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All regions of the United States will have adequate electric capacity reserves for the coming summer, according to Federal Energy Regulatory Commission staff.

FERC said all regions of the United States will have adequate electric capacity reserves. (Photo By: Adam Dodd)

However, staff forecast a wide regional variation in forward price differentials. Compared with this time last year, 2010 prices are mixed, according to a May 20 briefing on their Summer 2010 Energy Market and Reliability Assessment.

At the beginning of May, “July and August forward electricity prices were 38 percent higher in the Northwest … and 1 percent higher in PJM,” FERC was informed. There are two reasons for the wide difference, staff indicated: changes in natural gas market dynamics and expectations of sharply decreased hydro generation in the Northwest.

Staff said that the winter snowpack in the Pacific Northwest was 70 percent of the historical average, with runoffs predicted to be the lowest since 2001.

Increased gas demand for summer generation in the Northwest would also put upward pressure on gas prices, staff added.

In terms of supply adequacy, the assessment noted, “new market structures, moderated demand due to the recession and the availability of new gas-fired capacity to meet the generation shortfall should reduce the risk of a general market dysfunction.”

On the supply side, FERC staff noted the North American Electric Reliability Corporation’s projection that summer installed nameplate wind capacity would rise by about 25 percent, to almost 34,000 MW. However, it said, average on-peak wind capacity for the summer is forecast at 12.1 percent of nameplate capacity, a decrease from 2009’s 15.2 percent.

FERC reported that despite an early projection of a 9 percent drop in the demand-side management available for the coming summer, it expected that 2010’s on-peak demand response forecast would be comparable to 2009’s.

Tags: Federal Energy Regulatory Commission, Trends Reports and Analyses