As the polar vortex sent temperatures plunging below zero last year, the workers who run the regional electrical grid were scrambling to avoid a blackout.
Now PJM Interconnection, which delivers power to more than 61 million homes in 13 states and the District of Columbia, is seeking federal approval for changes it believes would reduce the risk of power cuts — but would increase customers' electricity bills.
The grid operator says the need for change will grow more urgent in the coming years, as natural gas surpasses coal as the dominant means of generating electricity. Power plants that rely on natural gas are less reliable during cold snaps.
"We need to do everything we can to preserve the reliability of power supplies, and we need to do it now so that it's in place when we need it," said Ray Dotter, a spokesman for PJM.
Chicago-based Exelon, the parent company of Baltimore Gas and Electric Co., is backing PJM's proposal. Exelon cites a consultant's report that a blackout would become "unavoidable" in the next few years if the region experienced another cold snap like last year's.
Exelon, the largest owner and operator of nuclear power plants in the United States, would also benefit financially from the proposal, which would reward the most reliable power producers and penalize the least reliable. During the polar vortex, nuclear energy proved the most reliable source of electricity.
Consumer advocates are skeptical of the proposal — and of the dire warnings. Some say more study is needed.
"It will have an adverse impact on customer bills, since it will greatly increase the cost of capacity without any assurance of real reliability benefits to justify the cost," said Maryland People's Counsel Paula M. Carmody. "Steps have already been taken to address many of the problems that occurred last winter during the polar vortex, and we don't believe this dramatic change is warranted, particularly in the short term, at such a cost."
A column of cold air from the Arctic spread down into the Eastern and Central United States last January. Wind chills reached 40 degrees below zero in parts of Western Maryland and 15 degrees below zero in Baltimore. On Jan. 7, electrical demand rose to a winter record while 22 percent of generation was knocked offline.
Coal, fuel lines and equipment froze in the bitter cold. The natural gas supply became so tight that some generators couldn't procure enough fuel to start up. Meanwhile, customers with variable-rate electricity contracts saw their bills triple or quadruple.
PJM says it was forced to take emergency measures to prevent a brownout or blackout and asked customers to voluntarily reduce their usage. PJM officials say some of the problems that arose last year — such as the disorganized scheduling of natural gas delivery, for example — have been addressed. They say they believe the grid can meet this year's demand.
"We think it's serious and something needs to be done to ensure the reliability of power supplies, but we're not at a point of saying that the power supply wouldn't be reliable," Dotter said. "We are concerned with the next couple of years. Not this current winter, but the following winter."
The grid operator needs approval from the Federal Energy Regulatory Commission before it may reward reliable generators with money that would be taken from unreliable generators. PJM says the change would provide an incentive for generators to make infrastructure improvements that would increase reliability.
PJM says the change would add about $2 to $3 a month to customers' bills, but would also leave them less susceptible to costly spikes during extreme weather.
In written comments filed with FERC, consumer advocacy representatives in states including Maryland, New Jersey and Virginia said the proposal "goes beyond what is necessary, is likely to be unacceptably costly, and poses a grave potential for resource owners to exercise market power."
It's not clear whether rewards for reliable performance would be passed on to consumers. Paul Elsberg, an Exelon spokesman, said it would be a "guessing game to speculate how it will impact generators or electric rates."
Elsberg wrote in an email that the polar vortex "exposed clear flaws ... that need to be fixed to prevent future reliability crises."
Northbridge, a consulting group for Exelon, said PJM "was forced to rely on a combination of luck" and procuring power from other regional grid operators to avoid a blackout. That luck included greater-than-usual wind production during part of the cold snap.
Dotter said a recent court ruling has also called into question PJM's ability to reward customers financially for reducing their usage during extreme peaks, and PJM is concerned it could place further stress on the grid.
Dotter said power plants capable of generating a combined 8,000 to 10,000 megawatts — enough to power 6.4 million to 8 million homes — are expected to retire in the next year. Most will be coal-powered plants, because of more stringent federal environmental regulations and competition from cheaper natural gas.
New plants — most of them powered by natural gas — are expected to come online, but PJM is concerned about the timing. The grid operator is seeking approval from the FERC to pay some generators to delay their retirement.
The trend toward a greater reliance on natural gas for energy is expected to continue. During the polar vortex, PJM says, it was responsible for nearly half of the loss of power. Meanwhile, nuclear plants were operating at 96 percent of their capacity.
"Due to a changing mix of generation sources, we believe there is a high and very real risk of reliability issues during extreme weather in the next few years unless urgent action is taken," Elsberg said.
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