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Summer Energy Market

and Electric Reliability

Assessment

A Sta Report to the Commission

2023

FEDERAL ENERGY REGULATORY COMMISSION

Oice of Energy Policy and Innovation

Oice of Electric Reliability

May 18, 2023

This report is a product of the Federal Energy Regulatory Commission Sta. The views expressed in this report do not

necessarily reect the views of the Commission or any Commissioner.

2023 SUMMER ENERGY MARKET ASSESSMENT n 1 n FEDERAL ENERGY REGULATORY COMMISSION

PREFACE

The 2023 Summer Energy Market and Electric Reliability Assessment (Summer Assessment) provides sta’s outlook

for energy markets and electric reliability focusing on the upcoming period from June to September 2023. The report

contains four main sections. The rst section summarizes the ndings of the Summer Assessment. The second

section details the weather outlook for summer 2023. The third section discusses energy market fundamentals,

primarily electric market and natural gas supply and demand expectations, including expected North American

Electric Reliability Corporation (NERC) regional resource adequacy details. The fourth section highlights unique

issues nationwide and specically addresses the potential implications of pipeline outages, drought, hydroelectric

power, and wildres on western United States (U.S.) energy markets.

The 2023 Summer Assessment is a joint report from the Commission’s Oice of Energy Policy and Innovation’s

Division of Energy Market Assessments and the Oice of Electric Reliability’s Division of Engineering and Logistics.

KEY FINDINGS

Weather Outlook: Higher-than-average temperatures are expected to have a signicant eect on electricity

demand for the coming summer. The U.S. National Oceanic and Atmospheric Administration (NOAA) forecasts

a 50% to 70% likelihood of higher-than-average temperatures for June through September 2023 in most parts

of the country, which, if materialized, could result in higher electricity demand for space cooling. Other weather

phenomena aecting electricity demand, including the El Niño-Southern Oscillation1 and more severe seasonal

storms in coastal states bordering the Atlantic Ocean and Gulf of Mexico, may also aect the overall energy

markets and grid reliability.

Energy Market Fundamentals and Electric Reliability: Data submitted by the regions to the North American

Electric Reliability Corporation (NERC) forecasts that all regions will have suicient generating resources to meet

expected summer demand and operating reserve requirements under normal operating conditions. However,

some regions may need to rely on operating mitigations during challenging summer conditions. The U.S. Energy

Information Administration (EIA) forecasts aggregate net summer electric generating capacity is expected to

increase from 1,138 gigawatts (GW) in summer 2022 to 1,167 GW this summer, reecting the addition of new

solar and wind generation. Battery storage capacity additions are anticipated to increase from 4.4 GW (summer

2022) to 7.0 GW in summer 2023 as the fourth-largest source of additions following solar and wind, nearly

equaling total natural gas-red generating capacity additions.

While planning reserve margins exceed the targeted levels, all regions may still face energy shortfalls during

extreme operating conditions caused by extreme heat, wildre, or other grid disturbances. The risks of these

conditions are more acute in certain parts of the Electric Reliability Council of Texas (ERCOT),2 the Midcontinent

The El Niño-Southern Oscillation (ENSO) is a recurring climate pattern involving oscillating warming and cooling pattern changes in the temperature of

waters in the central and eastern tropical Pacic Ocean and can have a strong inuence on weather across the US and other parts of the world. National

Oceanic and Atmospheric Administration ((NOOA), National Weather Service (NWS), What is ENSO? https://www.weather.gov/mhx/ensowhat.

2 ERCOT is located entirely in the state of Texas. NERC, 2022 Long Term Reliability Assessment (December 2022), https://www.nerc.com/pa/RAPA/ra/

Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.

2023 SUMMER ENERGY MARKET ASSESSMENT n 2 n FEDERAL ENERGY REGULATORY COMMISSION

ISO (MISO),3 New England,4 the SERC Reliability – Central subregion (SERC-Central),5 the Southwest Power Pool

(SPP),6 and the Western Electricity Coordinating Council (WECC).7 NERC anticipates these regions will have adequate

resources available to meet the expected operating reserve requirement under a normal demand scenario, but could

face a resource shortfall under an extreme demand scenario. Finally, U.S. electric market participants continue to call

on demand response to help balance electricity demand with available supply during periods of extreme weather, as

seen during the wildres in California and heat events across several regions during the past three summers.

Other Fuels for Electric Generation: Coal stockpiles at power plants remain relatively low compared to historical

levels, although EIA forecasts that coal stockpiled by the power sector will increase by more than 30% between

the end of December 2022 and May 2023, aer which it will decline as electric power generation ramps up to meet

summer air-conditioning needs. However, coal shipments to electric generators primarily from the western United

States continue to experience freight rail service issues, which may aect available supplies at coal plants.

During the summer, many electric generators that run on petroleum and liquid fuels such as fuel oil will look to

replenish fuel supplies that were diminished during the previous winter, with restocking dependent on supply and

pricing trends. Additionally, during critical periods, oil-red generators play an important role in ensuring reliability,

as they may provide the needed, additional power to the grid in extreme conditions. Current data show that ongoing

growth in the commercial inventory of petroleum and liquid fuels, with lower prices compared to last summer,

should make it easier for generators to restock on-site storage.

Natural Gas Fundamentals: The natural gas market is expected to be well-supplied, indicating that, on average,

natural gas prices should be lower than last summer. Record-high natural gas production levels, along with above-

average natural gas storage inventories, are anticipated to oset natural gas demand that will also be at record levels.

As of April 20, 2023, the Henry Hub8 futures contract price averaged $2.41 per Million British thermal units (MMBtu)

for the months June 2023 through September 2023, a decline of 71.3% from the summer 2022 settled price average.

In the May 2023 Short Term Energy Outlook, the EIA forecasts a new record for summer dry natural gas production

at 100.1 billion cubic feet per day (Bcfd), which represents a slight year-over-year increase of approximately 0.9%.

However, year-over-year growth of natural gas production continues to show a slowing trend. In the years prior

to the COVID-19 pandemic (2017 – 2019), summer dry natural gas production growth exceeded 10% per annum.

3 MISO encompasses 15 U.S. states including Arkansas, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri,

Montana, North Dakota, South Dakota, Texas, and Wisconsin, and the Canadian province of Manitoba. NERC, 2022 Long Term Reliability Assessment

(December 2022), https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.

4 The Northeast Power Coordinating Council-New England sub area consists of the states of Connecticut, Maine, Massachusetts, New Hampshire,

Rhode Island, and Vermont served by ISO New England (ISO-NE) Inc. NERC, 2022 Long Term Reliability Assessment, (December 2022), https://www.

nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.

SERC-Reliability Corporation, Central includes all of Tennessee and portions of Georgia, Alabama, Mississippi, Missouri, and Kentucky. NERC, NERC 2022

Long Term Reliability Assessment, (December 2022), https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.

6 The Southwest Power Pool encompasses all or parts of Arkansas, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Nebraska, New Mexico,

North Dakota, Oklahoma, South Dakota, Texas, and Wyoming. NERC, NERC 2022 Long Term Reliability Assessment, (December 2022), https://www.

nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.

7 WECC’s service territory extends from Canada to Mexico. It includes the provinces of Alberta and British Columbia in Canada, the northern

portion of Baja California in Mexico as well as all or portions of the 14 Western United States in between. This report focuses on the U.S. portions

of WECC and not Canadian provinces. NERC, NERC 2022 Long Term Reliability Assessment, (December 2022), https://www.nerc.com/pa/RAPA/ra/

Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.

8 Henry Hub is a natural gas pipeline hub located in Erath, La., that serves as the oicial delivery location for futures contracts on the New York

Mercantile Exchange (NYMEX).

