PA Environment Digest Blog: 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

On November 15, Utility Dive reported the North American Electric Reliability Corporation said in its Annual Winter Reliability Assessment 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.”

NERC continued, “While the natural gas industry is making progress on commercial practices and voluntary commitments to improve winter preparedness, supplies to electric generators remain vulnerable in extreme cold temperatures in many parts of North America, placing electric reliability at risk.

“As winter approaches, NERC encourages all entities across the gas-electric value chain—from production to the burner tip and the busbar—to take all necessary actions to prepare for extreme cold, keep natural gas flowing, and keep the lights and furnaces on.”

“During recent extreme winter weather events [winter storms Elliott and Uri], each of these areas has experienced or come dangerously close to a shortfall in electricity supply for which fuel availability was a significant factor.

“Because foreseeable extreme cold temperatures have the potential to push the existing natural gas supply infrastructure to maximum capacity again this winter, a shutdown of in-service regional natural gas facilities would endanger grid reliability.”

Colder Winter/Less Gas Production Due To Low Gas Prices

NERC said, “The U.S. Energy Information Administration anticipates a colder winter than last year’s relatively mild winter season, leading to a projection that U.S. households that use natural gas to heat their homes will consume 5% more than last winter.

“In addition, natural gas consumption in the power sector has seen record highs this year.

“The increased consumption of natural gas for power generation combined with the anticipated year-on-year increase in consumption of natural gas for home heating, particularly in the Midwest, comes as lower natural gas prices have had a chilling effect on natural gas production.

“The result of higher consumption and lower production is inventory that is settling closer to average volumes after several years of above-average natural gas stockpiles.”

Winter Preparedness

NERC said, “More generally, concerns over natural gas production issues during cold weather events remain in the Eastern and Western Interconnections.

“As one reporting assessment area has noted, there is (outside of Texas) little to no information to indicate that upstream gas producers, gatherers, and processors have improved winterization of their operations.”

NERC Conclusion

NERC’s winter reliability assessment concluded that all areas of the bulk power system have adequate resources for normal winter peak-load conditions but “more extreme winter conditions extending over a wide area could result in electricity supply and energy shortfalls.”

Click Here for a copy of the NERC Winter Reliability Assessment.

Natural gas producers pushed back on that assessment. Members of the Natural Gas Supply Association “take a multitude of proactive measures to prepare for winter weather so that we can provide safe and reliable service to our customers,” NGSA President and CEO Dena Wiggins said in a statement.

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.

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.

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 14 on November 8-- a 33% 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 norm conditions.

NewsClip:

-- Utility Dive: Natural Gas Supply Is A Bulk Power Reliability Risk This Winter: NERC

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]

-- 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

-- Sen. Yaw To Introduce Bills To Establish PA Baseload Energy Development Fund Based On Texas Model; And Have One Permit For Power Plants [PaEN]