Analysis: Retiting coal may tax MISO gas supply
OREANDA-NEWS. February 13, 2015. The projected retirement of coal-fired capacity on the midcontinent's primary electricity grid and its replacement with natural gas may strain midwest pipeline delivery capacity, even though the region has an extensive network of interstate pipeline and storage facilities.
The Midcontinent Independent System Operator (MISO) balancing area is the second largest US wholesale power market, and its midwest region depends on coal for two-thirds of its supply. But gigawatts of coal capacity will retire by April 2016 to comply with federal mercury and air toxics rules. Even more capacity may be forced to shut when the Environmental Protection Agency finalizes and enforces state-specific cuts in power sector CO2 emission rates.
Interstate natural gas pipelines supplying MISO's midwest region could see significant wintertime constraints — with pipeline capacity use exceeding 90pc — even without the CO2 rule, grid staffers said yesterday at the electric and natural gas coordination task force meeting in Carmel, Indiana. Midwest power markets under that scenario would resemble New York City and New England markets of today, in which gas-fired generators in winter compete for fuel supply with utilities that have priority rights to draw gas from pipelines under firm transportation contracts.
The findings are drawn from an ongoing study of gas-electric interdependency prepared by consultancy Levitan Associates on behalf of the Eastern Interconnect Planning Collaborative and with funding from the US Department of Energy.
MISO's zone 2, which covers eastern Wisconsin and Michigan's upper peninsula, will be the hardest hit by possible constraints. PJM's mid-Atlantic region also will see an increasing number of wintertime gas pipeline constraints despite proximity to the Marcellus shale production area, according to that study.
The projections suggest greater wintertime volatility of wholesale power markets in the midwest, matching trends in the northeast US.
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