/55

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SummerEnergyMarketandElectricReliabilityAssessmentAStaffReporttotheCommissionDEPARTMENTOFENERGYFEDERALENERGYREGULATORYCOMMISSION2023FEDERALENERGYREGULATORYCOMMISSIONOfficeofEnergyPolicyandInnovationOfficeofElectricReliabilityMay18,2023ThisreportisaproductoftheFederalEnergyRegulatoryCommissionStaff.TheviewsexpressedinthisreportdonotnecessarilyreflecttheviewsoftheCommissionoranyCommissioner.2023SUMMERENERGYMARKETASSESSMENTn1nFEDERALENERGYREGULATORYCOMMISSIONPREFACEThe2023SummerEnergyMarketandElectricReliabilityAssessment(SummerAssessment)providesstaff’soutlookforenergymarketsandelectricreliabilityfocusingontheupcomingperiodfromJunetoSeptember2023.Thereportcontainsfourmainsections.ThefirstsectionsummarizesthefindingsoftheSummerAssessment.Thesecondsectiondetailstheweatheroutlookforsummer2023.Thethirdsectiondiscussesenergymarketfundamentals,primarilyelectricmarketandnaturalgassupplyanddemandexpectations,includingexpectedNorthAmericanElectricReliabilityCorporation(NERC)regionalresourceadequacydetails.Thefourthsectionhighlightsuniqueissuesnationwideandspecificallyaddressesthepotentialimplicationsofpipelineoutages,drought,hydroelectricpower,andwildfiresonwesternUnitedStates(U.S.)energymarkets.The2023SummerAssessmentisajointreportfromtheCommission’sOfficeofEnergyPolicyandInnovation’sDivisionofEnergyMarketAssessmentsandtheOfficeofElectricReliability’sDivisionofEngineeringandLogistics.KEYFINDINGSWeatherOutlook:Higher-than-averagetemperaturesareexpectedtohaveasignificanteffectonelectricitydemandforthecomingsummer.TheU.S.NationalOceanicandAtmosphericAdministration(NOAA)forecastsa50%to70%likelihoodofhigher-than-averagetemperaturesforJunethroughSeptember2023inmostpartsofthecountry,which,ifmaterialized,couldresultinhigherelectricitydemandforspacecooling.Otherweatherphenomenaaffectingelectricitydemand,includingtheElNiño-SouthernOscillation1andmoresevereseasonalstormsincoastalstatesborderingtheAtlanticOceanandGulfofMexico,mayalsoaffecttheoverallenergymarketsandgridreliability.EnergyMarketFundamentalsandElectricReliability:DatasubmittedbytheregionstotheNorthAmericanElectricReliabilityCorporation(NERC)forecaststhatallregionswillhavesufficientgeneratingresourcestomeetexpectedsummerdemandandoperatingreserverequirementsundernormaloperatingconditions.However,someregionsmayneedtorelyonoperatingmitigationsduringchallengingsummerconditions.TheU.S.EnergyInformationAdministration(EIA)forecastsaggregatenetsummerelectricgeneratingcapacityisexpectedtoincreasefrom1,138gigawatts(GW)insummer2022to1,167GWthissummer,reflectingtheadditionofnewsolarandwindgeneration.Batterystoragecapacityadditionsareanticipatedtoincreasefrom4.4GW(summer2022)to7.0GWinsummer2023asthefourth-largestsourceofadditionsfollowingsolarandwind,nearlyequalingtotalnaturalgas-firedgeneratingcapacityadditions.Whileplanningreservemarginsexceedthetargetedlevels,allregionsmaystillfaceenergyshortfallsduringextremeoperatingconditionscausedbyextremeheat,wildfire,orothergriddisturbances.TherisksoftheseconditionsaremoreacuteincertainpartsoftheElectricReliabilityCouncilofTexas(ERCOT),2theMidcontinent1TheElNiño-SouthernOscillation(ENSO)isarecurringclimatepatterninvolvingoscillatingwarmingandcoolingpatternchangesinthetemperatureofwatersinthecentralandeasterntropicalPacificOceanandcanhaveastronginfluenceonweatheracrosstheUSandotherpartsoftheworld.NationalOceanicandAtmosphericAdministration((NOOA),NationalWeatherService(NWS),WhatisENSO?https://www.weather.gov/mhx/ensowhat.2ERCOTislocatedentirelyinthestateofTexas.NERC,2022LongTermReliabilityAssessment(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.2023SUMMERENERGYMARKETASSESSMENTn2nFEDERALENERGYREGULATORYCOMMISSIONISO(MISO),3NewEngland,4theSERCReliability–Centralsubregion(SERC-Central),5theSouthwestPowerPool(SPP),6andtheWesternElectricityCoordinatingCouncil(WECC).7NERCanticipatestheseregionswillhaveadequateresourcesavailabletomeettheexpectedoperatingreserverequirementunderanormaldemandscenario,butcouldfacearesourceshortfallunderanextremedemandscenario.Finally,U.S.electricmarketparticipantscontinuetocallondemandresponsetohelpbalanceelectricitydemandwithavailablesupplyduringperiodsofextremeweather,asseenduringthewildfiresinCaliforniaandheateventsacrossseveralregionsduringthepastthreesummers.OtherFuelsforElectricGeneration:Coalstockpilesatpowerplantsremainrelativelylowcomparedtohistoricallevels,althoughEIAforecaststhatcoalstockpiledbythepowersectorwillincreasebymorethan30%betweentheendofDecember2022andMay2023,afterwhichitwilldeclineaselectricpowergenerationrampsuptomeetsummerair-conditioningneeds.However,coalshipmentstoelectricgeneratorsprimarilyfromthewesternUnitedStatescontinuetoexperiencefreightrailserviceissues,whichmayaffectavailablesuppliesatcoalplants.Duringthesummer,manyelectricgeneratorsthatrunonpetroleumandliquidfuelssuchasfueloilwilllooktoreplenishfuelsuppliesthatwerediminishedduringthepreviouswinter,withrestockingdependentonsupplyandpricingtrends.Additionally,duringcriticalperiods,oil-firedgeneratorsplayanimportantroleinensuringreliability,astheymayprovidetheneeded,additionalpowertothegridinextremeconditions.Currentdatashowthatongoinggrowthinthecommercialinventoryofpetroleumandliquidfuels,withlowerpricescomparedtolastsummer,shouldmakeiteasierforgeneratorstorestockon-sitestorage.NaturalGasFundamentals:Thenaturalgasmarketisexpectedtobewell-supplied,indicatingthat,onaverage,naturalgaspricesshouldbelowerthanlastsummer.Record-highnaturalgasproductionlevels,alongwithabove-averagenaturalgasstorageinventories,areanticipatedtooffsetnaturalgasdemandthatwillalsobeatrecordlevels.AsofApril20,2023,theHenryHub8futurescontractpriceaveraged$2.41perMillionBritishthermalunits(MMBtu)forthemonthsJune2023throughSeptember2023,adeclineof71.3%fromthesummer2022settledpriceaverage.IntheMay2023ShortTermEnergyOutlook,theEIAforecastsanewrecordforsummerdrynaturalgasproductionat100.1billioncubicfeetperday(Bcfd),whichrepresentsaslightyear-over-yearincreaseofapproximately0.9%.However,year-over-yeargrowthofnaturalgasproductioncontinuestoshowaslowingtrend.IntheyearspriortotheCOVID-19pandemic(2017–2019),summerdrynaturalgasproductiongrowthexceeded10%perannum.3MISOencompasses15U.S.statesincludingArkansas,Illinois,Indiana,Iowa,Kentucky,Louisiana,Michigan,Minnesota,Mississippi,Missouri,Montana,NorthDakota,SouthDakota,Texas,andWisconsin,andtheCanadianprovinceofManitoba.NERC,2022LongTermReliabilityAssessment(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.4TheNortheastPowerCoordinatingCouncil-NewEnglandsubareaconsistsofthestatesofConnecticut,Maine,Massachusetts,NewHampshire,RhodeIsland,andVermontservedbyISONewEngland(ISO‐NE)Inc.NERC,2022LongTermReliabilityAssessment,(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.5SERC-ReliabilityCorporation,CentralincludesallofTennesseeandportionsofGeorgia,Alabama,Mississippi,Missouri,andKentucky.NERC,NERC2022LongTermReliabilityAssessment,(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.6TheSouthwestPowerPoolencompassesallorpartsofArkansas,Iowa,Kansas,Louisiana,Minnesota,Missouri,Montana,Nebraska,NewMexico,NorthDakota,Oklahoma,SouthDakota,Texas,andWyoming.NERC,NERC2022LongTermReliabilityAssessment,(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.7WECC’sserviceterritoryextendsfromCanadatoMexico.ItincludestheprovincesofAlbertaandBritishColumbiainCanada,thenorthernportionofBajaCaliforniainMexicoaswellasallorportionsofthe14WesternUnitedStatesinbetween.ThisreportfocusesontheU.S.portionsofWECCandnotCanadianprovinces.NERC,NERC2022LongTermReliabilityAssessment,(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.8HenryHubisanaturalgaspipelinehublocatedinErath,La.,thatservesastheofficialdeliverylocationforfuturescontractsontheNewYorkMercantileExchange(NYMEX).2023SUMMERENERGYMARKETASSESSMENTn3nFEDERALENERGYREGULATORYCOMMISSIONAftertheproductiondeclineduetothepandemicin2020,productionsurgedtopre-pandemiclevelsin2021butthegrowthratehassinceretreatedtoabouta2.7%summer-over-summercompoundedgrowthrateacross2022and2023.Meanwhile,EIAforecaststotalnaturalgasdemandintheUnitedStatestoaverage94.1Bcfdinsummer2023,whichis4.4%morethaninsummer2022and14%morethantheaverageofthepreviousfivesummers.Thisincreaseinnaturalgasdemandforsummer2023isexpectedtoprimarilycomefromnaturalgasnetexports(includingliquefiednaturalgas(LNG)andpipelinenetexports)thatareforecasttoaverage13.9Bcfdinsummer2023,up36.9%fromsummer2022levels.Naturalgasdemandfromthepowersector(forpurposesofgeneratingelectricity),incontrast,isexpectedtoaverage40.5Bcfdinsummer2023,down2.0%fromsummer2022levels.Atthestartofthe2023injectionseason(April-October),U.S.naturalgasstorageinventoriestotaled1,830billioncubicfeet(Bcf),whichwas22%,or329Bcf,morethantheaverageofinventorylevelsatthestartofthelastfiveinjectionseasons.AccordingtoEIA,naturalgasstorageinventoriesareforecasttogrowapproximately1,932Bcfduringthe2023injectionseason,andtoentertheupcomingwinter3%abovetheaveragestartinglevelofthelastfivewithdrawalseasons.CaliforniaNaturalGasSupply:Californiaseemslikelytohaveaccesstomoreupstreamnaturalgaspipelinecapacitythissummercomparedtosummer2022,particularlyafterElPasoNaturalGasPipeline’sLine2000returnedtofullservice.However,naturalgasstoragelevelsintheEIA’sPacificregion,ofwhichCaliforniamakesupthemajority,hadfallento57.5%belowthefive-yearaverageattheendofthe2022-2023winterseason,andmoresupplyisexpectedtorefillinventoriescomparedtolastsummer.DroughtandWaterConditions:HeavyprecipitationinCaliforniaoverwinter2022-2023hasalleviatedsomedroughtconcernsandislikelytosupporthydropowergenerationinmuchoftheWest.Currently,Californiasnowpacklevelshavebeenmeasuredashighas232%ofthehistoricalmedian–amajorincreasefromlastyearwhensnowpacklevelswerejust22%ofmedian,meanwhilelevelsarelowerinthePacificNorthwestandeasternpartofWECC.9AlthoughimproveddroughtconditionsinpartsoftheWestmaylowerwildfirerisksduringsummer2023,uncertaintyassociatedwithchangingconditionsremains.Notably,theWestexperiencedarelativelymildwildfireseasonin2022,comparedtothelongandintensewildfireseasonsin2020and2021.AlthoughasofMay1,2023,theNationalInteragencyFireCenternotesthattheUpperMidwestfacesabove-normalsignificantwildfirepotentialinJune2023.TheGreatBasinCoordinationCenteralsoforecastsareasofsignificantwildfireriskinWashington,Oregon,IdahoandNevadainJulyandAugust.10Inaddition,partsofTexas,themid-Continent,andareasofthePacificNorthwest,especiallyOregon,areexpectedtoremainindroughtthroughthesummer.ElectricRisks:Inadditiontoweatherandmarketconditions,reliabilitytrendsofrecentyearsmayposeareliabilityriskthissummeriftheypersist.TheDepartmentofEnergy(DOE)electricdisturbancereportsprovidedbyutilitiesindicatethatsecurityincidents,includingvandalism,suspiciousactivity,andcybereventsontheBulkPowerSystem9AccordingtotheNationalIntegratedDroughtInformationSystem,2023WesternDroughtWebinaronMay9,2023,approximately25%ofthewesternU.S.iscurrentlyclassifiedasindrought.