Analysis: PJM cuts outages, but causes persist

OREANDA-NEWS. March 24, 2015. The operator of the largest US wholesale power market is reporting a significant decrease in forced outage rates in winter 2014-15 but natural gas delivery problems and poor operational performance still removed 12pc of available generation on a particularly cold day last month.

Forced outages totaled 22,800MW on the morning of 20 February, when load peaked at 143,826MW, setting a new wintertime consumption record. But the outage volume was almost half the 40,200MW of capacity lost on 7 January 2014, when PJM came close to a shortfall in operational reserves and deployed 2.3GW of demand response.

Gas-fired plants accounted for 44pc of forced outages on 20 February, or 10GW. About 5.1GW of that total was forced off line for lack of fuel. Most gas-fired plants in PJM rely on interruptible pipeline contracts, exposing them to intraday price volatility and making them dependent on demand by utilities that hold firm pipeline transportation rights.

Almost 9.6GW of coal capacity also was forced off line on 20 February. Gas and coal plants similarly accounted for most outages in January 2014. The PJM members committee is discussing the winter generator performance report during a teleconference today.

Wholesale power prices were much lower this winter compared with last, reflecting declines in natural gas prices. PJM West peak prescheduled prices for 20 February were \\$164/MWh, down from a high of \\$683/MWh in January 2014.

The timing of the 20 February peak load likely helped cap the price spikes. Demand peaked in the hour ended 8am ET, on a Friday, toward the very end of the 24-hour gas scheduling period.

The unusual power and gas price runs in January 2014 occurred during the weekend or holiday scheduling period for natural gas, raising fuel costs.