ISO-NE faces an uncertain future after Vermont Yankee plant gets decommissioned

New England appears to be going all in on its commitment to natural gas as it closed the doors on the Vermont Yankee nuclear plant on Dec. 29. The decision to close the plant comes at a time when several coal-fired plants in the region are also on track to be retired, if they haven't already - something that has many analysts wondering exactly how the region plans on making up the shortfall.

Existing pipeline infrastructure makes natural gas a gamble for ISO-NE
ISO-NE, the independent service operator that covers nearly all of New England, is in a tight spot now that the Vermont Yankee plant is gone for good. An analysis of the feasibility of that plant's closure done in 2012 showed that the region could make up the shortfall from taking the nuclear generator offline, RTO Insider reported. The problem now is that since many other power plants, mainly coal-fired generators, are going offline as well - a development that could threaten grid reliability in New England in the near future.

"But the loss of other non-natural gas generation throughout the region is causing concern about long-term reliability," said Marcia Blomberg, a spokeswoman for ISO-NE, to RTO Insider. "This generation is most likely to be replaced by natural gas, which will only exacerbate our dependence on that resource."

As of now, this dependence on natural gas has grid operators and political leadership in a state of unease, as initiatives to expand the region's gas pipeline infrastructure has been met with fierce opposition due mainly to environmental concerns. Simply put, as New England's demand for gas increases, the existing infrastructure will be insufficient to meet utilities' and customers' needs.

New England's lack of natural gas pipelines could be problematic for grid operators going forward.

New England may already be getting a glimpse into the future
But even now, utilities and customers throughout the region are feeling the pinch as energy prices skyrocket due to a lack of pipeline capacity.

"There isn't enough pipe to carry the gas from where it's produced into New England," said Gordon van Welie, president of ISO-NE, in an interview with local news outlet WGBH.

As the news source explained, there are only three pipelines that bring natural gas into New England, all coming from the south and west. Last year, the pipelines began to run out of room on days where energy demand was high. This led to New Englanders paying energy prices that far outstripped the national average - $.18/kWh averaged over the whole year, compared to $.12/kWh for the rest of the country, based on a report from Forbes.

This is what has many in New England worried: The region already requires a lot of natural gas, and with the closure of the Vermont Yankee generator and other coal plants, the demand - and thus, the prices - for the commodity will only increase. As WGBH noted, the repercussions of the lack of generation in New England could be harsh: If the proposed Salem, Massachusetts natural gas plant doesn't see the light of day in 2016, the state could see rolling blackouts as a way to meet demand during peak times.

Demand response programs through ISO-NE region also decline
Demand response resources have increased over the past few years for most regions throughout the U.S., but the ISO-NE region was the only one to experience a decrease in its demand response capacity, per the latest Federal Energy Regulatory Commission report. Based on the FERC staff's findings, in ISO-NE declined by 669 MW, or 25% from 2012's levels.

The adds another layer to the potential grid instability that New England could experience. Demand response programs help reduce the strain on the grid during peak times, so the possible lack of natural gas resources combined with flagging demand response resources could create some major problems for grid operators going forward.

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