<article><p>The New England power grid has dispatched oil-fired units more often than normal in the past two days as electricity demand surged amid cold weather and natural gas prices in the region topped those for fuel oil.</p><p>Load today should peak at 21,000MW in the hour ending 5pm ET. Fuel mix this morning was 46pc natural gas, 24pc nuclear and 10pc oil, based on the grid operator's data. Oil-fired units yesterday provided 9pc of the electricity output in peak hours.</p><p>About 7,000MW of capacity in New England nominally is capable of burning oil and natural gas. The grid operator last summer estimated actual dual-fuel capacity at 3,000MW. A program providing incentives to add oil-burning capacity at natural gas-fired plants succeeded in making an additional 1,774MW available to use both fuels ahead of winter 2014-15.</p><p>Oil is a more reliable generating fuel choice in New England on bitterly cold days, because utilities use all available natural gas pipeline capacity for residential demand.</p><p>Almost 2,000MW of dual-fuel capacity was deployed during this morning's peak hour ended at 8 am ET, burning oil. </p><p>New England-delivered natural gas prices yesterday and today were at par or higher than the fuel oil equivalent. Gas prices at three major hubs in New England averaged $12.37/mmBtu for today's delivery. Diesel 500ppm NYH barge assessment averages $12.35/mmBtu. New England's grid operator uses that oil product index as a price benchmark for the region's dual-fuel units.</p><p>New England peak power prices averaged $106/MWh in the past two days. A year ago, New England wholesale power prices reached $225/MWh but fuel prices were higher and deep cold was straining all power grids in the eastern US and Canada. </p><p>Natural gas and oil prices also are significantly below their year-earlier levels. Warmer-than-normal weather for most of December has kept electricity demand below winter 2013-14 levels. Today's projected peak load is 231MW below the January 2014 high.</p><p>The Independent System Operator of New England, which manages the regional power grid, has subsidized stockpiling oil for dual-fuel units ahead of winter, by promising to pay $18/bl for unused inventory at the end of the winter. More than 4mn bl has been stockpiled and most remains in inventory. About 3.8mn bl will be eligible for the subsidy.</p><p>New England generators in December used less than one-sixth of the subsidized stockpiles, or 550,401bl. Oil units last month were dispatched on 4 December, when a transmission outage in Quebec cut off electricity imports into New England, and on 8 December when cold weather boosted New England load.</p><p>Oil units generated 22,039 MWh in December, less than a third of their output a year earlier. Oil units in 2014 accounted for 0.3pc of total regional generation. Environmental regulations severely limit oil burn in New England power plants so most run in winter or when dispatched in emergencies. </p><p>The regional grid operator also subsidized LNG stockpiling and demand response resources for winter 2014-15. The gas equivalent of 0.5 Bcf was secured but none used in December, according to the latest monthly operations report.</p><p>hg/ee</p><p><p><br> Send comments to <a href="mailto:feedback@argusmedia.com" target="_parent"> feedback@argusmedia.com </a></p><p><u><a href="http://www.argusmedia.com/Info/General/News" target="_TOP"> Request more information </a></u> about Argus' energy and commodity news, data and analysis services. </p><p><i> Copyright © 2015 Argus Media Ltd - <a href="http://www.argusmedia.com/" target="_TOP"> www.argusmedia.com </a> - All rights reserved. </i></p></article>