“Werecognizethisyear’sconditionsarenotwithoutcaveats,suchasnotallstatesreceivedabove-normalprecipitation,somereceivedtoomuchprecipitationandaresufferingfromsevereflooding,andlong-termdroughtremains,”GenovevaDeheza,executivedirectoroftheNIDIS.10GreaterBasinCoordinationCenter,GreatBasinSeasonalOutlookMay–(August2023),https://gacc.nifc.gov/gbcc/predictive/docs/monthly_seasonal.pdf.2023SUMMERENERGYMARKETASSESSMENTn4nFEDERALENERGYREGULATORYCOMMISSION(BPS)11areontherise,and2022sawthehighestnumberofreportedincidentssincethereportingofsuchactivitiesbeganin2011.Newregulatoryactionsandlegislationfromstateandfederalbodies,includingafair-tradeprobeintocertainsolarpanelimports,andenvironmentalregulations,couldaffecttheseelectricreliabilityconcernsgoingforward.Additionally,ongoingchangesindemandpatterns,suchasthoseunderwayinPJMInterconnection’s12DataCenterAlley,showtheneedforadditionalinvestmenttohandleincreasinglylocalizedissues.Further,continueddisruptionstothesupplychainfromtheCOVID-19pandemicandglobaleconomicsituationcreatechallengesforadditionsofnewandreplacementelectricsystemequipment,whichmayimpactgridreliabilityandsecurityin2023.11TheBulkPowerSystemincludesfacilitiesandcontrolsystemsnecessaryforoperatinganinterconnectedelectricenergytransmissionnetwork(oranyportionthereof)andelectricenergyfromgenerationfacilitiesneededtomaintaintransmissionsystemreliability.ThetermdoesnotincludefacilitiesusedinthelocaldistributionofelectricenergyorspecifyelementsthatarefurtherdefinedinthesubsetofcomponentsknownastheBulkElectricalSystem(BES).NERC,GlossaryofTermsUsedinNERCReliabilityStandards,https://www.nerc.com/pa/Stand/Glossary%20of%20Terms/Glossary_of_Terms.pdf.12PJMInterconnection(PJM)coordinatesthemovementofelectricitythroughallorpartsofDelaware,Illinois,Indiana,Kentucky,Maryland,Michigan,NewJersey,NorthCarolina,Ohio,Pennsylvania,Tennessee,Virginia,WestVirginia,andtheDistrictofColumbia.2023SUMMERENERGYMARKETASSESSMENTn5nFEDERALENERGYREGULATORYCOMMISSIONWEATHEROUTLOOKWeatherisafundamentaldeterminantofthedemandforenergy.Weathercanalsoimpactthesupplyofenergy.Forinstance,hottemperaturesincreasecoolingdemand,raisingthedemandforbothelectricpowerandnaturalgasasafuelforelectricgeneration,andcanstresselectricinfrastructure.Weatherevents,suchashurricanesmakinglandfallalongtheGulfCoast,canimpacttheproductionofcrudeoilandnaturalgas,ordamageelectricequipment.Aswiththepasttwoyears,NOAAforecaststhattemperaturesthissummerwillbeabovenormalformostoftheUnitedStatescomparedtoNOAA’s1991-2020U.S.ClimateNormals.Above-normaltemperaturesaremorethan50%likelytooccurthroughoutthecontinentalUnitedStates,withonlyNorthDakota;SouthDakota;Minnesota;Iowa;Missouri;andportionsofMontana,Nebraska,andIndianaexpectedtohaveanequalchanceofabove-orbelow-normaltemperatures.InJune,JulyandAugust,chancesofabove-normaltemperaturesarehighest,at60-70%,alongtheEastCoastandinthesouthernUnitedStates.ForJuly,August,andSeptember,chancesofabove-normaltemperaturesincreaseinthePacificNorthwestandSouthwest,whiledeclininginTexasandtheGulfCoaststates.ELNIÑO-SOUTHERNOSCILLATIONAfterseveralyearsinaLaNiña(cooling)pattern,theUnitedStatesisenteringanElNiño(warming)pattern.TheElNino-SouthernOscillation(ENSO)isanoscillatingwarmingandcoolingclimatepatternthatcanimpactglobalweatherconditions,directlyaffectsrainfalldistributioninthetropicsandcanhaveastronginfluenceonweatheracrosstheUnitedStatesandotherpartsoftheworld.13Thisshiftingweather,particularlyshiftingtemperaturesduringthesummer,13ElNiñoandLaNiñaaretheextremephasesoftheENSOcycle;betweenthesetwophasesisathirdphasecalledENSO-neutral.NOAANWS,WhatisElNiño-SouthernOscillation(ENSO)?https://www.weather.gov/mhx/ensowhat.Valid:June-July-August2023Issued:April20,2023Figure1:NOAAWeatherOutlookSeasonalTempertureOutlookSource:NOAAValid:July-August-September2023Issued:April20,2023leaningbelowlikelybelowProbability(PercentChance)AboveNormalEqualChancesleaningabovelikelyaboveBelowNormal33-40%40-50%50-60%60-70%70-80%80-90%90-100%33-40%40-50%50-60%60-70%70-80%80-90%90-100%2023SUMMERENERGYMARKETASSESSMENTn6nFEDERALENERGYREGULATORYCOMMISSIONcanaffectelectricitydemandforspacecooling.14AsofApril13,2023,NOAAreportedthatPacificOceanseasurfacetemperatureswerenear-to-aboveaverage,andthatENSO-neutralconditionswereexpectedtocontinueintheNorthernHemispherethroughthespring.NOAAforecasta62%chanceofElNiñodevelopingbetweenMayandJuly2023.15Specifically,ElNiñoconditionsforthesummercanresultindrierconditionsintheEastandincreasedprecipitationintheWest.16ElNiñoeventsgenerallysuppressAtlantichurricaneactivitysofewer-than-normalhurricanesformintheAtlanticduringAugusttoOctober,thepeakofAtlantichurricaneseason.However,theincidenceofhurricanesishigherduringtheneutralphase(whenneitherElNiñonorLaNiñaareineffect)thanduringElNiño.AlthoughhurricanesoccurmoreoftenduringLaNiñaepisodes,significanttropicalweathereventshaveoccurredduringtheneutralphase.17STORM/HURRICANESFORECASTHurricaneweatherconditionsthreatenoilandnaturalgasproduction,oilandnaturalgaspipelinetransmissionsystems,andelectrictransmissionnetworksalongtheGulfandAtlanticCoast.The2022hurricaneseasonproduced14namedstorms,ofwhicheightbecamehurricanesandtwointensifiedtomajorhurricanes.Anaveragehurricaneseasonhas14namedstorms,sevenhurricanes,andthreemajorhurricanes.18TwohurricanesmadelandfallinthecontiguousUnitedStatesin2022,HurricaneIan19(asaCategory4andCategory1)andHurricaneNicole(alateseasonCategory1),whileHurricaneFionamadelandfalloutsidethemainlandasaCategory1inPuertoRico.20TheAtlantichurricaneseasonrunsfromJune1throughNovember30,typicallypeakinginlatesummerorearlyfall.NOAAwillreleasethe2023AtlantichurricaneoutlookonMay25,2023.21ENERGYMARKETFUNDAMENTALSANDELECTRICRELIABILITYThissectionofthereportsummarizeselectricityandnaturalgasmarketfundamentalsexpectedforsummer2023,includingregionalreservemargins,probabilisticassessmentsandelectricgenerationcapacityadditionsandretirements,aswellasnaturalgasprices,production,anddemand.14Thesewarmerorcoolerthannormaloceantemperaturescanaffectweatherpatternsaroundtheworldbyinfluencinghigh-andlow-pressuresystems,winds,andprecipitation.ENSOmaybringmuchneededmoisturetoaregionwhilecausingextremesoftoomuchortoolittlewaterinothers.NOAAPhysicalSciencesLaboratory,ElNiñoSouthernOscillation(ENSO),https://psl.noaa.gov/enso/.15NOAA,ElNiño/SouthernOscillation(ENSO)DiagnosticDiscussion.April13,2023.https://www.cpc.ncep.noaa.gov/products/analysis_monitoring/enso_advisory/ensodisc.shtml.16NationalInteragencyFireCenter,NationalSignificantWildlandFirePotentialOutlookMay–August2023(May1,2023),https://gacc.nifc.gov/gbcc/predictive/docs/monthly_seasonal.pdf.17NOAANWS,ElNiñoandLaNiña:HowdoElNiñoandLaNiñaaffecttheAtlantichurricaneseason?https://www.weather.gov/jan/el_nino_and_la_nina#How_do_El_Nino_and_La_Nina_affect_the_Atlantic_hurricane_season.18NOAA,Damaging2022Atlantichurricaneseasondrawstoaclose(November29,2022),https://www.noaa.gov/news-release/damaging-2022-atlantic-hurricane-season-draws-to-close.19HurricaneIanbrieflyreachedmaximumCategory5statusbeforeweakeningtoaCategory4stormasitmadelandfallinsouthwestFlorida.IanalsoimpactedGeorgia,Virginia,andtheCarolinas.Morethan4.4millioncustomerslostpowerintheUnitedStatesduringHurricaneIan.NOAANWS,NationalHurricaneCenterTropicalCycloneReport(April3,2023),https://www.nhc.noaa.gov/data/tcr/AL092022_Ian.pdf.20NOAA,HurricaneFiona(September2022),https://www.nhc.noaa.gov/data/tcr/AL072022_Fiona.pdf.21NOAA,NOAAtoannounce2023Atlantichurricaneseasonoutlook(May15,2023),https://www.noaa.gov/media-advisory/noaa-to-announce-2023-atlantic-hurricane-season-outlook.2023SUMMERENERGYMARKETASSESSMENTn7nFEDERALENERGYREGULATORYCOMMISSIONElectricityMarketFundamentalsandElectricReliabilityOnbalance,muchofthenationshouldseelowerelectricitypricesthissummerasaresultoffactorssuchaslowernaturalgaspricesandincreasedavailabilityofhydroelectricpowerinportionsoftheWest.Othersupply/demandfactorssuchascapacityadditions,primarilyfromwind,solar,andstorage,shouldincreaseaggregatecapacitysupply,althoughthisispartiallyoffsetbyretirementsofprimarilycoalcapacityinmanyregions.Increaseddemandfromexpectedwarmer-than-averageweather,andtheresultingelectricdemandforcooling,mayalsoputupwardpricepressureonelectricityprices.ThissectiondetailsprobabilisticanalysesconductedbyNERCdemonstratingpossibleconcernsforthissummer.NERCusesresourceprojectionsforJunetoSeptember2023initsanalysisofsummerreservemargins;allotheranalysesbyFERCstaffinthisreportuseEIAdataandforecastscoveringtheperiodsincelastsummer,fromOctober2022toSeptember2023.REGIONALHIGHLIGHTSANDNERCPROBABILISTICASSESSMENTSAccordingtopreliminarydatafromNERC,22theplanningreservemargins23forsummer2023exceedthereference(target)reservelevelmargins24forthe13NERCassessmentareas.25Overall,thereappeartobesufficientresourcestomeetexpectedU.S.electricdemandundernormalsummerconditionsforsummer2023.Despitetheexpectedamplereservemargins,electricregionscanstillfacetighter-than-expectedsupplyconditionsifoperatingconditionsdeviatesignificantlyfromthoseanticipatedforthissummer.Reservemarginsdonotnecessarilyaccountforextremesummerconditionsthatcanleadtoderatesofelectricgenerators,unexpectedgeneratoroutages,transmissionoutages,reducedpowertransfersfromadjacentareas,andotherfactorsthatcouldaffectaregion’sabilitytoservecustomersandmaintainadequateoperatingreserves.Therefore,althoughallregionsareexpectedtomaintainadequatereservemarginsthroughsummer2023,reservemarginsdonotguaranteereliableoperations.Avarietyoffactorsaffectreliableoperationsandaremanagedbysystemoperatorstohelpmaintainelectricsupplyandreliability.MorecomprehensivereliabilityassessmentsforMISO,ERCOT,WECC-CAMX,WECC-SW,WECC-NW,andNPCC-NEarepresentedintheProbabilisticAssessmentsandRegionalProfilessectionbelow.22DatainthissectioniscalculatedwithpreliminarydataprovidedbytheNERCregionsfromNERC’s2023SummerReliabilityAssessment.Foramoredetailedanalysisthatincludesprobabilisticscenarioconditions,refertotheProbabilisticAssessmentandRegionalProfilessectionofthisreport.23Theplanningreservemarginisdesignedtomeasuretheamountofgenerationcapacityavailabletomeetexpecteddemandinaplanninghorizon.NERC,ReliabilityIndicators,Metric1-ReserveMargin,https://www.nerc.com/pa/RAPA/ri/Pages/PlanningReserveMargin.aspx.24Alsoknownasatargetreservemargin,thereferencereservelevelmarginisprovidedbytheregion/subregionbasedonload,generation,andtransmissioncharacteristicsaswellasregulatoryrequirements.NERC,ReliabilityIndicators,Metric1-ReserveMargin,https://www.nerc.com/pa/RAPA/ri/Pages/PlanningReserveMargin.aspx.25The13U.S.assessmentareasaretheNortheastPowerCoordinatingCouncil(NPCC);whichincludestheNPCC-NewEnglandandNPCC-NewYorksubregions;PJM;theSouthEasternReliabilityEntity(SERC)andsubregionsSERC-Central,SERC-East,SERC-Southeast,andSERCFloridaPeninsula;theMidcontinentISO(MISO);theSouthwestPowerPool(SPP);theTexasReliabilityEntity-ElectricReliabilityCouncilofTexas(TRE/ERCOT);andtheWesternElectricCoordinatingCouncil(WECC)withsubregionsWECC-NWPP(NorthwestPowerPool),WECC-SWRSG(SouthwestReserveSharingGroup),andWECC-CAMX(California-Mexico).NERC,Long-TermReliabilityAssessment(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.2023SUMMERENERGYMARKETASSESSMENTn8nFEDERALENERGYREGULATORYCOMMISSIONFigure2showsthenetinternaldemand26assolidbarsandtheavailableresourcesandnettransfervalues27(acombinationofinternalresourcesandadditionalexternalresourcesavailabletotheregion)asdiamonds.Theseshowbothsummer2022andsummer2023forcomparison.Staffalignedtheassessmentareastopresentamoreregionalanalysis.InFigure2,theNortheastPowerCoordinatingCouncil(NPCC)subregionsofNewEngland(NPCC-NE)andNewYork(NPCC-NY)arecombinedasNPCC-US;theSoutheastReliabilityCouncil(SERC)subregionsofSERC-East,SERC-Central,SERC-SouthEastandSERC-FloridaarecombinedasSERC;28andtheWECC-CAMX,WECC-SWandWECC-NWsubregionsarecombinedasWECC-US.29Thisgraphicshowsthatallregionshavesufficientavailableresourcesandnettransferstomeettheirrespectiveexpectedloadsandreservetargets,whichisconsistentwithobservationsaboutreservemarginsdiscussedlaterintheProbabilisticAssessmentsandRegionalProfilessection.FocusingonjustthesummermonthsofJunethroughSeptember,NERCforecastsnetinternalelectricdemandtoincreasebyapproximately1.4%,or10.6GW,from760.3GWinsummer2022to770.9GWinsummer2023.ProjectedgrowthinnetdemandisconcentratedinSERC-East,SERC-Central,SERC-Florida,andWECC-NWsubregions,aswellastheSPPandERCOTregions.However,NERCforecastsnetdemandreductionsfortheMISO26NetInternalDemandequalsTotalInternalDemandlessDispatchable,ControllableCapacityDemandResponseusedtoreduceload.PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).27Resourcesandnettransfersreferstotheadditionof“existing-certaincapacity”and“netfirmcapacitytransfers.”Existing-certaincapacityincludescommerciallyoperablegeneratingunitsorportionsofgeneratingunitsthatmeetatleastoneofthefollowingrequirementswhenexaminingtheperiodofpeakdemandforthesummerseason:unitmusthaveafirmcapabilityandhaveapowerpurchaseagreementwithfirmtransmissionthatmustbeineffectfortheunit;unitmustbeclassifiedasadesignatednetworkresource;and/orwhereenergy-onlymarketsexist,unitmustbeadesignatedmarketresourceeligibletobidintothemarket.Netfirmcapacitytransfersreferstotheimportsminusexportsoffirmcontracts.NERC,2022LongTermReliabilityAssessment(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.28SERC-EastincludesNorthCarolinaandSouthCarolina.SERC-CentralincludesallofTennesseeandportionsofGeorgia,Alabama,Mississippi,Missouri,andKentucky.SERC-SoutheastincludesallorportionsofGeorgia,Alabama,andMississippi.SERC-FloridaPeninsulaincludesthestateofFlorida.Sub-regionsarealsoshowngeographicallyinFigure3.NERC,LongTermReliabilityAssessment,December2022,https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.29WECC-CAMXincludespartsofCalifornia,Nevada,andBajaCalifornia,Mexico.WECC-SW(SouthwestReserveSharingGroup)includesArizona,NewMexico,andpartofCaliforniaandTexas.WECC-NW(NorthwestPowerPool)includesColorado,Idaho,Montana,Oregon,Utah,Washington,WyomingandpartsofCalifornia,Nebraska,Nevada,andSouthDakota.Sub-regionsarealsoshowngeographicallyinFigure3.NERC,LongTermReliabilityAssessment(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.Figure2:NERC2022and2023DemandandResources250200150100500RegionalDemand&Resources(GW)NERC/ISO/RTORegionsERCOTWECC-USSPPPJMSERCNPCC-USMISONetInternalDemand2022NetInternalDemand20232022Resources&NetTransfers2023Resources&NetTransfersSource:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn9nFEDERALENERGYREGULATORYCOMMISSIONregionandSERC-Southeast,alongwiththeWECC-CAMXandWECC-SWsub-regions.NERCforecaststhatthenetdemandinISO-NE,NYISO,andPJMwillremainsimilartosummer2022levels,withlessthan1%change.30Toservethatdemand,NERCforecastsanationalincreaseof2.42%,oralmost22.7GW,intotalsystemresourcesandnettransfers,from938.2GWinsummer2022to960.9GWinsummer2023,31asshownasdiamondshapesinFigure2.32ThisnationalincreasewasdrivenbyresourceadditionsandnettransferincreasesintheMISO(0.33%),NYISO(0.63%),PJM(1.1%),andERCOT(5.6%)regions,aswellastheSERC-Central(1.11%),SERC-Southeast(5.34%),SERC-Florida(11.5%)andWECC-NW(12.3%)subregions.However,generatorcapacityadditionsscheduledtocomeonlineforthesummercouldbedelayedforseveralreasons.Regionsarereportingthatsomegenerationandtransmissionprojectsarebeinghinderedbysupplychainissuessuchasproductunavailability,shippingdelays,andlaborshortages.SupplychainimpactsarenotedlaterintheElectricRiskssectionofthisreport.NERCaccountsforandadjustscapacityvaluestoreflecttheexpectedabilitytoserveload.First,projectedresourcecapacityusedintheNERCassessmentsisreducedfromnameplatecapacitytoreflectknownoperatinglimitations(e.g.,fuelavailability,transmissionlimitations,environmentallimitations)thencomparedtothereferencemarginlevels,whichrepresentlevelsofriskbasedonaprobabilisticlossofloadanalysis.33Consequently,theon-peakresourcecapacitythatNERCusesreflectstheexpectedoutputatthehourofpeakdemand.Becausetheelectricaloutputofvariableenergyresources(suchaswindandsolar)dependsonweatherconditions,andhydroelectriccapacitydependsonreservoirlevels,estimatedon-peakcapacitycontributionsarelessthannameplatecapacity.Generally,theEasternInterconnectionexpects16%ofnameplatewindcapacity,61%ofnameplatesolarcapacity,and81%ofnameplatehydrocapacitytobeavailabletomeetthepeakdemandhour.TheWesternInterconnectionexpects17%ofnameplatewindcapacity,61%ofnameplatesolarcapacity,and52%ofnameplatehydrocapacitytobeavailableduringthepeakdemandhour.ERCOTexpects33%ofnameplatewindcapacity,78%ofnameplatesolarcapacity,and85%ofnameplatehydrocapacitytobeavailableduringthepeakdemandhour.34Whenaccountingforcapacityplanning,resourcesarecategorizedasanticipatedorprospective,whichincludebothplannedandexistingresources.35NERCnotesthatwhileexistingandanticipatedresourcesshouldbeadequatetosupportresourceadequacythissummer,energyrisksremaininseveralregions,especiallyastheresourcemixcontinuestoevolve.Somerisksaredrivenbyadecreaseinavailablegenerationduetoretirementsandanincreaseinvariableenergyresources,especiallyduringoff-peakornet-peakhourswithhighpenetrationsofrenewables.Asthesunsetsandsolaroutput30PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).31Id.32Id.33ProjectedresourcecapacityusedintheNERCAssessmentsisprovidedbytheregion/subregionbasedonload,generation,andtransmissioncharacteristicsaswellasregulatoryrequirements.NERC,ReliabilityIndicators,Metric1-ReserveMargin,https://www.nerc.com/pa/RAPA/ri/Pages/PlanningReserveMargin.aspx.34PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).35Anticipatedresourcesincludecapacitydesignatedexisting-certain,tier1capacityadditions,andnetfirmcapacitytransfers.Generally,anticipatedresourcesincludegeneratorsandfirmcapacitytransfersthatareexpectedtobeavailabletoserveloadduringpeakperiodsthisseason.Prospectiveresourcesarethosethatcouldbeavailablebutthatdonotmeetthecriteriatobecountedasanticipatedresourcesalone.Prospectiveresourcesincludeallanticipatedresources,pluscapacitydesignatedexisting-other.Existing-othercapacityincludescommerciallyoperablegeneratingunitsorportionsofgeneratingunitsthatcouldbeavailabletoserveloadfortheperiodofpeakdemandfortheseasonbutdonotmeettherequirementsofanexisting-certainresource.PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).2023SUMMERENERGYMARKETASSESSMENTn10nFEDERALENERGYREGULATORYCOMMISSIONdeclines,distributionsolarcustomers’generationmustbereplacedbyotherresources,whichcancreateexposuretochallengingconditionsforsystemoperatorsparticularlyintheWestandERCOT,asthedemandincreases.Similarly,regionssuchasSPPandMISO,withhighamountsofwindresources,canbeatriskgivenwindvariability.Additionally,theriskgreatlyincreaseswhenhighdemandinmultiplelocationsreducestheinterregionalresourcesavailableforexporttoaneighboringregion.Finally,anydelaysinprojectcompletionfortier1resources,ortransmissionprojectsunderdevelopmentandexpectedtobeoperating,couldcreatepotentiallocalorregionalreliabilityrisksthissummer.Inprioryears,thissummerassessmenthasreliedextensivelyonNERC’sreservemarginanalysistodetermineresourceadequacylevels.However,regionscanfaceenergyshortfallsdespitehavingplanningreservemarginsthatexceedthereferencemarginlevels.Externalfactorsthatcancreateshortageseveninwell-suppliedregionsincludescheduledgeneratormaintenance,forcedoutages,andconditionsthataffectgenerationresourceperformanceoravailability,includingconstraintsonfuelsupplies.Asaresult,NERCandtheRegionalEntities,whichareshowninFigure3,alsouseaprobabilisticriskanalysistoassesstheavailabilityandsufficiencyofresourcestomeetdemandundernormaloperatingconditionsaswellasmultipleriskscenariosunderarangeofconditions.Whereasreservemarginsmaynotcapturethefullrangeofriskstoreliability,probabilisticriskanalysismorefullyassessesthepotentialvariationsinresourcesandloadthatcanoccurunderchangingFigure3:MapofNERCSub-regionsSource:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn11nFEDERALENERGYREGULATORYCOMMISSIONconditionsorcertainscenarios,aswellaswhatoperatoractionscouldhelptomitigateanyshortfallsinoperatingreserves.36Thisassessmentspotlightstworegionsandseveralsubregions37—MISO,ERCOT,WECC-CAMX,WECC-SW,WECC-NW,andNPCC-NE—asshowninFigure4,Figure5,Figure6,Figure7,Figure8andFigure9below.Theanalysesfortheseregionsprovideinsightintohowunanticipatedeventsduringnormaland/orextremesummerconditionsmayaffectthetotalresourcemixavailabletomeetdemand.Inparticular,NERC’sanalysisshowsthatWECC-CAMXandNPCC-NEmayrequireoperationalmitigationstomeetoperatingreserverequirementsfortheexpectedsummerpeakdemand.OtherregionsandsubregionssuchasMISO,ERCOT,WECC-SWandWECC-NW,aswellasSPPandSERC-Centralanticipateadequatesuppliesandreservemarginsundernormalconditionsbutfaceahigherlikelihoodoftightsupplyandreliabilityissuesduringextremeconditions.Fortheseregions,anabove-normalsummerpeakloadandoutageconditionscouldresultintheneedtoemployoperationalmitigations(i.e.,demandresponseandtransfers)andEnergyEmergencyAlerts(EEAs),38includingloadshed,underextremepeakdemandandgeneratoroutagescenarios.39Additionally,droughtconditionsinmanypartsofthecountrycouldfurthercomplicateoperationsformanyregions(discussedlaterinthisreport).Thechartsbelowcompareresourcesagainstlevelsofforecastedsupplyanddemand,includingrequiredreservelevels,underchosenextremescenarios.Theseincludethenormalpeaknetinternaldemand(50/50)scenarioandtheextremesummerpeakdemand(90/10)scenario.40Theleftbluecolumnshowsanticipatedresourcesandthetwoorangecolumnsattherightshowthetwodemandscenariosmentionedpreviously:thenormalpeaknetinternaldemand(50/50)scenarioandtheextremesummerpeakdemand(90/10)scenario.Bothscenariosaredeterminedbytheregionalorsub-regionalassessmentarea.Themiddleredorgreenbarsshowthefactorsthatcanaffectresourceavailabilityandtheirimpacts,measuredcumulatively,onresourceavailability.Theseincludereductionsfortypicalgenerationoutages(maintenanceoutagesandforcedoutagesnotalreadyaccountedforinanticipatedresources),showninred,andadditionsthatrepresenttheresourcesfromoperationalmitigationtools,ifany,showningreen,thatareavailableduringscarcityconditionsbuthavenotbeenaccountedforinthereservemargins.Asidentifiedinpastseasonalassessments,thissummerriskassessmentdoesnotaccountforalltheuniqueenergyadequacyrisksassociatedwithaspecificarea(e.g.,expectedunservedenergy).Long-durationheatwavesanddisruptionstoprimaryandbackupfuelsupplychainsarenotexplicitlyconsideredintheregionalseasonal36OperatingReservesarethecapabilityabovefirmsystemdemandrequiredtoprovideforregulation,loadforecastingerror,equipmentforcedandscheduledoutagesandlocalareaprotection.Itconsistsofspinningandnon-spinningreserves.NERC,GlossaryofTermsUsedinNERCReliabilityStandards,https://www.nerc.com/files/glossary_of_terms.pdf.37ThissectionisbasedonpreliminarydataprovidedbytheNERCRegionalEntitiesforNERC’supcoming2023SummerReliabilityAssessment,tobereleasedMay17,202338EachregionhasaseriesofemergencyproceduresinplaceknownasEnergyEmergencyAlerts(EEAs),whichmaybeusedwhenoperatingreservesdropbelowspecifiedlevels.Theseproceduresaredesignedtoprotectthereliabilityoftheelectricsystemasawholeandpreventanuncontrolledsystem-wideoutage.39Otherexamplesofoperationalmitigationsmayincludearrangingtopurchaseavailableemergencycapacityandenergyfromneighboringbalancingauthorities,implementingavoltagereductiontoreduceload,requestinggeneratorsanddemandresponsethatdonothavecapacityobligationtoprovideenergyordecreasedemandforreliabilitypurposes,requestingvoluntaryloadcurtailmentbylargeindustrialandcommercialcustomers,andallowingfordepletionofoperatingreservesbeforesheddingload.40A50/50peakloadforecastisbasedona50percentchancethattheactualsystempeakloadwillexceedtheforecastedvalue.A90/10peakloadforecastisbasedona10percentchancethattheactualsystempeakloadwillexceedtheforecastedvalue.2023SUMMERENERGYMARKETASSESSMENTn12nFEDERALENERGYREGULATORYCOMMISSIONriskscenariosandcancauseuniqueriskstoanarea’soperations.Notethatmethods,scenariosconsideredandassumptionsdifferbyassessmentarea,andmaynotbecomparable.MISO:NERC’sseasonalriskassessmentanalysisforMISOforecaststhatexpectedresourceswillmeetloadandreserverequirementsunderthenormalpeak-demandscenario.However,itshowssomeriskthat,underahigh-load,high-outagescenario,gridoperatorsmayneedtoemployemergency-onlyloadmodifyingresources(LMRs),suchasdemandresponseandbehind-the-metergeneration,andnon-firmsystemimportstomeetsystemneeds.InordertoactivateLMRdemandresponseresources,MISOdeclaresa“MaximumGeneration”eventwhenallonlinedispatchablegenerationisused.PreliminaryNERCdataindicateminimalchangeforMISOinsummer2023comparedtosummer2022intermsofdemandandgeneratoravailability.Forexample,thereisasmalldecreaseintypicalmaintenanceoutages(0.2GW)andasmallincreaseintypicalforcedoutages(1GW).Resourcederatesfortheextremeconditionscenariodecreasedbyonly0.6GWandoperationalmitigationremainedatthesamelevelwith2.4GW,keepingthoseresourcesavailableduringextremeconditions.Also,summerdemanddecreasedby1.4GWforthenormalforecastanddecreasedby1.3GWfortheextremedemandscenarioforecast.Figure4showsNERC’spreliminaryassessmentforanormalsummerandforanextremesummerforMISO.Overall,NERCanticipatesthatMISOwillmeetthenormalsummerdemand.However,MISOcouldfacearesourceshortfallunderanextremedemandscenariowithextremesummerpeakload,accordingtoNERC.Theanticipatedresourcesare143.7GW,typicalmaintenanceoutagesare6.5GW,andtypicalforcedoutagesare15.4GW.Thisleaves121.8GWtomeettheexpectednormaldemandscenarioforecastforasummerpeakloadof116.8GW.Inthisscenario,netresources,aftertypicalmaintenanceoutagesandforcedoutages,exceedloadby5GW,whichiswellabovetheoperatingreserverequirementof2.4GW.Forextremesummerconditions,NERC’sassessmentofMISOindicatesacapacityderateof9GW,whichwouldfurtherreduceavailableresourcesfrom121.8GWto112.8GW,whichislowerthantheextremedemandscenarioforecastforasummerpeakloadof123.9GW.DuringextremeFigure4:MISORiskPeriodScenario160140120100ExpectedOperatingReserveReq.+ExtremePeakDemand806040200ExtremeSummerPeakDemand2023SummerNetInternalDemandTypicalMaintenanceOutagesTypicalForcedOutagesResourceDeratesforExtremeConditionsOperationalMitigation2023SummerAnticipatedResources143.7-6.5-15.4-92.4116.8123.9ExpectedOperatingReserveRequirement=2.4GWCapacity(GW)Source:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn13nFEDERALENERGYREGULATORYCOMMISSIONsummerconditions,MISOcangain2.4GWofbenefitfromoperationalmitigations,41butstillfaceapotentialresourceshortfallofupto8.7GW.For2023,MISOhasimplementedanewseasonalcapacityconstructandassociatedmodelingimprovementsthatintroduceseasonalrequirementstothePlanningResourceAuctiontoaccountfortheuniqueriskprofileofeachseason.42Asaresult,MISO’ssummerreference(target)reservemargindeclinedfrom17.9%to15.9%,whichmeansthatlessresourcesareneededthissummer.Additionally,MISO’s2023-2024PlanningYear,LossofLoadExpectation43(LOLE)studyincorporatedmanyimprovementsasaresultoftheapprovedseasonalconstruct.44Theseimprovementsincludeupdatedtransferlimitsduetoimprovedredispatch,seasonaloutagerates,correlatedhot/cold-weatheroutages,probabilisticdistributionofnon-firmsupport,andhourlywindandsolarprofiles.TheMISOLOLEanalysisshowsthatthesystemwouldachieveaone-daylossofloadeverytenyearsor0.1day/yearreliabilitylevelforthesummer2023seasonwhentheamountofinstalledcapacityavailable(consideringexternalsupport)is1.159timesthatofMISO’sexpectedsummer2023coincidentpeak.45MISOdoesnotanticipateoperationalchallengesthissummerduetoanyfuelsupply,inventory,ortransportationissues.However,existing-certainresourcesarelowerthisyearthaninlastyear’s2022summerassessmentby0.8%,or1.2GW.Also,thisyearMISOhasgainedanadditional1.7GWofnetfirmimportscomparedtosummer2022,asaresultofanincreaseinexternalresourceregistrationsintheMISO2023-2024PlanningYearandareductioninexports.MISOcontinuestocollaboratecloselywithneighboringareastoaddressloopflowsfromhighregionaltransfersbetweenMISONorthandMISOSouthaswellasanyanticipatedsystemconditionsrequiringclosercoordination.ERCOT:NERC’sseasonalriskassessmentanalysisforERCOTforecaststhatexpectedresourceswillmeetloadandoperatingreserverequirementsunderthenormalpeak-demandscenarioconditions.However,above-normalpeakloadandoutageconditionscouldproducearesourcedeficiencyandtheneedtoemployoperationalmitigationsuchasdemandresponse,transfers,andshort-termloadinterruption.EEAsmaybeneededunderextremepeak-demandandoutagescenarios.PreliminaryNERCdataindicatechangesforERCOTinsummer2023,comparedtosummer2022,intermsofgeneratoravailability,demandgrowthanddemandprofile.Forexample,NERCforeseesasmallincreaseintypicalforcedoutages(0.5GW)fromlastsummer.Resourcederatesfortheextremeconditionscenarioincreasedby2.7GW,while41Operationalmitigationsareoperationalactionstakenbysystemoperatorsthatincludetheabilitytoimportadditionalpowerfromneighboringregions,requestvoluntaryormandatoryconservationfromcustomerstoreduceload,manageloadbyreducingoperatingvoltages,drawdownoperatingresevesorshedload.However,loadsheddingisonlyusedasanemergency,lastresort,measureanditiseachentity’soverridinggoaltoavoidthisscenario.42MidcontinentIndependentSystemOperator,Inc.,180FERC¶61,141,(2022),https://elibrary.ferc.gov/eLibrary/filelist?accession_number=20220831-3093&optimized=false.43LossofLoadExpectation,orLOLE,isastudytodetermineaPlanningReserveMarginUnforcedCapacity,zonalper-unitLocalReliabilityRequirements,ZonalImportAbility,ZonalExportAbility,CapacityImportLimitsandCapacityExportLimits.TheresultsofthestudyanditsdeliverablessupplyinputstotheMISOPlanningResourceAuction.Historically,theLOLEmodelutilizeda5-yearaverageoftheEquivalentDemandForcedOutageRate(EFORd),ameasureoftheprobabilitythatgeneratingunitwillnotbeavailableduetoforcedoutagesorforcedderateswhenthereisarequestfortheunittogenerate.TheEFORdisbasedonhistoricNERCGeneratorAvailabilityDataSystem(GADS)data,