If winter is bitter, brace for a natural-gas crunch

Such scenarios might seem a distant threat. Winter began mildly, and natural-gas storage caverns are now almost full. Still, hurricane damage continues to block about 6 percent of the nation's gas supply flowing through pipelines north from the Gulf of Mexico. The government reported last week that 32 percent of the Gulf supply remains "shut in" - a loss of 3.2 billion cubic feet per day. That's at the high end of the range the INGAA predicts will be "missing" this winter.

This missing flow of gas could be critical in mid- to late winter, when reserves are drawn down.

"This loss of supply - even if only temporary - is cause for concern," Phillip Wright of Williams Pipeline, the nation's second largest gas transporter, told Congress this month. "It cannot be emphasized enough that storage supplements, but does not replace, natural gas flowing through the interstate pipeline network."

Potential problems exist in New York, where half of the electricity-generating capacity is fueled by natural gas, and Florida, where it is 35 percent. New York's advantage is that two-thirds of its gas-fired generators are "dual-fuel" facilities that can switch to burn oil.

That's not the case in New England, where only about one-third of the gas-fired generators can burn oil as a backup. As a result, the Independent System Operators of New England, which coordinates power delivery and oversees system reliability across the region, is scrambling.

"We're talking to all the New England states about greater fuel diversity to try to develop more than 1,000 megawatts of dual-fuel capacity," says Ken McDonnell, ISO New England spokesman.

Developing new dual-fuel capability, however, takes time. And environmentalists, meanwhile, are protesting moves to lift air-pollution restrictions on dual-fuel power plants that can burn distillate fuel oil. Massachusetts environmental officials are expected to decide soon whether to allow more oil-burning.

In the effort to avoid blackouts, a large hurdle may have just been lowered: utilities' push for profits.

When natural-gas prices have been high during past power crunches, some power companies have elected to sell their gas rather than burn it for electricity. Such "economic outages" occurred in 2004 during one of the sharpest New England cold snaps in years.

On the bitterly cold day of Jan. 14, as winter power demand headed toward a new record, power companies failed to heed grid operators' urgent call to get every functioning power plant in the region online immediately.

As ISO New England battled to prevent blackouts from rolling across the region, nine power plants representing 2,159 megawatts of capacity sat on the sidelines, a post-mortem report on the emergency found. Some apparently were hampered by weather-related problems. But others ignored the plea. With natural-gas prices soaring to 10 times their normal levels, some found it more lucrative to sell their gas contracts than to use them to generate power, experts say.

Though blackouts were averted, the incident prompted the ISO to push for a "last resort requirement" to compel generators to make electricity in an emergency. On Nov. 17, the Federal Energy Regulatory Commission granted the request. It won't solve the power problem. But there will be, as the ISO's lawyer wrote to FERC, "a greater opportunity to avoid load shedding that would place human life and property in jeopardy during a period of frigid cold."

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