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Resource Adequacy In New England

Resource Adequacy In New England. Are we putting our heads in the sand? Restructuring Roundtable September 23, 2005. Ken Bekman Advisor to Con Edison Energy. FERC Chairman: Joseph T. Kelliher.

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Resource Adequacy In New England

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  1. Resource Adequacy In New England Are we putting our heads in the sand? Restructuring Roundtable September 23, 2005 Ken Bekman Advisor to Con Edison Energy

  2. FERC Chairman:Joseph T. Kelliher “There is a problem in New England’s wholesale power markets that cannot be ignored, namely, the collapse of generation additions and the threat that poses to reliability…. in New England….. At the same time, demand continues to inexorably grow. Current reserve margins are barely adequate at best, and more severe supply problems threaten just over the horizon. That is the status quo.”

  3. How Does New England Assure Resource Adequacy? • Objective Capability (aka ICAP Requirement) • The amount of Installed Capacity the Load must buy to assure that there is involuntary interruption no more than once in 10 years. • Established using complex probabilistic modeling software • Based on: • Load Forecast • Capacity within ISO Footprint • Assumptions of ability to import from other Control Areas

  4. How Much Capacity is Needed in New England?

  5. “New England Has a Huge Surplus”

  6. Are You Sure?

  7. The Peak Load Day

  8. Do We Have a Problem? • ICAP is valued at zero • Energy Margins are insufficient to maintain going forward costs on oil and gas fired plants including efficient combined cycle technology • Investment in new resources has dried up • Natural Gas prices have risen dramatically • Do the owners of bankrupt or nearly bankrupt companies have sufficient credit to fuel their plants this winter?

  9. Fixing the Problem • Requires recognition that: • the New England Power System has inadequate resources to meet future demand • there is no more time, i.e. structure to promote new investment must be put in place now • there need to be assurancesthat existing resources stay around • new resources will cost large amounts of MONEY BUT • The alternative would be far more costly

  10. Chairman Kelliher “I am concerned that the situation in New England bears an uncomfortable resemblance to the situation facing California in the late 1990’s. One factor in the California crisis, of course, was lack of adequate electricity supply. I do not want to see the California crisis visited upon New England.”

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