Chanel Chasanov, FERC:
Good morning, Chairman and Commissioners,
Recent extreme cold weather events across North America have shown the need for the natural gas and electric systems, and the underlying infrastructure that supports their operations, to continue to prepare for extreme cold weather. Over the past few years, the Commission, NERC, its Regional Entities, as well as the natural gas and electric industries have focused on improving winter weather preparedness and operations in response to these cold weather events. This is important as severe arctic storms have the potential to significantly impact system reliability and have occurred with increasing frequency. Joint FERC, NERC, and Regional Entity Reports on Winter Storms Uri and Elliott, and the recent Blackstart Availability Study each resulted in recommendations aimed at addressing the ongoing reliability risks posed by extreme cold weather. Next slide.
We focus now on Winter Storms Gerri and Heather, which moved across North America from January 10th to January 17th, 2024. In February, the Commission, NERC, and its Regional Entities launched a review of natural gas and electric performance during these arctic storms. Our review found that both industries largely operated without major incident, though some entities did experience challenges. In brief, the joint team observed that there was zero system operator initiated load shed during Gerri and Heather. Further, the natural gas and electric industries improved communication and coordination ahead of these arctic storms. Electric generator performance improved, which was attributed to improved preparedness, proactive commitments, and the use of alternate fuel supplies. The performance of the natural gas and electric systems during Gerri and Heather emphasizes the benefits of prior recommendations and the need for vigilance in continuing to implement these recommendations from joint FERC-NERC-Regional Entity reports. Next slide.
The team focused on four key areas: weather conditions, natural gas performance, electric system planning and operations, and generator performance. This review engaged approximately twenty entities identified by the team that provided a high-level overview of the natural gas and electric systems’ performance within the Eastern, Western, and Texas Interconnections during Winter Storms Gerri and Heather. At the inception of this project, the joint team agreed not to attribute any statements in this presentation to specific entities and to anonymize the identities of all participants, even when referencing publicly available data. The team thanks each participant for their contributions to this joint review. Next slide.
Here, the team chose a qualitative approach because, despite Winter Storms Gerri and Heather being major cold weather events that resulted in customer outages, there was no system operator initiated load shed and the Bulk-Power System did not experience the extensive generator outages that were seen in Uri and Elliott. Rather, the team performed a qualitative review of the natural gas system and the Bulk Power System’s performance during Gerri and Heather that focused primarily on information collected through voluntary interviews. Staff’s presentation pertains to the observations of the interviewees and publicly available data only. Next slide, please.
The two arctic storms swept through North America in quick succession, bringing frigid cold, high winds, heavy snow, and, in some places, freezing precipitation. On January 10th, Winter Storm Gerri began making its way through the Pacific Northwest, crossed the Rockies, continued through the Midwest, and turned into the Great Lakes before making its way into Southern Canada on January 13th. That same day, Winter Storm Heather arrived and began its route through the Pacific Northwest and northern mountain states. The center of this storm took a Southern route – impacting Texas, Oklahoma, and Tennessee—on January 15th. It then headed north to the mid-Atlantic and Northeast, before continuing into Canada on January 17th. Overall, Gerri and Heather had less freezing precipitation compared to Uri and Elliott and Gerri and Heather did not result in the uncharacteristic and extreme rapid decline in temperatures seen during Winter Storm Elliott.
For the Eastern and Texas Interconnections, entities stated that the weather conditions experienced during Gerri and Heather were not as severe as during Uri and Elliott. They observed that recent operational experience with winter storms helped the natural gas and electric industries better navigate the challenges resulting in fewer major incidents during of Gerri and Heather compared to Uri and Elliott.
Unlike the Eastern and Texas Interconnections, entities in the Western Interconnection were not as heavily impacted by Uri and Elliott and thus, had limited operational experience dealing with extreme cold weather conditions. These entities, particularly those in the Pacific Northwest, bore the brunt of Gerri and Heather. According to these entities, the conditions of Gerri and Heather represented a “1 in 30 year” cold event. All-time record lows for temperature were set, particularly in the Western portions of Oregon and Washington–where winters are typically mild.