whichwasconstantthroughoutthesimulatedyearforallresources.Thisyear,theLOLEmodelcalculatesaseasonalEFORdusingthesameGADSdatabutoutagesareclassifiedbyseasontoproducefouruniqueseasonalEFORdvaluesforeachresource.Thechangebettercapturestheseasonalavailabilityofresourcesobservedinoperations.44MISOissettoannouncetheresultsofthePlanningReserveAuctionforthe2023/2024planningyearonMay19,2023.45MISO,PlanningYear2023-2024LossofLoadExpectationStudyReport,(November1,2022),https://cdn.misoenergy.org/PY%202023%202024%20LOLE%20Study%20Report626798.pdf.2023SUMMERENERGYMARKETASSESSMENTn14nFEDERALENERGYREGULATORYCOMMISSIONthelowwindscenariodecreasedby0.9GWandoperationalmitigationsremainedatthesamelevelof1.7GWascomparedtosummer2022.Also,summerdemandincreasedby4.4GWforthenormalforecastandincreasedby5.9GWfortheextremedemandscenarioforecast.ThishigherdemandincreasereflectsERCOT’supdatedlong-termloadforecastreleasedinNovember2022andisattributabletothecontinuedrobustpost-COVID-19economicrecoveryinTexas.Growthintransmission-connectedcrypto-currencyminingfacilitiesisalsoacontributortoloadgrowth.Figure5showsregionaldatasubmittedforNERC’spreliminaryassessmentinanormalsummerandforanextremesummerforERCOT.NERCprojectsthatERCOTwillhavesufficientresourcestoexceedtheoperatingreserverequirementunderthenormaldemandscenariowithexpectedsummerpeakload.However,theERCOTregioncouldfacearesourceshortfallunderanextremedemandscenarioforecastwithextremesummerpeakload,accordingtoNERC’sassessment.NERCprojects97GWofanticipatedresourcesinERCOTforsummer2023andtypicalforcedoutagesof5GW.Thisleaves92GWavailabletomeettheexpectednormaldemandscenarioforecastforasummerpeakloadof79GW.Inthisscenario,netresources,aftertypicalmaintenanceoutagesandforcedoutages,exceedloadby13GW,whichiswellabovetheoperatingreserverequirementof1GW.Forextremesummerandlowwindconditions,NERC’sassessmentofERCOTindicatesacapacityderateof12.7GW.Thiswouldreduceavailableresourcesfrom97GWto79.3GW,whichislowerthantheextremedemandscenarioforecastforanextremesummerpeakloadof82.3GW.Duringextremesummerconditions,ERCOTcangain1.7GWofadditionalresourcesfromoperationalmitigations,butstillfaceapotentialshortfallofupto1.3GW.Overall,existing-certaincapacityincreasedby5.6%andanticipatedresourcesincreasedby6.9%.Thisgrowthismainlyduetosolarplantadditions.Thegrowthalsoreflectstheimplementationofanewinterimcapacitycontributionmethodologyforbatterystoragefacilities,whichincreasedthesummerpeakcapacityby661MWcomparedto0MWlastsummer.4646PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).Figure5:ERCOTRiskPeriodScenario1401008-6040200OperationalMitigation97-5-5.6-7.11.77982.3Capacity(GW)ExpectedOperatingReserveReq.+ExtremePeakDemandExpectedOperatingReserveRequirement=2.4GWTypicalForcedOutages2023SummerAnticipatedResourcesExtremeSummerPeakDemand2023SummerNetInternalDemandResourceDeratesforExtremeConditionsLowWindScenarioSource:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn15nFEDERALENERGYREGULATORYCOMMISSIONAsofMarch30,2023,ERCOTplannedtohave15.9GWofutility-scalesolarresourcenameplatecapacityconnectedforthesummer.Ayearago,thesolarnameplatecapacityexpectedforthesummerwasabout11.5GW.Theamountofinstalledwindandsolarnameplatecapacityexpectedfortheupcomingsummerpeakdemandhoursisabout46.9GW(similartolastyear’ssummerassessment).AlthoughnameplatecapacityforsolarhasincreasedinERCOT,windnameplatecapacityhasdecreasedby4.5GW.47VariableenergyfromwindandsolarresourcesiscriticaltomeetingpeakelectricitydemandinERCOT.Periodsoflowwindorsolargenerationorhigher-than-expectedthermaloutagescreateareliabilityriskduringpeakloadhours.LikeCalifornia,ERCOTseescapacity-scarcityriskshiftingtolaterhours,mainlybecauseofthelargeincreaseinsolarcapacityasashareoftheresourcemixoverrecentyears.Inotherwords,netpeakloadhoursshifttolaterinthedaywhenthesunsetsandsolargenerationoutputdeclines,anddistributionsolarcustomersreturntogridservices,creatingmorechallengingconditionsforsystemoperators.WhileERCOT’ssummer2023probabilisticassessmentindicatesalowriskfortheforecastedpeakloadhour,therisksteadilyincreasesintotheeveningduetotherampingdownofsolarwiththehighestriskintheearlyevening,althoughtheriskiscurrentlyassessedtobelowerthansummer2022.TheperformanceofsolarresourcesinERCOTduringdisturbances(i.e.,systemfaults)continuestobeaconcern.AJune4,2022,disturbanceinOdessa,Texas,involvedthelossofsolarresources.Intotal,844MWofsynchronousgenerationtrippedatthetimeofthedisturbanceand1,711MWofsolarresourcesfrommultiplefacilitiesalsounexpectedlyreducedpoweroutputduetotheprotectionandcontrolsateachsite.WhilesolarPVpenetrationwasonlyat15%ofthetotalgenerationmixforthisevent,thesizeoftheeventnearlyexceededsystemdesigncriteria.48IncoordinationwithTexasRE,49NERCpublishedareportontheincidentinDecember2022withanumberofrecommendationsforindustry.ERCOTalsofiledNodalOperatingGuideRevisionRequest245,whichproposestoupdateERCOTInverterBasedResource(IBR)frequencyandvoltageride-throughrequirementstobeconsistentwithor,insomecasesexceed,therequirementsidentifiedintheIEEE2800-2022standard.50IBRsarediscussedinfurtherdetailbelowintheInverter-BasedResourcessection.AnotherpotentialissueforERCOTthissummerisagrowingfrequencyoftransmissionconstraintsandresultingwindandsolargenerationcurtailments.Thenumberoflocalorregionalgenerictransmissionconstraints(GTCs)implementedbytheERCOTOperationsDepartmenthasincreasedby13percentfromlastyear.51GTCsareusedtomanagethestability-relatedconstraintsandmaintainreliablepowertransferandgenerationoperationinreal-timeandareassessedquarterly.ERCOTisalsoexperiencinglargeincreasesinwindandsolarproductioncurtailmentsduetotransmissionconstraints.CurtailmentshavebeenpredominatelyassociatedwithwindfacilitiesinWestTexasandthePanhandle.However,curtailmentisgrowinginotherpartsofERCOTaswellandisincreasinglyoccurringatsolarfacilities.ERCOTalsoisfacinganincreasedriskofintensifyingdroughtconditionsandhigher-than-normalsummertemperatures.MostofERCOTexperiencedseveredroughtconditionsduringthemostrecentwinterandspring,47PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).48NERC,NERC2022OdessaDisturbanceReport(December2022),https://www.nerc.com/comm/RSTC_Reliability_Guidelines/NERC_2022_Odessa_Disturbance_Report%20(1).pdf.49TexasReliabilityEntity(TexasRE)isresponsiblefortheERCOTRegionalEntityfunctionsdescribedintheEnergyPolicyActof2005.NERC,2022LongTermReliabilityAssessment,(December2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_LTRA_2022.pdf.50ERCOT,ERCOTNodalOperatingGuideRevisionRequestat245,https://www.ercot.com/mktrules/issues/NOGRR245#summary.51PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).2023SUMMERENERGYMARKETASSESSMENTn16nFEDERALENERGYREGULATORYCOMMISSIONwhichwilllikelysetthestageforthehighertemperaturesanddroughtconditionsrangingfrommoderatetoexceptionalinmostoftheregion.Thermaloutagesmayalsoincreaseduringsevereandprolongeddroughtconditionsduetocoolingwatertemperatureissuesandwatersupplyconstraints.Increaseddroughtcouldincreaserisksofwildfires,whichposelocalizedthreatstotransmissionlines.Hightemperaturescoulddrivesummerpeakdemandsaboveforecasts,whichalreadyprojectrecordpeakdemandlevels.Inadditiontotheseongoingconcerns,ERCOTconsidersitsmostsignificantchallengethissummertobethepotentialneedtoreduceoutputfromcertainthermalgenerationtomeetnew,tighterlimitsontheemissionofozone-formingnitrogenoxides(NOx).ThetighterlimitsaresetintheEnvironmentalProtectionAgency’s(EPA)recentlyapproved“GoodNeighborPlan.”52TheGoodNeighborPlanestablishesaNOxemissionstradingprogramandstate-specificemissionbudgetsforeachozoneseason(May1–September30)in22statesthatwilldeclineeachyear.Thestatebudgetsarecalculatedbasedonstringentoptimizationofexistingpost-combustioncontrols(SelectiveCatalyticReductionandSelectiveNon-CatalyticReduction)andwillstartinthe2023ozoneseason.Undertheplan,thestate-of-the-artNOxcombustioncontrolswillbeinstalledbythe2024ozoneseason,andnewpost-combustioncontrolswillbeaddedby2030.WhiletheEPAadjustedsomeoftheprogramrequirementsfollowingcomments,severalgenerationownersimpactedbytheprogram(whichrepresentnearlyhalfoftheERCOTcoalandgasgenerationfleetonacapacitybasis)havestatedthatcertaingeneratorsmayrunoutof2023ozoneseasonemissionallowancesbyJuly2023,particularlyiftheERCOTregionexperienceshigher-than-normaltemperatures.53Inthepastduringextremesystemstress,ERCOThasrequestedDOEtograntanemergencyorderunderSection202(c)oftheFederalPowerAct.54WECC-US:Generally,allthreeWECC-U.S.subregionsareexperiencingheightenedreliabilityrisksandsimilaroperationalchallenges,withspecificsubregionhighlightsfurthercalledoutbelow.SupplychainissuesareamajorconcerntomaintainingreliabilityintheWesternInterconnection,potentiallyaffectingthecommercialoperationofnewresources,schedulingofplantmaintenance,andconnectionsofnewcustomers.Distributionpowertransformers(DPT)andlargepowertransformers(LPT)areincriticallyshortsupply.Anextendedsupplycrunchhasresultedinafour-foldincreaseinwaittimesforDPTs,from3-6monthsbefore2022to1-2yearscurrently.LPTshavewaittimesoftwo-plusyears.Accesstograin-orientedelectricalsteel,acriticalcomponentfortransformersandotherkeycomponents,isalsoextremelyrestricted.55Thesedelaysaffecttheregion’sabilitytocompletenewprojectsandwillalsoimpactrestorationeffortsfromanyfiresorextremeweatherthissummer.ThesesupplychainissueshaveledsomeownersandoperatorstodelayorcancelmaintenanceactivitiesthataretypicallyperformedtoensurefacilitiesarereadyforsummerconditionsandareprofiledinmoredetailsintheElectricRiskssectionlaterinthisreport.Additionally,generatorownersinsomeareasthatwerepreparingtointerconnectnewgenerationarefacingdelaysthatwillpreventsomefrombeingavailabletomeetexpectedpeaksummerdemand.ThisincludesareasintheU.S.SoutheastandtheU.S.partoftheWesternInterconnection.56However,newresourcesarecomingonlinebetweenJanuaryandJuly2023,withtheWECC-USregionsnotingadditionsof7,164MWinWECC-CAMX,3,401MWinWECCSWand2,060MWinWECC-NW,while263MWofcapacity52ThisisfurtherdescribedlaterinthereportintheElectricRisksSection.53PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).54StateofTexasv.EPA,5thCir.App.,No.23-60069,OrderMay1,2023.55DOE,SummaryofRoundtablesandRFIResponses,(March2023),https://www.energy.