The New York Independent System Operator s 2012 Comprehensive Review of Resource Adequacy

Transcription

1 The New York Independent System Operator s 2012 Comprehensive Review of Resource Adequacy Covering the New York Control Area for the Period Final Report Approved by the NPCC RCC November 27, 2012

2 Caution and Disclaimer The contents of these materials are for information purposes and are provided as is without representation or warranty of any kind, including without limitation, accuracy, completeness or fitness for any particular purposes. The New York Independent System Operator assumes no responsibility to the reader or any other party for the consequences of any errors or omissions. The NYISO may revise these materials at any time in its sole discretion without notice to the reader.

3 Executive Summary The 2012 Comprehensive Review of Resource Adequacy covers the time period of 2013 through The New York Independent System Operator (NYISO) has prepared this Comprehensive Review to comply with the Reliability Assessment Program established by the Northeast Power Coordinating Council (NPCC). This assessment follows the resource adequacy guidelines outlined in NPCC s Regional Reliability Reference Directory #1, Appendix D 1 and supersedes the 2009 Comprehensive Review of Resource Adequacy approved by the Reliability Coordinating Committee (RCC) on March 10, The 2012 Comprehensive Review demonstrates that New York will meet the NPCC resource adequacy criterion of not more than one unplanned disconnection of firm load in ten years or 0.1 days/year on average under a Base Forecast of future system electric loads. Major Findings The findings of this review are based primarily on the results of the 2012 Reliability Needs Assessment (RNA) of the New York bulk power system approved by the NYSIO Board of Directors in September The findings indicate that the anticipated capacity supply (42,361 MW) will exceed a projected 16% Installed Reserve Margin requirement by 2,283 MW. This projected requirement is based on the currently established margin (116%) times the 2017 forecast peak load of 34,550 MW. The primary factors driving this analysis are: Capacity resources modeled for the 2012 Review are about 200 MW less than the 2009 Review. For this review, a total of 1,794 MW of generation is modeled as retired as listed in the 2012 Load and Capacity Data Report 2. This includes 1,006 MW of units confirmed retired prior to the start of this review and 788 MW of units that have submitted notice of their intent to retire during the review period. These retirements have been offset by the addition of 817 MW new generation coming on-line during the review period. The baseline forecast for the 2012 Review is 822 MW higher in 2017 than the load forecast for that year from the 2009 Review. The primary reason for this increase is higher economic growth for the period 2012 through 2017, as compared to the economic growth that was expected for this period in the 2009 review which was developed during the depth of the recession. Special Case Resources (SCRs) projections are about 100 MW less than prior projections New York Comprehensive Review of Resource Adequacy Page 1

4 Major Assumptions Table ES-1 lists the major assumptions modeled in this review. Table ES-2 lists the Loss of Load Expectation (LOLE) results. Table ES-1 Model Assumptions Model Assumptions Assumption Description NPCC Loss Of Load Expectation (LOLE) requirement of Adequacy Criterion not more than one unplanned disconnection of firm load in ten years or 0.1 days/year on average. Reliability Model GE s MARS program Based on 2012 Load and Capacity Data Report adjusted to account for the Energy Efficiency Portfolio Standard load Load Model reduction goals. 11 Zones modeled Load shape for year 2002 utilized. Historical Basis. Weather and economic conditions are Load Uncertainty factored in the analysis. Generating Capacity Additions 817 MWs of nameplate capacity by MW Actual; 788 MW Proposed. All removed from Generating Capacity Retirements model Based on NERC-GADs data (EFORd calculation) and 5 year Unit Availability unit history. As defined per the 2012 RNA study with modifications dictated by the assessment of future transmission Topology system conditions. Emergency transfer limits at transmission interfaces between zones modeled. EOPs that reduce load during emergency conditions to Emergency Operating Procedures (EOP) maintain operating reserves are modeled. 655 MWs of 10 minute synchronized reserves MW Operating Reserve total reserves modeled. Load and Capacity fixed for years 2014 through 2017 per the 2012 RNA study. For Year 2014, the peak load was adjusted to yield an LOLE of approximately 0.10 External Control Areas days/year in External Areas. External Control Areas provide generator, load, transfer limits, and forecast uncertainty data. New York Comprehensive Review of Resource Adequacy Page 2

5 Table ES-2 LOLE Results LOLE Results Year Projected Base Load High Load LOLE Resources (MW) Forecast (MW) Forecast (MW) LOLE ,405 33, , ,361 33, , ,361 34, , ,361 34, , ,361 34, , New York Comprehensive Review of Resource Adequacy Page 3

6 This Page Intentionally Left Blank New York Comprehensive Review of Resource Adequacy Page 4

7 Table of Contents Executive Summary... 1 Major Findings... 1 Major Assumptions... 2 Table of Tables... 6 Table of Figures Introduction Previous Comprehensive Review Comparison of Load and Resources with Previous Review Demand Forecast Resource Adequacy Criterion Statement of Resource Adequacy Criterion Application of the Criteria Capacity Resources to Meet Criteria Planning Coordinator Criterion Resource Adequacy Studies Since the 2009 Review RNA RNA Resource Adequacy Assessment Base Load Forecast Results High Load Forecast Results Impact of Load and Resource Uncertainties Resource Capacity Mix Reliability Impacts from Fuel Supply Mechanism to Mitigate Risk Environmental Impacts Reasonably Available Control Technology for Oxides of Nitrogen (NOx RACT) Best Available Retrofit Technology (BART) Mercury Air Toxics Standard (MATS) Best Technology Available (BTA) New York Comprehensive Review of Resource Adequacy Page 5

