NERC, PJM Express Concerns about Winter Power Outlook

Temperatures are beginning to fall and the the winter heating season is just ahead. The North American Electric Reliability Corp. (NERC) recently issued a statement that it “it remains concerned about maintaining sufficient natural gas supplies to address extreme weather conditions."

NERC is a non-profit international regulatory authority that oversees the reliability of the North American electric grid to ensure that power is available consistently and even during periods of extreme weather. NERC is urging all utility-related entities, from natural gas producers to power plant operators to utility providers to prepare for extreme cold scenarios to ensure reliable electric supply.

The National Weather Service preliminary winter outlook indicates a greater than 35% chance that temperatures will be colder than normal this winter due to expected La Nina conditions. In Pennsylvania, natural gas is the fuel used to generate 59% of the electricity, followed by nuclear with 31%, according to the Pa. Independent Fiscal Office (IFO).

The NERC statement noted that this December is the two-year anniversary of Winter Storm Elliott, which gripped much of the eastern U.S. is record cold temperatures on Dec. 23-24, 2022. That led to a sharp rise in electricity demand for heating, widespread power outages, and stress on the PJM grid system that regulates electric transmission in 13 Mid-Atlantic states.

Much of “unprecedented, unplanned generation unit losses” totaling about 90,500 megawatts was due to disruption in the natural gas supply as pipeline pressures dropped and valves and other equipment froze up in the extreme cold. Natural gas production in the Marcellus and Utica formations in the Appalachian region was most affected, with production dropping by 23% to 54%.

NERC conducted a study on the causes of the event and made a number of recommendations for actions that should be taken to prevent similar failures during future extreme winter weather. That report was released almost a year ago.

Among those actions are cold weather reliability improvements for power generators and natural gas infrastructure, as well as for the energy grid in general. The report also stated that congressional and state legislation or regulation is needed to establish reliability rules for natural gas infrastructure to ensure cold weather operation. There is now no entity charged with ensuring the reliability of the natural gas infrastructure, which is the largest fuel source for power generation in the U.S.

As the winter season approaches, another concern is that gas production in the Marcellus has dropped significantly over the past year due to low gas prices. The IFO reported that second-quarter natural gas production dropped to its lowest level since the third quarter of 2020. The number of new wells spud in the second quarter was just 63, the lowest since 2008’s first quarter.

“Drillers have likely cut back in response to very low average prices and high inventory levels,” the report states. However, stored natural gas inventories are high because of last year’s mild winter, the report also notes.

PJM Interconnection, the grid operator for 13 states including Pennsylvania, and Washington, D.C., is forecasting that it has adequate resources for this winter under “expected conditions,” but noted that it faces challenges as its reserve power continues to shrink as demand increases, fossil fuel power plants shut down, and new projects are slow to come online. Its' forecast also mentions Winter Storm Elliott, noting that the scenario could happen despite its work to beef up winter preparations.