gov/sites/default/files/202304/DOE%20DPA%20Roundtables%20and%20RFI%20Executive%20Summary%20FINAL%203-21-23.pdf.56PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).2023SUMMERENERGYMARKETASSESSMENTn17nFEDERALENERGYREGULATORYCOMMISSIONwillberetiredintheWECC-NW(U.S.)subregion.57TheWECC-USregionscouldbechallengedthissummerbymultiplefactors,includingincreasedsupply-sideshortagesandfuelconstraints,theimpactoftheongoingdroughtinsomeareas,continuedwildfirethreats,andregionalheatwaves.Anincreaseinnaturalgasprices,ifitoccurs,wouldtriggeraregionalincreaseincoaldemandandcoalprices.Somesub-regionshavehadreducedcoaldeliveriesforthepasttwoyears,andtheregionhasconcernsaboutavailablebaseloadgenerationcapacityfortheforeseeablefuture.WECCalsoexpectsutilitiestoimplementcontrolstomaintainfuelstocksthroughsummer2023tomaximizecoalinventoriesandtocontinuemonitoringcoaldeliveries.AcrosstheWesternInterconnection,utilities,gridoperatorsandgeneratorshaveenactedadditionalsecuritycontrolsandsituationalawarenessmonitoringprotocolstoaddressrecentheightenednationalandglobalcyberandphysicaleventstargetingenergyinfrastructure.WECChad10EnergyEmergencyLevel3Alerts(EEA-3)58in2022,nineofwhichoccurredduringanextremeheatwavethatlastedfor11daysinlateAugustandearly-September.TheaveragedurationoftheEEA-3sin2022wasmorethan200minutes,almostdoublingtheaveragedurationofEEAalertsinpreviousyears.59DuringtheextendedheateventfromAugust30toSeptember10,2022,theWesternInterconnectionsetanewpeakdemandof167,530MW.Thepreviousrecordwas162,017MW,setonAugust18,2020.60Duringthe2022event,excessiveheatwarningswereissuedformuchofCaliforniaandpartsofwesternArizonaandsouthernNevada.57Retirementsinclude:162MWofPumpedStorage,96MWofNaturalGasand4.8MWofBiomass.FromPreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).58AnEEA-3alertisdefinedasasituationinwhichfirmloadinterruptionisimminentorinprogress.59WECCWebsite,Indicator4:NumberandDurationofEnergyEmergencyAlerts,ReliabilityandSecurityIndicatorDashboard,https://www.wecc.org/PerformanceAnalysis/Pages/ReliabilityIndicatorDashboard.aspx?.60WECC,2023StateoftheInterconnection(March24,2023),https://www.wecc.org/Administrative/State%20of%20the%20Interconnection.pdf.Figure6:WECC-CAMXRiskPeriodScenario0102030405060ExtremeSummerPeakDemand2023SummerNetInternalDemandLowHydroScenarioResourceDeratesforExtremeConditionsTypicalForcedOutages2023SummerAnticipatedResourcesExpectedOperatingReserveReq.+ExtremePeakDemand57.7-3.4-5.2-2.349.558.1Capacity(GW)ExpectedOperatingReserveRequirement=3.4GWSource:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn18nFEDERALENERGYREGULATORYCOMMISSIONTemperaturesreachedwellintothetripledigits(Fahrenheit),withsomeareasexhibitingrecord-highnighttimelowsandrelativelyhighdewpoints.61Therequestsforenergyconservation,useofdemand-sidemanagementprograms,andshortagesofreal-timegenerationrequiredBalancingAuthoritiestorequestassistancefromothers.TheWECCBalancingAuthoritieswereabletooperatethroughouttheeventwithoutsheddinganyfirmload.62WECC-CAMXsubregion:RegionaldatausedinNERC’sseasonalriskassessmentanalysisforCAMXshowsthatexpectedresourcesmeetoperatingreserverequirementsunderthenormalpeak-demandscenario.Conditionswithabovenormalsummerpeakloadandoutageconditionscouldresultinaresourcedeficiencyandtheneedtoemployoperationalmitigationssuchasdemandresponse,transfers,andshort-termloadinterruptionandEEAs.PreliminaryNERCdataindicatenotablechangeforCAMXinsummer2023comparedtosummer2022intermsofdemandandresourceavailability.Forexample,althoughtypicalforcedoutagesremainedthesameat3.4GW,theresourcederatesforextremeconditionsscenariodecreasedby4GWandthelowhydroscenariodecreasedby1.5GW,suggestingresourcescouldbemoreavailablethissummer.Theexpectedoperatingreserverequirementremainedatthesamelevelwith3.4GW.Also,summerdemanddecreasedby4.7GWforthenormalforecastanddecreasedby4.6GWfortheextremedemandscenarioforecast.Figure6showsCAMXregionaldatasubmittedforNERC’spreliminaryassessmentforanormalsummerandforanextremesummer.Itshowspotentialresourceshortfallsfortheexpectednormaldemandscenariowithexpectedsummerpeakload,aswellasfortheextremedemandscenarioforecastwithanextremesummerpeakload.Theanticipatedresourcesare57.7GWandtypicalforcedoutagesare3.4GW.Thisleaves54.3GWtomeettheexpectednormaldemandscenarioforecastforasummerpeakloadof49.5GW.Inthisscenario,netresources,aftertypicalforcedoutages,exceedloadby4.8GW,whichisabovetheoperatingreserverequirementof4.8GW.Forextremesummerconditions,NERC’sassessmentofCAMXindicatesacapacityderateof7.5GW.Thiswouldalsoreduceavailableresourcesfrom54.3GWto46.8GW,whichis11.3GWbelowtheextremedemandscenarioforecastforasummerpeakloadof58.1GW.InCAMX,temperaturesareexpectedtobeaboveaveragewiththehighestriskofincreasedtemperatureslaterinthesummer.63AlthoughmuchofCaliforniaintotheGreatBasincontinuedtoseedroughtreductionthroughFebruary,intheSouthernCaliforniaregion,heavier-than-normalgrassgrowthdoesraisethepossibilityofahigher-than-normalnumberofgrassfiresoncegrassescureinMay,whichcouldraisefirerisklaterinthesummer.64Additionally,summerheatmeltingtheunusuallyhighsnowpackcouldproduceacceleratedrun-offconditionswithflooding,mudslides61NASA,ALong-lastingWesternHeatwave(September6,2022),https://earthobservatory.nasa.gov/images/150318/a-long-lasting-western-heatwave.62WECC,2023StateoftheInterconnection(March24,2023),https://www.wecc.org/_layouts/15/WopiFrame.aspx?sourcedoc=%2FAdministrative%2FState%20of%20the%20Interconnection%2Epdf&action=view.63NOAAClimatePredictionCenter,SeasonalOutlook(April20,2023),https://www.cpc.ncep.noaa.gov/products/predictions/multi_season/13_seasonal_outlooks/color/t.gif.64Mostnative,crop,andpasturespeciesdevelopthroughalifecycleinwhichtheplantannuallygreensupinthespring,maturesduringthesummer,driesoutinthelatesummerorfall,thendiesorbecomesdormant.Thisannualdryingprocessistermedcuring,andthisishowfueliscreatedwhichgeneratesthepotentialforgrasslandfires:NOAA,NWS.GrasslandCuringGuide.https://www.weather.gov/media/dmx/FireWx/CuringGuide2022.pdf.2023SUMMERENERGYMARKETASSESSMENTn19nFEDERALENERGYREGULATORYCOMMISSIONandimpactstoinfrastructure.Whiletheremaybeanincreaseinwildfiresduetothehighavailabilityofplantmaterialasfuel,offshorewindeventsareexpectedtobenearorbelownormalthisspring,whichwouldlikelyleadtofeweropportunitiesforgrassfirestospreadrapidlyorintootherfueltypes.TheWesternInterconnectionhasplannedfor3,557MWofbatterystoragetocomeonlinebyJuly2023,withanadditional2,049MWbytheendofSeptember2023.InCAISO,alargeamountofthebatterycapacitycomingonlineislocatedinthesouthernportionoftheRTO,andmarketenhancementsareongoingtoimprovethebatteryperformancetosupportreliability.65AtraditionalreservemarginanalysisindicatesthatCAMXisexpectedtohavesufficientresourceavailabilitytomeetdemandandcoverreserves.TheCAMXreservemarginisestimatedtobeapproximately25%,withanexpectedincreaseto35%withanticipatedresources.ThereferencemarginforCAMXonthepeakhouris16.8%,andtheareaisexpectedtohaveadequateresourcesforthepeakhour.However,underanextremesummerpeakloadduringthenetpeakriskhoursfrom7:00pm-8:00pm,CAMXwouldneedtorelyonincreasedimportstomaintainadequatereserves.CAMXwillalsorelyonimportstomeetexpectednetinternaldemandforthesameriskhourfrom7:00pm-8:00pm(notanextremesummerpeakforthathour),shouldanytypicaloutagesand/orextremederatesoccur.WECC-SWsubregion:NERC’sseasonalriskassessmentanalysisforWECC-SWshowsthatexpectedresourcesmeetoperatingreserverequirementsunderthenormalpeak-demandscenario.However,above-normalpeakloadandoutageconditionscouldproducearesourcedeficiencyandtheneedtoemployoperationalmitigationsuchasdemandresponse,transfers,andshort-termloadinterruption.EEAsmaybeneededunderextremepeakdemandandoutagescenarios.PreliminaryNERCdataindicateminimalchangeforWECC-SWinsummer2023comparedtosummer2022.Forexample,thereisasmalldecreaseintypicalforcedoutagesandresourcederatesfortheextremeconditionsscenario,bothby0.3GW,improvingresourceavailability.Also,summerdemanddecreasedby0.3GWforthenormalforecastandincreasedby1.2GWfortheextremedemandscenarioforecast.Figure7showsregionaldatasubmittedforNERC’spreliminaryassessmentforanormalsummerandforanextremesummerforWECC-SW.Itshowsthesubregionmeetingitsoperatingreserverequirementfortheexpectednormaldemandscenariowithavailableresources,butapotentialresourceshortfallundertheextremedemandscenarioforecastwithanextremesummerpeakload.Theanticipatedresourcesare30.6GWandtypicalforcedoutagesare0.94GW.Thisleaves29.6GWtomeettheexpectednormaldemandscenarioforecastforasummerpeakloadof25.6GW.Inthisscenario,netresources,afterforcedoutages,exceedloadby4GW,whichisabovetheoperatingreserverequirementof1.6GW.Forextremesummerconditions,NERC’sassessmentofWECC-SWindicatesacapacityderateof3.6GW.Thiswouldreduceavailableresourcesfrom29.6GWto26.1GW,whichislowerthantheextremedemandscenarioforecastforasummerpeakloadof28GW.Duringextremesummerconditions,WECC-SWfacesapotentialresourceshortfallofupto1.9GW.65CAISO,EnergyStorageEnhancementsTariffAmendmentRequestforWaiverofNoticeRequirement(ER23-1533)(March31,2023),https://www.caiso.com/Documents/Mar31-2023-Tariff-Amendment-EnergyStorageEnhancements-ER23-1533.pdf.2023SUMMERENERGYMARKETASSESSMENTn20nFEDERALENERGYREGULATORYCOMMISSIONWECC-SWanticipatesareservemarginof20%whichmeetsthereferencelevelof13%.However,thisanticipatedreservemargincouldbeaffectedbysupplychaindelays,asmentionedaboveintheWECC-USintroductiontothissection.WECC-SWhasan11%year-over-yeardecreaseinexistingcoalcapacity,alongwitha39%decreaseinplannedtier1(underconstruction)naturalgascapacity.66Windcapacityincreased60%in2022to2,883MW.WECC-NW(U.S.)subregion:NERC’sseasonalriskassessmentanalysisfortheWECC-NWsubregionshowsthatexpectedresourcesmeetoperatingreserverequirementsunderthenormalpeak-demandscenario.However,above-normalpeakloadandoutageconditionscouldproducearesourcedeficiencyandtheneedtoemployoperationalmitigationsuchasdemandresponse,transfers,andshort-termloadinterruption.EEAsmaybeneededunderextremepeakdemandandoutagescenarios.TheriskintheWECC-NWsubregionincreasesafewhourslaterthanthepeakhour,duetothevariabilityofenergyavailablelaterintheevenings,whenthesub-regionisreliantonincreasedimportsfromneighbors.PreliminaryNERCdataindicatenotablechangesfortheWECC-NWsubregioninsummer2023comparedtosummer2022.Forexample,thereisalargeincreaseintypicalforcedoutages(2.7GW)fromlastyear.Theresourcederatesfortheextremeconditionscenarioincreasedby1.1GW.Also,anticipatedsummerdemandincreasedby3.5GW(or5.9%)forthenormalforecastandincreasedby8.3GW(or14.1%)fortheextremedemandscenarioforecast.Figure8showsregionaldatafromNERC’spreliminaryassessmentforanormalsummerandforanextremesummerfortheWECC-NWsubregion.Itshowsthesubregionmeetingitsoperatingreserverequirementfortheexpectednormaldemandscenariowithexpectedsummerpeakload,butapotentialresourceshortfallundertheextremedemandscenarioforecastwithanextremesummerpeakload.Theanticipatedresourcesare72.2GW,66Tier1additionsincludecapacitythatiseitherunderconstructionorhasreceivedapprovedplanningrequirements.PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).Figure7:WECC-SWRiskPeriodScenario303525201510502023SummerNetInternalDemand30.6-0.94-3.30.325.628Capacity(GW)ExpectedOperatingReserveReq.