8 4.3.5 Cross State Air Pollution Rule (CSAPR) Summary of Environmental Programs A. Resource Reliability Model... A-1 A-1 Load Model... A-1 A-2 Supply Side Resources... A-3 A-3 External Control Areas... A-6 A-4 Variable and Limited Energy Resources... A-7 A-5 Demand Side Resources... A-8 A-6 Modeling of All Resources... A-8 A-7 Other Assumptions... A-8 B. Other Factors... 1 Table of Tables Table ES-1 Model Assumptions... 2 Table ES-2 LOLE Results... 3 Table 1-1 Comparison of Peak Load Forecasts and Capacity Resources from Previous Review... 8 Table 2-1 Emergency Operating Procedures Table 2-2 Capacity Resources to Meet Current Criteria Table 3-1 Base Load Forecast Results Table 3-2 High Load Forecast Results Table 3-3 Unit Additions Table 4-1 Summary of Environmental Impacts Table A-1 Capacity by Type and GWh... A-3 Table A-2 Five-Year Weighted EFORd Values... A-4 Table A-3 Unit Retirements Actual and Proposed... A-6 Table of Figures Figure 1-1 Comparison of Load Forecasts... 8 New York Comprehensive Review of Resource Adequacy Page 6

9 1. Introduction The New York Independent System Operator, formed in 1997 and commencing operations in 1999, is a not-for-profit organization that manages New York s bulk electricity grid, administers the state s competitive wholesale electricity markets, provides system and resource planning for state s bulk power system, and works to advance the technology serving the power system. The organization is governed by an independent Board of Directors and a governance structure made up of committees with market participants and stakeholders. The NYISO is also the regional Reliability Coordinator for the New York Balancing Authority Area of the Northeast Power Coordinating Council. As the Reliability Coordinator, the NYISO is responsible to conduct reliability studies and provide results to NPCC demonstrating that the New York bulk power system complies with NPCC reliability criteria as defined in NPCC s Regional Reliability Reference Directory #1, Design and Operation of the Bulk Power System. The NYISO submits the 2012 Comprehensive Review of Resource Adequacy covering the period 2013 through 2017 to satisfy NPCC requirements. The review follows the guidelines as specified in Appendix D of NPCC s Regional Reliability Reference Directory # Previous Comprehensive Review The RCC approved the 2009 New York Comprehensive Review of Resource Adequacy in March The findings of that review demonstrated that New York would meet the NPCC Resource Adequacy Design Criterion for the period studied under the base case load and resource conditions. 1.2 Comparison of Load and Resources with Previous Review Demand Forecast The electricity forecast is based on projections of New York s economy performed by Moody's Analytics in January The forecast includes detailed projections of employment, output, income and other factors for twenty three regions in New York State. Econometric forecasts were developed for zonal energy using monthly data from 2000 through For each zone, the NYISO estimated an ensemble of econometric models using population, households, economic output, employment, cooling degree days and heating degree days. Each member of the ensemble was evaluated and compared to historic data. The zonal model chosen for the forecast was the one which best represented recent history and the regional growth for that zone. The NYISO also received and evaluated forecasts from Con Edison and LIPA, which were used in combination with the NYISO forecasts developed for Zones H, I, J and K. New York Comprehensive Review of Resource Adequacy Page 7

10 Table 1-1 Comparison of Peak Load Forecasts and Capacity Resources from Previous Review Comparison of Peak Load Forecasts and Capacity Resources with 2009 Comprehensive Review Capacity Resources (MW) Base Case Load Forecast (MW) Year 2009 Comprehensive 2012 Comprehensive 2009 Comprehensive 2012 Comprehensive Delta Review Review Review Review Delta ,586 42, ,494 33, ,536 42, ,594 33, ,361 34, ,361 34, ,361 34,550 Figure 1-1 Comparison of Load Forecasts 36,500 Comparisons of Load Forecasts (MW) 36,000 35,500 35,000 34,500 34,000 33,500 33, Comprehensive Review Base Load Forecast 2009 Comprehensive Review Base Load Forecast 2012 Comprehensive Review High Load Forecast New York Comprehensive Review of Resource Adequacy Page 8

