Dallman Unit 4, peaking units and stable pricing in coal contract are shields against Midwest grid owner’s energy price spikes but possibilities remain for forced power outages due to energy shortages outside of the utility’s control.
On May 17, 2022, City Water, Light and Power (CWLP) officials presented
to the Springfield City Council on what lies ahead for CWLP customers with the possibility of rolling blackouts for Midwest states being predicted. Officials explained the utility’s role in regional energy emergencies,
with an overview of what resources it has, and the mitigation and steps that are and would be taken by CWLP, including asking its customers to conserve, should an energy emergency arise.
CWLP officials presented information on this issue to the Springfield City Council on May 17, 2022
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The presentation was given following the regional grid operator, the Midcontinent Independent System Operator’s (MISO), recent announcement that this summer has some risk for rolling blackouts due to an estimated 5 gigawatt (GW) energy shortfall due to lack of “firm generation” during peak load times in its north and central zones with most of Illinois in its Zone 4. States impacted in North-Central MISO include Illinois with the exception of the Chicago area, Indiana, Iowa, Michigan, Minnesota, Missouri, Montana, North Dakota, South Dakota and Wisconsin. MISO says the risk for rolling blackouts, which are temporary controlled power outages, will be higher next summer with 11 gigawatts of plant retirements planned over the next year.
MISO attributed this year’s shortfall primarily to higher demand along with reduced electric generation availability due to thermal plant retirements. This came on the heels of
MISO’s planning resource capacity auction for 2022-2023 where prices jumped almost 50 times higher from $5 per MW-day to $236.66/MW-day while prices for market energy have also jumped to high levels.
About Rolling Blackouts
All utility customers over the nine-state region in MISO’s north and central zone, including CWLP and most of Illinois in Zone 4, would be impacted by rolling blackouts if there are regional energy shortfalls as MISO is predicting. No matter the generation resources a utility has, an energy shortage or imbalance on the grid at a regional level where the demand for energy isn’t matched with generation, could cause the need for rolling blackouts. Grid managers like MISO are charged with coordinating their member utilities to match the demand for energy to available generation through conservation and adding resources when needed.
“Fortunately, Unit 4 and our peaking units can cover almost all of our load throughout the year with exception only to short periods during the highest peak summer demand,” said CWLP Chief Utility
Engineer Doug Brown. “And while we’ve invested in transmission upgrades to improve our ability to import power, if there is a regional issue with a grid imbalance in MISO territory, we will still need to encourage conservation and do everything we can to avoid rolling blackouts to our customers.”
When MISO alerts of a predicted energy shortage, CWLP and other member utilities in the affected zones, begin¬¬ a number of internal measures and steps to prepare to bring additional resources on, such as peaking units, and to begin conservation. If these steps by CWLP and other member utilities, are not successful to lower energy demand and increase generation to the grid, only as a last resort MISO would require rolling blackouts or temporary controlled outages to keep the grid stable.
In CWLP’s energy emergency plan, after internal steps are taken and voluntary conservation is requested, implementation of controlled outages would occur at the circuit level, over 15-minute increments, in small pockets across the City to lessen the impact overall to its customers.
About Energy Price Spikes
As for cost increases due to the price spikes in the MISO capacity auction, CWLP officials are predicting less of an impact to summer bills than
Citizens Utility Board’s projection for a doubling of the electric price for customers in central and southern Illinois. CWLP customers should be largely shielded from the price spiking since less capacity is needed with Dallman Unit 4 and its peaking units in operation.
“Those utilities without long-term contracts for capacity and energy or without their own generation resources, unfortunately have to buy a large amount of the energy capacity needed for their customers—and will be buying large amounts of purchased power in a volatile price market,” said Brown. “These are the times we are reminded that building Unit 4 for Springfield was the right decision and Springfield will continue to benefit from local control of its generation resources along with stable pricing in our coal contract as an important protection against market instability.”
“We are currently evaluating the markets, our generation, and expected summer peak loads for our customer-base and expect a smaller cost impact since Dallman 4 and our peaking units cover our energy needs nearly all year long other than the highest summer peak when we run short,” Brown said. “We will need to purchase power from the market to cover the remaining peak demand and any other time when our generation resources can’t cover it.”
More on MISO & Need For Statewide Rules For Reliability in Illinois
In response to the projected energy shortage and pricing impacts, MISO is indicating they will be re-assessing their process that in the end resulted in price spikes and the process for evaluating plant retirements and working with generation owners in this re-evaluation as well.
While MISO territory had more renewable energy come online, what is considered “accredited” capacity like reliable baseload generation coming from a coal, gas or nuclear plant, went down. Renewable resources are intermittent and therefore not accredited at the same rate as thermal sources such as coal, nuclear and gas per MISO.
Statewide planning and rules for energy reliability should be established according to Brown. “As we’ve been noting with MISO, the downstate Illinois grid would have significant reliability impacts with rules that just affect coal and gas plants,” he said. “This is the primary concern we should all have—to insist that the reliability and resiliency of the electric grid is protected so we can avoid blackouts. There must be statewide planning for reliability and viable replacement resources before regulation after regulation shuts down baseload generators with no regard to the detrimental impacts.”
Learn More About Regional Energy Emergencies & Energy Conservation: Energy Efficiency Page
About MISO
MISO (Midcontinent Independent System Operator) is an independent, not-for-profit, member-based organization responsible for operating the power grid across 15 U.S. states and the Canadian province of Manitoba.