Another notable difference was that most entities generally did not encounter widespread freezing precipitation. As a result, entities did not experience the extent of icing on wind turbine blades that limits energy production from wind generators, as was seen during Winter Storm Uri.
Next slide, please. I will now pass it on to Robert Clark, from FERC, to discuss natural gas performance leading up to and during these arctic storms.
Robert Clark, FERC:
Thank you, Chanel. The performance of the natural gas system during Gerri and Heather validates the important recommendations and lessons learned from the Winter Storms Uri and Elliott reports and the Blackstart Availability Study, particularly with respect to early and proactive preparation, communication, and coordination. Next slide.
This graph illustrates how, like prior events, Winter Storms Gerri and Heather triggered a rise in natural gas demand coupled with a nearly simultaneous plummet in natural gas production. During Gerri and Heather, total U.S. production was 15 percent below production levels earlier in the same month. This is similar to the 19 percent decline seen during Winter Storm Elliott, although less severe than the 23 percent decline seen during Winter Storm Uri. Despite this, reliability concerns in the natural gas markets were limited, and natural gas prices remained relatively moderate compared to previous artic storms. The following slide discusses the reasons for this. Next slide.
Natural gas entities described many important steps taken to prepare for Gerri and Heather. Natural gas entities communicated current system conditions directly to the public through appeals for conservation, and to shippers and relevant RTOs and ISOs via Electronic Bulletin Board operational notices. Further, in the Texas Interconnection, natural gas entities and government officials participated in daily calls providing updates on current operations, and identifying issues such as unsafe roadways that could impede access to natural gas infrastructure.
As was seen in previous arctic storms, pipelines prepared ahead of time by increasing pipeline pressures through storing more gas in the pipelines, called line pack, to support system reliability. Pipelines also posted winter guidance to its customers in anticipation of strained operating conditions. Even with this heightened preparation, there were still certain impacts on the operation of the natural gas system. Specifically, one pipeline observed underperforming receipt points at Upper Midwest area production fields and a subsequent decline in pipeline pressure, which led to a Force Majeure. This Force Majeure led to reduced natural gas deliveries to another regional pipeline; however, the other pipeline was able to mitigate the impact of reduced deliveries by using Permian natural gas supply flowing from the South that performed well, and by relying on natural gas storage, for which inventory levels were high.
In addition, during Winter Storms Gerri and Heather, one entity experienced a communications equipment failure at a crucial natural gas storage facility that is used to meet peak natural gas system loads. While this entity was able to make the necessary repairs, this type of vulnerability highlights the importance of the underlying infrastructures, such as communication networks, that support the natural gas and electric systems.
The team observed that the natural gas system experienced fewer disruptions during Gerri and Heather compared to Uri and Elliott. Nevertheless, these storms demonstrated the benefits of advance preparations, diversity of natural gas supplies, natural gas storage, and reinforce the need to continue implementing the recommendations from the Winter Storm Uri and Elliott reports, as well as those from the recent Blackstart Availability Study.
Next slide. I will now pass it on to Matt Lewis from NERC, to discuss electric planning and operations.
Matt Lewis, NERC:
Thank you, Robert. Next slide.
During Gerri and Heather, neighboring reliability coordinators and balancing authorities worked closely to improve their winter preparedness efforts. This included daily conference calls beginning seven days prior to the event and continuing throughout. These entities noted that this practice provided a higher level of situational awareness than they experienced during Uri and Elliott, and improved their ability to make more informed reliability decisions. Additionally, based on lessons learned, one grid operator’s executive team met daily during Gerri and Heather to communicate operating plans with staff from generation and transmission operations, the control center, and natural gas scheduling. Another grid operator developed a formal process to further enhance communications with generators regarding fuel availability. A different entity stated that it has established a relationship with natural gas pipelines within its footprint; this entity now has monthly status calls with this pipeline so that they can maintain working relationships.