11 2. Resource Adequacy Criterion 2.1 Statement of Resource Adequacy Criterion The NYISO adheres to the NPCC resource adequacy criterion 3, which reads: The probability (or risk) of disconnecting firm load due to resource deficiencies shall be, on average, not more than one day in ten years as determined by studies conducted for each Resource and Planning Coordinator Area. Compliance with this criterion shall be evaluated probabilistically, such that the loss of load expectation (LOLE) of disconnecting firm load due to resource deficiencies shall be, on average, no more than 0.1 day per year. This evaluation shall make due allowance for demand uncertainty, scheduled outages and de-ratings, forced outages and de-ratings, assistance over interconnections with neighboring Planning Coordinator Areas, transmission transfer capabilities, and capacity and/or load relief from available operating procedures. The NYISO also adheres to the New York State Reliability Council (NYSRC) resource adequacy criterion (A-R1), which reads: The NYSRC shall establish the Installed Reserve Margin (IRM) requirement for the NYCA such that the probability (or risk) of disconnecting any firm load due to resource deficiencies shall be, on average, not more than once in ten years. Compliance with these criteria shall be evaluated probabilistically, such that the loss of load expectation (LOLE) of disconnecting firm load due to resource deficiencies shall be, on average, no more than 0.1 day per year. This evaluation shall make due allowance for scheduled outages and de-ratings, forced outages and de-ratings, assistance over interconnections with neighboring control areas, NYS Transmission System transfer capability, and capacity and/or load relief from available operating procedures. The NYSRC criterion is consistent with the NPCC criterion. In addition, NYSRC imposes Installed Capacity Requirements on NYCA Load Serving Entities (LSE) (A-R2), as follows: "LSEs shall be required to procure sufficient resource capacity for the entire NYISO defined obligation procurement period so as to meet the state-wide IRM requirement determined from A-R1. Further, this LSE capacity obligation shall be distributed so as to meet locational ICAP requirements, considering the availability and capability of the NYS Transmission System to maintain the A-R1 reliability requirements." This means that New York State Transmission System capability limitations shall not prevent NYISO from meeting the NYSRC resource adequacy criterion. 3 See NPCC Directory #1 at New York Comprehensive Review of Resource Adequacy Page 9

12 2.2 Application of the Criteria NYSRC uses these criteria to establish the appropriate NYCA installed reserve requirements. According to these criteria, not more than one unplanned disconnection of firm load can occur in a ten year period. However, before a load disconnection will occur, a series of emergency operating procedures (EOP s) will be invoked. These are aimed at either reducing load or increasing capacity. Table 2-1 lists the operating procedures and their respective effect. Table 2-1 Emergency Operating Procedures STEP Procedure Effect Effective MW Value 1 Special Case Resource Load Relief Emergency Demand Response Program Load Relief % Manual Voltage Reduction Load Relief Minute Reserve to zero Allow Operating Reserve to decrease to largest unit capacity % Remote Voltage Reduction Load Relief Voluntary Industrial Curtailment Load Relief General Public Appeals Load Relief 88 8 Emergency Purchases Increase Capacity Varies 9 10-minute Reserve to zero Allow 10-minute reserve to decrease to zero Customer Disconnection Load Relief As needed 2.3 Capacity Resources to Meet Criteria The current approved Installed Reserve Margin requirement for the May 1, 2012 through April 30, 2013 Capability Year is 16.0%. This value is based upon an annual Installed Reserve Margin study report adopted by the NYSRC 4 completed in December, Should the reserve margin requirement remain constant over the Comprehensive Review period, the NYCA would have a minimum excess capacity of 2,283 MWs to meet the current Installed Reserve Margin requirement. Table 2-2 shows the resources necessary to meet the current reserve margin if it were to be extended to cover the study period and the projected resources to be available to meet criteria over the study period. 4 New York Comprehensive Review of Resource Adequacy Page 10

13 Table 2-2 Capacity Resources to Meet Current Criteria Year Load Forecast (MW) Projected Resources (MW) Estimated Resources to meet current criteria (MW) Excess Resources (MW) ,696 Base Load 42,405 39,087 3, ,914 42,361 39,340 3, ,151 42,361 39,615 2, ,345 42,361 39,840 2, ,550 42,361 40,078 2,283 High Load ,320 42,405 39,811 2, ,846 42,361 40,421 1, ,361 42,361 41,019 1, ,791 42,361 41, ,224 42,361 42, Planning Coordinator Criterion The NYCA criterion is the same as the NPCC criterion. 2.5 Resource Adequacy Studies Since the 2009 Review The Comprehensive System Planning Process (CSPP) is the NYISO s biennial ten-year planning process. The CSPP is a multi-phase process. The Reliability Needs Assessment (RNA) evaluates the reliability needs of the New York State Bulk Power Transmission System to identify any factors or issues that might adversely impact the reliability of the system. The Comprehensive Reliability Plan (CRP) provides a process whereby all proposed solutions to identified needs are proposed, evaluated, and planned in a timely manner RNA The 2010 CRP approved by the NYISO Board of Directors in January 2011 indicated that the system was reliable and no solutions were necessary. The primary reasons that no needs were identified in the 2010 RNA were, in comparison with prior years: 1) an increase in generation and transmission facilities, 2) a decrease in the energy forecast due to the Energy Efficiency Portfolio Standard Order (EEPS), and 3) an increase in Special Case Resources (SCRs). New York Comprehensive Review of Resource Adequacy Page 11

