submitted to Docket No. M-2024-3051988. They may be filed in one of three ways--

-- By efiling with the Secretary of the Commission by opening and using an efiling account through the Commission’s website and accepting eservice;

-- By mail, preferably by overnight delivery to the Secretary of the Commission at 400 North Street, Harrisburg, PA 17120; or

-- By dropping off comments to the Front Desk of the Secretary’s Bureau, 2nd Floor, Keystone Building, 400 North Street, Harrisburg, PA.

More Background

Pennsylvania’s electricity generation lacks the stability and lower costs brought by diversity in our fuel mix. We depend on one fuel to generate 59% of our electricity-- natural gas-- followed by nuclear power-- 31.9%, coal-- 5.4% and 3.7% from other sources. Read more here.

The price of that fuel is set by foreign markets and is heavily influenced by the whims of adversarial nations and dictators. Read more here.

The dramatic spikes in natural gas cost as a result of the Russian war in the Ukraine and international markets now setting the price of gas in Pennsylvania are still being felt in Pennsylvania’s electricity rates, as the Public Utility Commission has repeatedly warned electricity consumers. Read more here.

Currently, in spite of low prices for natural gas, Pennsylvania customers of natural gas utilities are still seeing increases in their rates, for example, Peoples Natural Gas customers will have a 12% increase in their bills, with more coming. Read more here.

On November 25, the PUC warned electric customers of coming changes in their electricity bills starting December 1 that range from a 8.4% decrease in rates to a 31.2% increase. Read more here.

The upward pressure on natural gas prices is expected to increase as federal policies change on LNG gas exports.

On November 25, Public Citizen released a new report saying Pennsylvania’s households, businesses, and owners of electric power plants could pay up to $16 billion more because of higher natural gas prices between 2035 to 2050 if the new Republican Administration approves new gas export facility permits put on hold by the Biden Administration. Read more here.

The impact of all these trends can be seen in the last PJM electricity capacity auction.

In July, the PJM Interconnection auction for wholesale electricity generation capacity to be delivered in 2025-26 resulted in a 933% increase in electricity costs over 2024-25. Read more here.

PJM said one of the factors in raising prices was improved risk modeling for extreme weather and accreditation that more accurately values each resource’s contribution to reliability.

In plain language that means accurately factoring in the potential unreliability of natural gas, among other factors, on which we depend for 59% of our electric generation.

In September, Sen. Gene Yaw (R-Lycoming) announced plans to add more gas-fired electric generation through a taxpayer-funded PA Baseload Energy Development Fund based on a Texas model. Read more here.

However, developers of electric generation facilities at the PUC Technical Conference said given Pennsylvania’s position in the middle of increased electricity demand, taxpayer-funded support to develop facilities probably will not be needed.

38,000 MW of renewable electric generation and energy storage has already been approved by the PJM for connection to the electric grid. Read more here.

However, on September 26, Utility Dive reported concerns by PJM that these projects are not being built for a variety of reasons including procuring equipment, local opposition and financing obstacles.

Will We Have Enough Gas?

Pennsylvania natural gas producers like EQT, CNX Resources, Coterra Energy, Chesapeake Energy and many others have been deliberately cutting back production-- EQT alone by 1 billion cubic feet per day-- in an attempt to raise natural gas prices.

From August 23 to now, Baker Hughes continues to report the number of shale gas drilling rigs in Pennsylvania dropped significantly from 21 to 15 on November 27-- a 28% decline.

Between 75% and 80% of the shale gas produced in Pennsylvania is used outside the state and exported to other countries. Read more here.

In November of 2023, Pittsburgh-based EQT Corporation, the largest producer of natural gas in the US, relaunched its "Unleash” LNG Exports initiative that argued the US "has a duty to provide” natural gas to countries like China because they don't have natural gas of their own. Read more here. Read more here.