Some grid operators stated that they have made improvements to their load forecasting. They stated that these improvements could be attributed to using multiple data inputs in their load forecasting models, such as temperature forecasts and ‘holiday settings.’ Some entities provide their system operators with the ability to manually adjust the load forecast, based on real-time data and operating experience.
Grid operators also noted that they benefited from improved weather forecasts during Gerri and Heather as compared to prior storms. Additionally, they issued more cold weather alerts and advisories further in advance of Gerri and Heather than in prior arctic storms.
Other grid operators stated that they benefit from robust wind forecasting by using both a normal forecast and an extreme weather forecast to better determine wind generation levels, with one grid operator stating that accurate wind forecasting was important to their overall success during Gerri and Heather.
Notwithstanding these improvements, forecasting models will never perfectly predict actual system conditions and they are particularly challenged during extreme cold weather events that push current forecasting modeling capabilities. As such, there will be forecasting errors that may require mitigating actions. One grid operator stated that it had an issue with its load forecast being inaccurate; the reliability concerns from this forecast error were compounded when bilateral energy purchases were not made quickly to address the forecasting error. Another grid operator reported that its actual load came in significantly higher than previously observed peak values; thus, the actual load values were flagged as ‘bad data,’ even though the data was correct and should have been used. Next slide.
Significant amounts of energy were both imported and exported during Gerri and Heather to navigate operational challenges, highlighting the importance of energy transfer capabilities.
As shown on this slide, according to the Energy Information Administration (or EIA), a balancing authority in the Eastern Interconnection exceeded the hourly record imports set during Winter Storm Uri. Next slide.
Another example of the importance of energy transfers is shown on this slide. The image on the left shows the nine-year average hourly flow of energy transfers into and out of a balancing authority in the Western Interconnection, and the image on the right shows the average hourly flow of energy transfers during Gerri and Heather experienced by the same balancing authority. In this area, energy typically flows North to South, whereas during Gerri and Heather, energy flowed South to North, providing energy to the hardest hit areas of these arctic storms.
Gerri and Heather continue to expose planning and operating challenges and highlight the importance of energy transfer capabilities, such as those being examined by the NERC Interregional Transfer Capability Study. The record amount of energy imports and exports seen by some entities during Gerri and Heather reinforces topics seen in recommendation 20 from the Winter Storm Uri report and recommendation 10 from the Winter Storm Elliott report. Next slide.
Reliability coordinators initiate EEAs to communicate when an electric balancing authority is in jeopardy of, or can no longer meet, its expected load or its minimum contingency reserve obligations. Multiple EEAs, including one EEA-3, were declared during Winter Storms Gerri and Heather. The circumstances that led to these EEAs included forced generation outages, natural gas delivery issues, as well as load and variable energy resource forecasting challenges.
Some entities noted that during Gerri and Heather, system conditions previously not experienced resulted in certain operating thresholds being met. For these entities, such operating thresholds required an EEA declaration to gain access to additional energy. This underscores the importance of communicating operating thresholds, as well as protocols, to all entities that could be affected. Next slide.
Winter Storm Uri led to the largest system operator initiated load shed event across North America, with over 23,000 MW of firm load shed. Almost one year later, Winter Storm Elliott led to the largest system operator initiated load shed in the Eastern Interconnection, with over 5,400 MW of load shed. In contrast, as shown on the slide, during Winter Storms Gerri and Heather, there was zero system operator initiated load shed.
Next slide. I will now pass it on to Kiel Lyons from NERC, to discuss electric generator performance.
Kiel Lyons, NERC:
Thank you, Matt. Next slide.
As we mentioned earlier, quantitative data regarding generator outages was not within the scope of the team’s performance review.
Nevertheless, during Gerri and Heather, most generator owners and generator operators were able to procure natural gas. These entities observed that fuel supply and firm transportation during extreme cold weather continues to be critical. Multiple entities stated that natural gas storage is important to reliability because it provides access to fuel if the production and processing of natural gas is limited.
Compared to Winter Storms Uri and Elliott, many grid operators reported that they experienced fewer generation derates and outages. Some grid operators attributed this improvement to better estimating the operating limitations of generators, and incorporating those risks into their operating plans (that is, not dispatching generators less likely to be able to perform). Other grid operators stated that the use of on-site alternate fuel by generator owners and generator operators was helpful to avoid derates and outages when gas curtailments occurred.
Grid operators also reported that, during Gerri and Heather, generators identified as blackstart resources performed better and experienced fewer outages compared to Uri and Elliott. Some grid operators noted that they are in the process of reconsidering their risks due to their blackstart resources’ heavy reliance on natural gas and whether these resources can truly start on alternate fuel. Next slide, please.
In addition to procuring more reserves, as noted on this slide, one grid operator stated that it committed more generators to offset and account for unplanned generator outages. Another grid operator focused on committing generators early to better understand and manage generator unavailability and risk. A different grid operator committed more reserves in the day-ahead market so that more generation was available to mitigate against the potential for unplanned outages. Additionally, a grid operator incorporated fuel survey results from generators into its operational plans to better account for uncertainties. One generator owner and generator operator also proactively started its units prior to the event to ensure that they were available when committed. Next slide.
Electric entities stated that generator winterization measures, and the development of cold weather checklists led to generators being able to operate at lower temperatures with fewer outages. One grid operator stated that since Winter Storm Uri, a significantly higher percentage of its generators can operate below freezing temperatures. After Winter Storm Elliott, one entity simulated a mock winter peak event as a stress test to ensure it could meet a record demand day. A different grid operator heavily invested in winterization measures to enhance reliability. Compared to Winter Storm Elliott, one grid operator stated that its ten-fold reduction in outages during Winter Storms Gerri and Heather could be attributed to implementing lessons learned, its after-action review process, improving its generators' performance capabilities, and completing thousands of winter readiness activities. All of these winterization measures highlight the importance of recommendations from the Winter Storm Uri and Elliott reports.
Next slide. I will now pass it back to Chanel for concluding remarks.
Chanel Chasanov, FERC:
Thank you, Kiel. During Winter Storms Gerri and Heather, the natural gas and electric systems performed better relative to Winter Storms Uri and Elliott, as measured by the fact that there was zero system operator initiated load shed. Nevertheless, both systems were challenged by the extreme cold weather conditions. This illustrates the need for entities across both industries to continue to work collaboratively to enhance reliable operations in extreme cold weather by continuing to implement the recommendations from the Winter Storms Uri and Elliott reports as well as the recent Blackstart Availability Study.
This concludes our presentation. Heather Polzin and David Huff from FERC will be providing a brief update on the status of the Winter Storms Uri and Elliott report recommendations. After that, we will be happy to take any questions you may have.
Next slide.
Heather Polzin, FERC:
Thanks Chanel. To track the progress entities have made at preventing worse bulk-power system reliability outcomes, such as those experienced during Winter Storms Uri and Elliott, FERC and NERC staff are establishing a web-based public dashboard. The goal of the dashboard is to periodically provide status updates regarding responses to the recommendations made in the Uri and Elliott inquiry reports. The dashboard will not only highlight the solid progress made in implementing the recommendations by the many stakeholders who have been working hard to ensure our nation’s bulk power grid is reliable during extreme cold weather but will also identify areas where more progress is needed.
Dave Huff, FERC:
For the combined 39 recommendations contained in the Uri and Elliott inquiry reports, many of them have either been completed or are in progress. For example, the mandatory reliability standards for generator and power grid operations during extreme cold weather have been developed. However, there is still more work to be done in areas such as natural gas and electric grid coordination. This concludes our update and as Chanel mentioned, we will be happy to take any questions you may have.