14 RNA The 2012 RNA approved by NYISO Board of Directors in September 2012 showed no resource adequacy deficiencies over this review s indentified period ( ) under the base case conditions. The assessment, however, identified potential transmission security violations on BPTF (bulk power transmission facilities) throughout the study period. Some violations occur as early as These violations were revealed by additions made in late 2010 to the NYISO s BPTF list rather than due to any significant system changes since the 2010 RNA. Because Reliability Needs arise in Zones B, C, and G within the first five years of the study period ( ) as a result of identified transmission security violations, the Transmission Owners in those zones must provide Updated Local Transmission Plans or detailed Regulated Backstop Solutions to address these violations. (1) High Load (Econometric Forecast) Scenario The High Load Scenario reveals that reliability violations due to resource deficiencies would occur in 2017 at the higher peak load levels when the high peak load does not account for the projected energy efficiency reductions included in the Base Case. (2) Indian Point Plant Retirement Scenario Reliability violations due to resource deficiencies would occur in 2016 if the Indian Point Plant were to be retired at the latter of the two units current license expiration dates using the Base Case load forecast assumptions. In addition to the LOLE violations, transmission analysis demonstrated thermal violations per applicable Reliability Criteria. Under stress conditions, the voltage performance on the system without Indian Point would be degraded. (3) Coal Plant Retirement Scenario The Coal Plant Retirement Scenario analyzed resource adequacy without any of the existing coal-fired generating units by the end of The results showed that the year of need (showing an LOLE value greater than 0.1) would be 2019, which is outside the scope of this study period. In summary, the NYISO has identified multiple transmission security based Reliability Needs during the ten year RNA study period ( ). There were no identified resource adequacy deficiencies under the base case assumptions for the years 2013 through New York Comprehensive Review of Resource Adequacy Page 12

15 3. Resource Adequacy Assessment 3.1 Base Load Forecast Results Assessment results for the Base Load forecast are summarized in Table 3-1. No LOLE violations occur during the study period. Assuming the current IRM value is projected forward for the study period, Table 3-1 also summarizes the amount of excess capacity resources covering the study period. Table 3-1 Base Load Forecast Results Year Projected Resources to Meet Current Criteria of 16.0 % Reserve Base Load Resources to meet Projected Excess Resources Base Forecast (MW) Current Criteria Resources (MW) (MW) (MW) LOLE ,696 39,087 42,405 3, ,914 39,340 42,361 3, ,151 39,615 42,361 2, ,345 39,840 42,361 2, ,550 40,078 42,361 2, High Load Forecast Results The high peak load forecast excludes the projected energy efficiency reductions included in the Base Case. Assessment results for the High Load forecast are summarized in Table 3-2. An LOLE violation occurs in Table 3-2 High Load Forecast Results Projected Resources to Meet Current Criteria of 16.0 % Reserve High Load Year High Load (MW) Resources to meet Projected Excess Resources Current Criteria Resources (MW) (MW) (MW) LOLE ,320 39,811 42,405 2, ,846 40,421 42,361 1, ,361 41,019 42,361 1, ,791 41,518 42, ,224 42,020 42, New York Comprehensive Review of Resource Adequacy Page 13

16 3.3 Impact of Load and Resource Uncertainties Some uncertainty exists relative to forecasting NYCA loads for any given year. This uncertainty is incorporated in the base case model by using a load forecast probability distribution that is sensitive to different weather and economic conditions. See Appendix A-1.2. Only existing resources and those that have met certain inclusion rules in the NYISO s procedures are modeled. Existing resources are those listed in the 2012 Load and Capacity Data Report. 5 Table 3-3 lists generating units that met criteria for inclusion in the study period. Table 3-3 Unit Additions Unit Additions (MW) Unit Name Total New Units Bayonne Energy 500 Marble River Wind I 83 Marble River Wind II 132 Uprates Nine Mile Point II 96 Munnsville Wind Resource Capacity Mix 4.1 Reliability Impacts from Fuel Supply The NYISO evaluates extreme contingencies as required by the New York State Reliability Council, such as the loss of all transmission circuits on a common right-of-way, or the sudden loss of a fuel delivery system (i.e., gas pipeline contingencies). The NYISO also evaluates extreme system conditions such as extreme weather or loss of gas supply (i.e., shortage). Should natural gas supply shortages arise in New York State in the winter, natural gas fired units could be forced to burn other fuels or curtail operations. Many of the dual-fuel units are the larger and older steam units located in load pockets and would impact reliability needs in multiple ways if they were to retire and if replacement capacity with dual-fuel capability was not available. The real challenge on a going forward basis will be to maintain the benefits that fuel diversity, in particular dual fuel capability, provides today. This will be especially critical in New York City and Long Island which are entirely dependent on oil and gas-fired units, many of which have interruptible gas transportation contracts. In terms of operational strategy, the NYSRC has adopted the following local reliability rule where a single gas facility refers to a pipeline or storage facility: 5 New York Comprehensive Review of Resource Adequacy Page 14

