16-2 Water

RESPONSE 16-2:

As mentioned, it is very difficult to correlate historical fuel oil burn with natural gas shortages since this will be impacted by generators contracted capacity and where plants are located on the natural gas pipeline system.

One way to explore potential for dual fuel units to switch over to oil is to examine the data from ISO-NE who provided an analysis of historical events that would have been periods when supply shortages would have occurred and possibly triggered “Pay for Performance” penalties. The summary of this data is as follows:

There were 178 events in the 7 year, 4 month study period;

The average event was 29 minutes, the maximum event was 285 minutes;

The majority of events were less than one hour; and

There were only three events greater than two hours.

(www.iso-ne.com/static-assets/documents/markets/othrmkts_data/fcm/doc/opr...)

Note however, that the supply shortage in these instances were not necessarily due to gas supply shortages.

Based on our analysis, there were three recently observed natural gas shortages in the ISO-NE which resulted in duel fired plants using fuel oil:

1. The most severe example where natural gas supply was compromised was what is referred to as the polar vortex in Winter 2013/2014 where the area saw the coldest temperatures observed in two decades. In this instance, duel fuel fired plants of similar size ran for on average maximum 72 hours.
2. The second instance was also due to a cold front that happened in 2015. This resulted in plants of a similar size to CREC running on average a maximum of 68 consecutive hours on fuel oil.
3. This month, Algonquin had to curtail interruptible gas and reduce firm transport to 80% of contracts because of the Oxford Compressor outage. While detailed information is not yet available, it is expected that this could have caused some units to switch from gas to fuel oil.

Invenergy also examined data associated with when plants that have dual fuel capability have fired oil. Invenergy identified all ISO-NE plants with dual fuel capability (“DFC”), and there are 7,052 MW DFC units out of 17,184 MW NG units. Invenergy identified all instances in 2014 and 2015 where the dual fuel units were operated on fuel oil and the duration of the fuel oil run events were:

• On average, Units are running 16 hours.
• When outliers (>100 hr runs) are removed from the data set, the average drops to 8 hours.

More Information is included in Exhibit 1, which includes some graphics around where the dual fuel fired power plants are located in NE, their operating capacity, average consecutive hours run in 2015, maximum consecutive hours run in 2015 and the natural gas pipeline infrastructure.

Some key points on the data included:

1. The plants with high fuel oil usage (based on hours) generally are on or at the end of natural gas lines or laterals off of the main line.
2. DFC plants on the main line have relatively lower number of hours on fuel oil suggesting they are less likely to switch to oil in a gas shortage events based on their superior access to gas.
3. The amount of DFC capable plants is only about 25% of the peak load.

In Exhibit 1, the maps shown of duel fuel units running on oil were built using the Velocity Suite Online application, created by ABB.  Specifically, the ABB Database of Unit Generation & Emissions - Hourly (Standard), which provides unit-level hourly generation and emissions data for fossil-fuel generating units. The hourly data comes from the US EPA (CEMS reporting), the Nuclear Regulatory Commission, the Alberta Electric System Operator and the Ontario IESO.

The CEMS database can be accessed directly from this public website:

https://ampd.epa.gov/ampd/.

DATE:

August 25, 2016