FERC Chairman Urges Northeast Generators to Buy Fuel Before Winter
(Reuters) — U.S. Federal Energy Regulatory Commissioner (FERC) Richard Glick urged power generators in the Northeast to buy enough fuel for the winter as global supply shortfalls have caused oil and gas prices to soar.
"I implore all entities with capacity supply obligations in the (Northeast) to take all necessary measures to ensure they meet their commitment to serve load this winter," Glick said in a tweet.
"This includes arranging fuel contracts (and) starting the winter with sufficient supply."
His comments followed FERC's release of an assessment on Thursday that warned extreme cold could cause shortages and price spikes in New England and New York because they are heavily dependent on gas for power.
Rising demand for energy around the world this year has already caused shortages of coal, gas and oil, that have resulted in power blackouts in China.
Gas prices in Europe and Asia have soared to record highs as utilities have competed for LNG exports to refill stockpiles before the winter heating season.
FERC noted gas futures in New England for January-February 2022 were trading over $21 per million British thermal units, up sharply from $6.78 in January-February 2021 and a five-year (2017-2021) average of $5.79.
FERC expects gas-fired plants will generate about 52% of New England's power and 47% in New York this winter.
Glick told utilities to line up fuel supplies because the Northeast does not have enough gas pipeline capacity for both heating and power generation on the coldest days.
"Winter is a challenging season," ISO New England spokesperson Ellen Foley said, noting "We would expect to see higher electricity prices ... this winter due to higher fuel prices, relative to recent years."
She said the ISO, which operates the region's power grid, was in regular contact with generators and pipeline operators to check on fuel inventories and pipeline status to "identify potential energy shortfalls early enough to allow for appropriate action."
Many power plants burn oil instead of gas, but oil is usually more expensive and needs to be stockpiled.
FERC also noted New England gas prices were soaring for the winter because the region gets some gas from LNG, which is trading at record levels.
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