17 I-R3. Loss of Generator Gas Supply (New York City & Long Island) The NYS Bulk Power System shall be operated so that the loss of a single gas facility does not result in the loss of electric load within the New York City and Long Island zones. The greatest risk to fuel supply interruption occurs during the winter months when both natural gas and heating fuel oils are competing to serve electrical and heating loads. Fortunately in New York, peak electrical loads occur during the summer months when demand is approximately 9,000 MWs greater than the winter peak. As such, New York can meet the winter peak of roughly 25,000 26,000 MW with sufficient generation without exposure to significant fuel risks. Even with a forced outage rate of 10%, there is sufficient generation in the low to moderate fuel risk categories to meet the winter electrical peak. On June 25, 2007, FERC Order 698 incorporated by reference NAESB (North American Energy Standards Board) standards to establish communication protocols between interstate pipelines and power plant operators and transmission owners and operators. The NYISO has met this requirement with the establishment of communication systems to receive notices of system events, including OFOs (Operational Flow Orders) from interstate pipelines serving generators in New York, and working with Interstate Pipelines and local distribution companies to identify generators critical to maintaining electric system load and identifying the availability of gas for those units. The NYISO has also established communication systems to send Energy Emergency Alerts to the Interstate Pipelines. The NYISO will also notify Local Distribution Companies in the event of a system alert. These communication protocols are documented in the Attachment BB of the NYISO OATT (Open Access Transmission Tariff). 4.2 Mechanism to Mitigate Risk The most current project schedules are also incorporated into the studies to reflect any potential changes due to economics, permitting and cancellations for resources expected to come on line during the study period. There are no current impacts to reliability due to economic conditions expected. The NYISO monitors, on a quarterly basis, projects identified in an RNA to determine that those projects remain on schedule. The NYISO also monitors progress on the State energy efficiency program implementation, SCR program registration, transmission owners updated plans and other planned projects on the bulk power system. Should the NYISO determine that conditions have changed, it will determine whether market-based solutions that are currently progressing are sufficient to meet resource adequacy and system security needs of the New York bulk power system. If not, the NYISO will address any newly identified reliability need in the subsequent RNA or, if necessary, issue a request for a Gap solution. New York Comprehensive Review of Resource Adequacy Page 15

18 Should extreme conditions result in unanticipated load levels, the NYISO will call on its SCR and EDRP programs and invoke coordinated system operations through NPCC Regional Reliability Reference Directory 2, Emergency Operations. 4.3 Environmental Impacts New York has a long and active history in the development of environmental policies and regulations to govern the permitting, construction and operation of power generation and transmission facilities. Currently New York s standards for permitting new generating facilities are among the most stringent in the nation. The combination of tighter environmental standards, coupled with competitive markets administered by the NYISO since 1999 has resulted in the retirement of older plants equaling approximately 4,000 MW of capacity, and the addition of over 9,300 MW of new efficient generating capacity. In turn, these changes have led to marked reduction of power plant emissions and a significant improvement in the efficiency of the generation fleet. Various environmental initiatives driven by the State and/or Federal regulators are either in place or are pending that will affect the operation of the existing fleet. Since the prior RNA, the United States Environmental Protection Agency (USEPA) has promulgated several regulations that will affect most of the thermal fleet of generators in NYCA. Similarly, the New York State Department of Environmental Conservation (NYSDEC) has undertaken the development of several regulations that will apply to most of the thermal fleet in New York. The control technology retrofit requirements of five environmental initiatives are sufficiently broad in application that certain generator owners may need to address the retirement versus retrofit question. These environmental initiatives are: (i) NYSDEC s Reasonably Available Control Technology for Oxides of Nitrogen (NOx RACT); (ii) Best Available Retrofit Technology (BART) to address regional haze; (iii) Best Technology Available (BTA) for cooling water intake structures; (iv) the USEPA s Mercury and Air Toxics Standards (MATS); and (v) either the Cross State Air Pollution Rule (CSAPR) or its predecessor the Clean Air Interstate Rule (CAIR) addressing interstate transport of criteria air pollutants Reasonably Available Control Technology for Oxides of Nitrogen (NOx RACT) NYS DEC finalized new regulations for the control of emissions of nitrogen oxides (NOx) from fossil fueled power plants (Part 227-2). The regulations establish presumptive emission limits for each type of fossil fueled generator and each fuel used in an electric generator in New York that has a capacity greater than 25 MW. Compliance options include averaging emissions with lower emitting units, fuel switching, and installing emission reduction equipment such as low NOx burners or combustors, selective catalytic reduction units, or retirement. Generators were required to file permit New York Comprehensive Review of Resource Adequacy Page 16

19 applications and a RACT analysis with NYSDEC by January 1, Compliance with approved plans is required by July 1, (1) NOx RACT Impact Assessment The NYISO retained GE to conduct a detailed study about the types and costs of control technology necessary to comply with the proposed regulation. The study found that [a] total of 72 units or 9515 MW of capacity was identified as needing some type of control mechanism or equipment modification to comply with the proposed standard. Capital costs of compliance were estimated to be approximately in the range of $ million. The study concluded that the costs to comply with this regulation would reduce the operating margin for affected generators but taken alone would not generally lead to situations where those margins would become negative. The available plans have been reviewed, but as of this release, the NYISO has not accessed all plans for review. Reviewing the plans that are public, approximately 27,000 MW of capacity are subject to this rule, of which approximately 6,000 MW of capacity are involved in emission reduction projects. Some of these projects are underway, and the balance should be accomplished prior to the July 2014 compliance date Best Available Retrofit Technology (BART) The NYSDEC recently promulgated a new regulation Part 249, Requirements for the Applicability, Analysis, and Installation of Best Available Retrofit Technology (BART) Controls. The regulation applies to fossil fueled electric generating units built between August 7, 1962 and August 7, 1977 and is necessary for New York State to comply with provisions of the federal Clean Air Act that are designed to improve visibility in National Parks. The regulation requires an analysis to determine the impact of an affected unit s emissions on visibility in national parks. If the impacts are greater than a prescribed minimum, then emission reductions must be made at the affected unit. Emissions controls for sulfur dioxide (SO2), nitrogen oxides (NOx) and particulate matter (PM) may be necessary. Compliance Plans were filed with NYSDEC in October The compliance deadline is January USEPA recently announced that several of the submitted plans required additional reductions. (1) BART Impact Assessment The results of the visibility analysis are used to determine the emission reductions that may be necessary for SO2, NOx, and PM. USEPA has New York Comprehensive Review of Resource Adequacy Page 17