On February 28 of this year, Ohio US Senator Sherrod Brown and Oregon US Senator Jeff Merkley introduced the Protecting American Households from Rising Energy Costs Act, legislation that would ban the export of crude oil or liquefied natural gas (LNG) to our biggest adversaries: China, Russia, Iran, and North Korea. Read more here.

LNG gas export capacity will double by 2028 resulting in a harder link to international markets and often higher prices with its resulting impacts on Pennsylvania consumers. Read more here.

Delay In Next PJM Auction

On October 11, Utility Dive reported PJM will be delaying the next power auction for “about six months” to give it time to draft more changes to its capacity market auction system. The next auction was originally planned for December.

PJM’s Forecast

PJM analyzes the expected demand for electricity, weather predictions and other factors to develop its forecast for winter operations.

PJM's ongoing Cold Weather Preparation Guideline and Checklist for generation owners includes everything from increasing staffing for weather emergencies to performing required maintenance activities to prepare equipment for winter conditions.

This checklist is mandatory.

Each year, PJM performs winter readiness assessments in advance of the cold weather months, collecting data on fuel inventory, supply and delivery characteristics, emissions limitations, and minimum operating temperatures.

PJM meets with federal and state regulators and neighboring systems to review winter preparations.

PJM also conducts weekly operational review meetings with major natural gas pipeline operators serving generators in the PJM footprint to coordinate operations with the pipelines that supply a large portion of the gas generation fleet.

PJM and its members also conduct a cold weather operations drill ahead of each winter.

Additionally, ahead of this winter, PJM will schedule site visits to generation resources along with ReliabilityFirst and SERC, two of the six regional organizations that audit reliability standards on behalf of the North American Electric Reliability Corporation (NERC).

In 2023, PJM and the Independent Market Monitor developed and published guidance for generators (PDF) on how best to provide timely and accurate information about their operating parameters and availability during periods of natural gas pipeline operating restrictions.

Click Here for a copy of PJM’s Winter Outlook which concluded there would be adequate power supplies available under normal conditions.

(Written by David Hess, Former DEP Secretary.)

Resource Links - Electric Grid:

-- Gov. Shapiro, Joins 4 Other Governors To Call On PJM To Reform Its Electric Generating Capacity Auction Rules To Prevent Billions Of Dollars In 'Unnecessary’ Costs To Their Residents, Businesses [PaEN]

-- PJM CEO Expresses Concern About Electric Generating Capacity: Higher Prices Have Incentivized Some Generators, But Building Gas Generators Has Slowed, Permitting, Supply Chain Issues Hamper Renewables [PaEN]

-- Utility Dive: North American Electric Reliability Corp: Natural Gas Electric Generation Is Threatened This Winter By Ongoing Concerns About Gas Production, Delivery In Extreme Weather Conditions [PaEN]

-- PJM Interconnection Winter Outlook: Adequate Power Supplies Available Under Normal Conditions; PJM Delays Next Power Auction After Prices Spike [PaEN]

-- PJM Electricity Auction Price 9 Times Higher Than Previous Auction-- $269.92/MW-Day For 2025/26 Delivery Compared To $28.92/MW-Day In 2024-25; Extreme Weather Risk Big Factor [PaEN]

-- PennFuture: Dramatic PJM Electricity Price Increases Due To Forced Outages Of Gas Power Plants; Huge Backlog Of New Generation Projects; Demand Growth Driven By Data Centers, Cryptocurrency Mining [PaEN]

-- Natural Resources Defense Council: The Cost Of Slow-Walking Clean Energy Can Be Seen In Latest PJM Electricity Prices [PaEN]

-- Spotlight PA: No One Is Using $2.6 Billion Hydrogen, Natural Gas Tax Credit, Shapiro Wants To Rewrite The Law To Boost Electricity Production

-- Washington & Jefferson College Center For Energy Policy & Management: Distributed Energy Resources Can Provide Benefits For Electric Grid