20 established a presumptive set of emission limits for 8,600 MW of affected units. The majority of these units are large oil fired units that have gas as an alternate fuel. Many of these units do not have state of the art emission control systems. The NOx control measures for BART generally were consistent with the results of the NOx RACT study. The NYSDEC has established a reasonableness test of $5500/ton reduced. Capital expenditures for this program would be of the same order of magnitude as the NOx RACT program. BART compliance plans were filed with the NYSDEC in October The NYSDEC has reviewed these plans and is in the process of issuing amended Title V stationary source permits. The USEPA must also review and approve these plans. It has announced that two of the proposed plans will need to be revised based on alternative limits that EPA has proposed as being more appropriate. Historic emissions and inventories of installed emission control equipment have been reviewed to estimate the level of additional emission reductions required. Most of the affected capacity can comply with the emission limits with optimum operation of existing environmental control equipment and/or fuel switching. Several small units have chosen to retire, which represents a capacity loss of less than 50 MW. Other plants will achieve the required emission reductions through the use of cleaner fuels, while others are undertaking retrofit projects. Approximately 1,800 MW of capacity may be required to undertake a major emissions reduction project or switch to cleaner fuels. Five units may be required to retrofit environmental control technology. According to the Federal Register (April 25, 2012 pages to 24827), they are Northport 1, 2, 3, & 4 and Danskammer Mercury Air Toxics Standard (MATS) The USEPA announced the final MATs rule in December, The proposed rule previously had been known as the Maximum Achievable Control Technology MACT Rule for Hazardous Air Pollutants (HAPS). The rule establishes limits for acid gases, Hydrogen Chloride (HCl), Hydrogen Fluoride (HF), Mercury (Hg), and Particulate Matter. Alternative limits were also established. MATS limits will apply to coal and/or oil-fired generators. The compliance date is March The NYSDEC may provide an additional year to comply if necessary. Further, reliability critical units can qualify for another year to achieve compliance if the additional year is necessary to complete the retrofitting of emissions control technology or to allow for the alternate reliability improvement project to be completed. New York Comprehensive Review of Resource Adequacy Page 18

21 In addition, the NYSDEC has promulgated Part 246: Mercury Reduction Program for Coal-Fired Electric Utility Steam Generating Units, which establishes emission limitations that are currently in effect in New York to reduce mercury emissions. Phase II of this regulation requires additional reductions for coal fired boilers in The Phase II emission limitations are more stringent than the USEPA MATS limits. (1) MATS Impact Assessment The USEPA announced the final rule for MATS for fossil fired electric generators in December. The regulations apply to coal and oil fueled electric generators greater than 25 MW. Units with 10,300 MW of capacity in New York will be affected by this regulation. The USEPA established a subcategory for limited use oil-fired generators. Units that maintain a capacity factor on oil that is less than 8% will be more lightly regulated. No oil-fired EGUs exceeded the 8% Capacity Factor while firing oil in 2009 and Although these units will remain subject to MATS, mandatory significant emission control retrofit projects are not expected at these units. The coal fired generators subject to MATS are also subject to the NYSDEC Part 246 Phase 2 regulations for limitations on mercury emission. These regulations are more stringent than the USEPA MATS regulations. The review of potential impacts for coal units focused on emissions of particulate matter (PM) and acid gases in the form of HCL. Alternative emission limits are also provided for Non-Hg Metals and SO2. Historic emissions and inventories of installed emission control equipment have been reviewed to estimate the level of additional emission reductions required. With optimum operation of existing environmental control equipment and/or fuel switching, most of the affected coal capacity can comply with the emission limits Best Technology Available (BTA) The NYSDEC has finalized its policy document Best Technology Available (BTA) for Cooling Water Intake Structures. The policy applies to plants with design intake capacity greater than 20 million gallons/day and prescribes reductions in fish mortality. The proposed policy establishes performance goals for new and existing cooling water intake structures. The performance goals call for the use of wet, closed-cycle cooling systems at existing generating facilities. The policy provides some limited relief for plants with historical capacity factors less than 15%. The policy is applied at the time that a plant s State Pollution Discharge Elimination System Permit is renewed, which is theoretically every five years. New York Comprehensive Review of Resource Adequacy Page 19

22 Once the NYSDEC has made a determination of what constitutes BTA for a facility, the Department will consider the cost of the technology to determine if the costs are wholly disproportionate to the environmental benefits to be gained with BTA. (1) BTA Impact Assessment The NYSDEC s BTA policy will require the use of closed cycle cooling systems at some facilities that currently have open cycle cooling systems. Limited relief is available for sites that cannot physically accommodate cooling towers, generators with historical capacity factors below 15%, and where the expense of a closed cooling water system is wholly disproportionate compared to the environmental benefits to be gained. Several sites have gained limited relief. The NYSDEC has made twelve BTA determinations of which two determinations required the use of closed cycle cooling systems. Although the number of impacted MWs is unknown, for study purposes the NYISO shows a range from 4,000 MW to 7,000 MW. This program will require capital investments that are one to two orders of magnitude greater than the cumulative costs for the other environmental initiatives examined. Consequently, the BTA program has the greatest potential to lead to previously unplanned retirements Cross State Air Pollution Rule (CSAPR) 6 The USEPA finalized the CASPR rule in December. The rule is designed to reduce emissions of SO2, Annual NOx and Ozone Season NOx from fossil fueled power plants in 28 central and eastern states. The regulation is implemented through the use of emission allowances and limited emissions trading programs. The regulation establishes emission budgets for each affected state. The emission budget is then divided on a prorata basis determined by historic heat input for existing facilities. There are set asides to provide allowances to new fossil generators. The use of emission allowances is expected to increase offering prices for generation from affected facilities. The final rule was placed under a stay by a federal District Court. But for the action of the courts, the rule would be in effect currently with another reduction in the SO2 cap scheduled for While this rule is currently the subject of litigation, we have chosen to include it in our analysis. 6 A three-judge panel of the United States Court of Appeals for the District of Columbia Circuit vacated, in an order issued August 21, 2012, the final Transport Rule (CSAPR), and the Transport Rule Federal Implementation Plans. The Court remanded the proceeding to the Environmental Protection Agency and ordered it to continue to administer CAIR pending a valid replacement. New York Comprehensive Review of Resource Adequacy Page 20

23 CSAPR is USEPA s revision of the Clean Air Interstate Rule (CAIR) which was vacated by the U.S. Supreme Court. In doing so, the Court ordered that CAIR remain in effect until such time as replacement rule is implemented. In December 2011, when the District Court stayed the CSAPR rule, it ordered that CAIR be reinstated. CAIR as promulgated requires significant reductions in allowable emissions scheduled for Because the federal Clean Air Act provides for reductions in interstate air pollutant transport, it is reasonable to assume that a national interstate program will be in effect for limiting emissions of SO2 and NOx via a cap and trade program in the early part of the ten-year planning horizon. Therefore, the CSAPR rule will be used to evaluate the potential impacts of that program. (1) CSAPR Impact Assessment The CSAPR rule applies to most of the fossil fueled fleet with nameplate capacity greater than 25 MW. The rule will require the use of allowances in numbers equivalent to actual emissions for SO2, Annual NOx, and for Ozone Season NOx. The budget for each of the states in the program has been established by the USEPA through the use of long range transport models to identify sources and sinks for impact of emissions on areas in other states. The budget of allowances for each of the three categories is distributed on a pro-rata basis developed on historic heat input at affected units. A small setaside is established for new units and recently retired units to continue to receive allowances for a limited time period. The rule calls for a two phase reduction of SO2, while the limits for Annual NOx and Ozone Season NOx are fixed. The program limits the amount of allowances that can be obtained through trading with generator owners in other states. The total of the budget plus traded allowances is known as the Assurance Level. Should a state s emissions exceed the Assurance Level, two additional allowances would need to be surrendered for the excess emissions. This penalty would be prorated across all emitters. Historic emissions and inventories of installed emission control equipment have been reviewed to estimate the level of additional emission reductions required. With optimum operation of existing environmental control equipment and/or fuel switching, New York State should be able to operate within the Assurance Level Summary of Environmental Programs Table 4-1 below summarizes the new environmental requirements that were known to come into effect in the near term and the amounts of capacity that would be affected by each of these regulations. In addition, the quantities of capacity and number of units New York Comprehensive Review of Resource Adequacy Page 21

24 that have announced or are expected to undertake environmental control projects to achieve compliance are also tabulated. Table 4-1 Summary of Environmental Impacts Program Status Compliance Deadline Approximate Capacity Affected Potential Retrofits NOx RACT In effect Jul-14 28,700 MW (294 Units) 6,000 MW (23 Units) BART In effect Jan-14 8,600 MW (19 Units) 1,800 MW (5 Units) MATS In effect April 16, 2015, 2016 or ,000 MW (32 Units) 400 MW (2 Units) BTA In effect Upon Permit Renewal 17,400 MW (42 Units) 4,400 to 7,300 MW CSAPR Implementation is stayed while the rule is in litigation Jan and Jan ,800 MW (162 Units) 2,400 MW (11 Units) New York Comprehensive Review of Resource Adequacy Page 22

25 Appendices

26 A. Resource Reliability Model A-1 Load Model A-1.1 Description of Load Model The New York Control Area (NYCA) is a summer peaking system and its summer peak has grown faster than annual energy and winter peak over this period. Both summer and winter peaks show considerable year-to-year variability due to the influence of peak-producing weather conditions for the seasonal peaks. Annual energy consumption is influenced by weather conditions over an entire year, which is much less variable than peak-producing conditions. The electricity forecast is based on projections of New York s economy performed by Moody's Analytics in January The forecast includes detailed projections of employment, output, income and other factors for twenty three regions in New York State. In June 2008, the New York Public Service Commission issued its Order establishing the Energy Efficiency Portfolio Standard. This proceeding set forth a statewide goal of a cumulative energy reduction of about 26,900 GWh. The NYISO estimates the peak demand impacts to be about a 5,500 MW reduction. This goal is expected to be achieved by contributions from a number of state agencies, power authorities and utilities, as well as from federal codes and building standards. Econometric forecasts were developed for zonal energy using monthly data from 2000 through For each zone, the NYISO estimated an ensemble of econometric models using population, households, economic output, employment, cooling degree days and heating degree days. Each member of the ensemble was evaluated and compared to historic data. The zonal model chosen for the forecast was the one which best represented recent history and the regional growth for that zone. The NYISO also received and evaluated forecasts from Con Edison and LIPA, which were used in combination with the forecasts developed for Zones H, I, J and K. The summer and winter non-coincident and coincident peak forecasts for Zones H, I, J and K were derived from the forecasts submitted to the NYISO by Con Edison and LIPA. For the remaining zones, the NYISO derived the summer and winter coincident peak demands from the zonal energy forecasts by using average zonal weather-normalized load factors from 2000 through In addition to the baseline forecast, the NYISO has high and low forecasts for each zone, representing an 80% confidence interval, using the baseline forecast as the midpoint, with the high and low forecasts based on extreme weather assumptions. New York Comprehensive Review of Resource Adequacy Page A-1

27 The 2002 load shape was compared to load shapes from 1999 through The conclusion was that the 2002 load shape was best suited for this analysis. A-1.2 Load Forecast Uncertainty Some uncertainty exists relative to forecasting NYCA loads for any given year. This uncertainty is incorporated in the base case model by using a load forecast probability distribution that is sensitive to different weather and economic conditions. Recognizing the unique Load Forecast Uncertainty (LFU) of individual NYCA areas, the LFU model is subdivided into four areas: Zones H and I, Zone J (NYC), Zone K (LI), and Zones A-G (the rest of New York State). The process followed in this and in previous years is for the Transmission Owners in Zones H, I, J, and K to provide Load Forecast Uncertainty (LFU) models to the Installed Capacity Subcommittee (ICS) for the TOs respective Transmission Districts. The NYISO develops an LFU model for the rest of the state. As a matter of practice, the NYISO develops its own estimates of LFU for Zones H, I, J, and K, and compares its results to those of the Transmission Owners. A-1.3 External Control Areas The NYCA reliability depends on emergency assistance from its interconnected Control Areas in NPCC and PJM based on reserve sharing agreements with these Areas. Load and capacity models of these Control Areas are therefore represented in the GE-MARS analyses. The load and capacity models for New England (multi-area), Ontario (singlearea), PJM (multi-area), and Quebec (single-area) are based primarily on data contained in the most current NPCC regional model. The primary consideration for developing the final load and capacity models for external areas is to avoid over-dependence on them for emergency capacity support. For this purpose, a rule is applied whereby either the LOLE of each Area cannot be lower than 0.1 days/year LOLE, or its isolated LOLE cannot be lower than that of the NYCA. In other words, the neighboring Areas are assumed to be equally or less reliable than NYCA. Another consideration for developing models for the neighboring Areas is to recognize internal transmission constraints within these Areas that may limit emergency assistance to the NYCA. This recognition is considered implicitly for those Areas that have not supplied internal transmission constraint data. The year 2002 load shape was used in this study for both the NYCA and the neighboring Areas. In order to avoid over-dependence from emergency assistance, the three highest summer load peak days of these Areas are modeled to match the same load sequence as in the NYCA. Another measure to reduce over-dependence from emergency assistance was to remove the EOPs from the external Area models. Also, the assistance New York Comprehensive Review of Resource Adequacy Page A-2

28 from Reliability First Corporation (RFC), with the exception of PJM-Mid Atlantic, and the Maritime Provinces was not considered, therefore, limiting the emergency assistance to the NYCA from the immediate neighboring control areas. A-1.4 Demand Response Special Case Resources (SCRs) constitute electric loads functioning as a Capacity Resource by reducing consumption when called upon. SCRs are deployed for forecast or actual reserve shortages or other emergency conditions. The NYISO s Emergency Demand Response Program Resources are voluntary emergency resources deployed for forecast or actual reserve shortages or other emergency conditions. EDRP resources are modeled in the NYISO s probabilistic resource adequacy planning studies. This assessment held projected levels of Special Case Resources constant from 2013 through The inclusion of Special Case Resources in this manner is an appropriate assumption for planning purposes as these resources can be added or removed with short lead times and are driven by market conditions. A-2 Supply Side Resources A-2.1 Resource Ratings The capacity ratings for thermal units are based on their Dependable Maximum Net Capability (DMNC) test results. The source of DMNC ratings are seasonal tests required by procedures detailed in the NYISO Installed Capacity Manual. Wind and solar units are rated at their nameplate, or full rated value, in the model. The NYCA Load and Capacity Report, issued by the NYISO, is the source of those generating units and their ratings included on the capacity model. The procedure for verifying unit ratings through DMNC testing is detailed in Section 4.2 of the NYISO Installed Capacity Manual. Table A-1 Capacity by Type and GWh Capacity (MW) Capacity (%) Generation (% of GWh) Year Gas 6, Oil 3, Gas & Oil 14, Coal 2, Nuclear 5, Hydro - Pump Storage 1, Hydro 4, Wind 1, Other New York Comprehensive Review of Resource Adequacy Page A-3