+ExtremePeakDemandExpectedOperatingReserveRequirement=1.6GWTypicalForcedOutages2023SummerAnticipatedResourcesExtremeSummerPeakDemandResourceDeratesforExtremeConditionsLowHydroScenarioSource:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn21nFEDERALENERGYREGULATORYCOMMISSIONandtypicalforcedoutagesare3.9GW.Thisleaves68.3GWtomeettheexpectednormaldemandscenarioforecastandcoverreservesforasummerpeakloadof61GW.Inthisscenario,netresources,aftertypicalforcedoutages,exceedloadby7.3GW,whichiswellabovetheoperatingreserverequirementof3.9GW.Forextremesummerconditions,NERC’sassessmentoftheWECC-NWsubregionindicatesacapacityderateof16.7GW.Thiswouldreduceavailableresourcesfrom68.3GWto51.6GW,whichislowerthantheextremedemandscenarioforecastforasummerpeakloadof67.2GW.Duringextremesummerconditions,theWECC-NWsubregiondoesnothavethebenefitofoperationalmitigationsandcouldfaceapotentialshortfallofupto15.6GW.Duringtheextremesummerpeakloadandeitherextremethermalorextremehydroderates,oranycombinationofthoseextremederatescenarios,theWECC-NWsubregionwouldneedtorelyonimportstomaintainadequatereserves.Thisismostchallengingduringawide-areaheatevent,asoccurredduringthemostrecentsummers(2020through2022),whenotherregionsalsoarechallengedtomeettheirowninternalreservesandmaybeunabletoexporttoneighboringregions.NPCC-NewEnglandsubregion:RegionalsubmitteddatausedinNERC’sseasonalriskassessmentanalysisforNewEnglandshowsthatexpectedresourcesandoperationalmitigationsmeetoperatingreserverequirementsunderthenormalpeak-demandscenario.Abovenormalsummerpeakloadandoutageconditionscouldproducearesourcedeficiencyandtheneedtoemployoperationalmitigationsuchasdemandresponse,transfers,appealsandshort-termloadinterruptionsandEEAs.However,becauseoperationalmitigationsareavailable,theriskofloadsheddinginthisregionislow.Figure9showsNERC’spreliminaryassessmentforanormalsummerandforanextremesummerforNewEngland.Theanticipatedresourcesare29GW,typicalmaintenanceoutagesare0.35GW,andtypicalforcedoutagesare2.3GW.Thisleaves26.35GWtomeettheexpectednormaldemandscenarioforecastforasummerpeakloadof24.7GW.Inthisscenario,netresources,aftertypicalmaintenanceoutagesandforcedoutages,exceedloadby1.7GW,whichisbelowtheoperatingreserverequirementof2.3GW.Forextremesummerconditions,NERC’sassessmentofNewEnglandindicatesacapacityderateof2.1GW.Thiswouldfurtherreduceavailableresourcesfrom26.35GWto24.25GW,ashortfallof2.1GWbelowtheextremeFigure8:WECC-NW(U.S.)RiskPeriodScenario7080506040302010Capacity(GW)2023SummerNetInternalDemandTypicalForcedOutages2023SummerAnticipatedResourcesExtremeSummerPeakDemandResourceDeratesforExtremeConditionsLowHydroScenario072.2-3.9-10.9-5.86167.2ExpectedOperatingReserveReq.+ExtremePeakDemandExpectedOperatingReserveRequirement=3.9GWSource:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn22nFEDERALENERGYREGULATORYCOMMISSIONdemandscenarioforecastof26.5GWforasummerpeakload.AlthoughNewEnglandcouldgain1.15GWfromoperationalmitigations,duringextremesummerconditions,itwouldstillfaceapotentialshortfallofupto1.1GW.PreliminaryNERCdataindicateminimalchangeforNewEnglandinsummer2023comparedtosummer2022.Forexample,thereisasmalldecreaseinprojectedtypicalmaintenanceoutages(0.2GW)andtypicalforcedoutagesremainedatthesamelevel.Theresourcederatesfortheextremeconditionsscenariodecreasedby1GWandoperationalmitigationdecreasedby0.8GW.Also,summerdemanddecreasedby0.1GWforthenormalforecastanddecreasedby0.1GWfortheextremedemandscenarioforecast.Althoughthesechangesareseeminglyminor,itcouldresultinsystemchallengessinceNewEnglandisasmallerregion.NewEnglandmayrequirelimiteduseofoperationalmitigationsdesignedtoassistresourceshortagesduringthereducedresource,highestpeakloadscenario.Since2014,Behind-the-MeterPhotovoltaic(BTMPV)generationhashadgreatimpactonISO-NE’sdailydemandcurves.AlargeincreaseofBTMPVinstallationsinNewEnglandsignificantlyreducestheamountofelectricityhomesandbusinessesdrawfromthegrid,whichcanincreaseintradayloadvariabilityonthesystemloadwithdemandforgridelectricitybeinglowestduringthedayinsteadofatnight.TheBTMPVistiedtothedistributionsystem,andtherefore,theISO-NEcontrolroomhasnoabilitytocontroltheresources.ItisbecomingcommonforsystemoperatorsinNewEnglandtoseemid-afternoonloadsdipbelowtheovernightlows.Thisresultsinlessgenerationfromresourcesduringthedaytime.ISO-NEfirstobservedthephenomenononApril21,2018,andithashappened34moretimesthroughtheendof2021.67ISO-NEcontinuestofactorthisnewphenomenoninitsunderstandingoftheinterplaybetweenBTMPVandthegridtobolsterthereliableplanningandoperationofthebulkpowersystem.67ISONewEngland,ISONewswire,SolarPower’sImpactonGridSeeninRecordNumberof‘DuckCurve’Days(February13,2023),https://isonewswire.com/2023/02/13/solar-powers-impact-on-grid-seen-in-record-number-of-duck-curve-days/#:~:text=February%2013%2C%202023-,Solar%20power%27s%20impact%20on%20grid%20seen%20in%20record%20number%20of,ISO%20New%20England%27s%20system%20operators.Figure9:NPCC-NewEnglandRiskPeriodScenario35253020151050OperationalMitigation29-0.35-2.3-2.11.1524.726.5Capacity(GW)ExpectedOperatingReserveReq.+ExtremePeakDemandExpectedOperatingReserveRequirement=2.3GWTypicalMaintenanceOutages2023SummerAnticipatedResources2023SummerNetInternalDemandExtremeSummerPeakDemandTypicalForcedOutagesResourceDeratesforExtremeConditionsSource:NorthAmericanElectricReliabilityCorporation2023SUMMERENERGYMARKETASSESSMENTn23nFEDERALENERGYREGULATORYCOMMISSIONTheNewEnglandareaexpectstohavesufficientcapacitytomeetthe2023summerpeakdemandforecastof24,664MW.However,thecapacitymaynotbesufficienttomeettherequiredoperatingreserverequirement,andestablishedoperationalmitigationsareinplacetomaintainreliabilityandkeepelectricitysuppliesanddemandinbalance,ifneeded.SincenaturalgasisthepredominantfuelsourceforpowergenerationinNewEngland,theISOstatesthatitwillcontinuetovigilantlymonitoraspectsofthenaturalgasfueldeliverabilityfortheregion.ISO-NEexpectslimitednaturalgaspipelinemaintenanceandconstructiontooccurforselectareasduringtheupcomingsummeranddoesnotforecastmajordeliverabilityissuesthatwouldimpacttheinstalledcapacity.ELECTRICGENERATION-RESOURCEADDITIONSANDRETIREMENTSWhilethepriorsectionusedNERCdatatoassessregionalperformanceduringvariousconditions,thissectionfocusesonEIAdatadescribingtheinstalledcapacityavailableineachregion,includingnotableresourceadditionsandretirementsforthesummerof2023.68Consistentwithrecenttrends,muchofthenetcapacityaddednationwidethissummerwilllikelycomefromwindandsolarprojects,whilecoalplantswilllikelyrepresentmuchofthecapacityretired.69Figure10providesasnapshotofthetotalnetsummercapacity,reflectingadditionsandretirementsfromtheendoflastsummerthroughsummer2023.70Aggregatenetsummercapacityisexpectedtoincreasefrom1,138GWto1,167GWsince68Installedcapacitydoesnotaccountforexpectedperformanceduringextremeconditionsthatcanleadtofuelunavailability,deratesofintermittentresources,unexpectedgeneratingresourceoutages,transmissionoutages,reducedpowertransfersfromadjacentareas,anddelaysinresourcescomingonlinethatcouldaffectaregion’sabilitytoservecustomersandmaintainadequateoperatingreserves.69Inthissection,“capacity”referstothemaximumoutputthatgeneratingequipmentcansupplytosystemload,asdemonstratedbyamulti-hourtest,atthetimeofpeaksummerdemand(periodofJune1throughSeptember30).Thisoutputreflectsareductionincapacityduetoelectricityuseforstationserviceorauxiliaries.TheFormEIA-860MdataisasofthereleasedateofMarch2023.Figure10capturesdataonOperatingandStandbyresourcesenteringoperationandexpectedcapacityretirementsduringthemonthsofOctober2022throughSeptember2023.70ThesnapshotcoverstheperiodfromOctober2022throughSeptember2023.Source:U.S.EIAForm-860M,March2023Release.DataexcludeAlaskaandHawaii.WECCreferstoWECCwithoutCAISO0%20%40%60%80%100%OtherBatteriesOilWindSolarHydroNaturalGasCoalNuclearISO-NENYISOCAISOSPPERCOTWECCMISOPJMSERCTotalNetSummerCapacity(GW)24320118116113593784135Figure10:TotalNetSummerCapacityandPercentageSharebyResourceTypeacrosstheUnitedStatesinSeptember20232023SUMMERENERGYMARKETASSESSMENTn24nFEDERALENERGYREGULATORYCOMMISSIONlastsummer.Figure10alsoshowstheprojectedtotalsharesofelectricitynetsummercapacitybyresourcetypeacrossRTOs/ISOsandotherregionsacrosstheUnitedStatesinSeptember2023.Figure11andFigure13highlighttheresourcemixshiftsindifferentregionalmarkets.Naturalgasrepresents43%ofthecapacitymixacrosstheUnitedStates,followedbycoalat16%,windat12%,andhydroat8%.Resourceavailability,whichdiffersfromnetsummercapacity,ishighlightedattheendofthissectioninTable1whichshowsexpectedavailablepercentageofnameplatecapacityforsolarandwindresources.71Acrossthecountry,RTOs/ISOsthissummerlikelywillhavetoadjusttotheadditionandretirementofawiderangeofresources.AmongtheRTOs/ISOs,CAISO(batterystorage),ERCOT(solarandnaturalgas),andMISO(coal)mayseethelargestchangesinresourcemix.InCAISO,theshareofbatterystoragecapacityisexpectedtoincreasefrom6%to11%.InERCOT,theproportionofsolarcapacitycouldrisefrom8%to11%.Conversely,inERCOT,thepercentageofnaturalgascapacityisexpectedtodecreasefrom46%to44%.InMISO,coalcapacitycoulddropfrom28%oftotalcapacityattheendofsummer2022to26%byendofsummer2023.WithrespecttocapacityadditionsbyresourcetypeacrosstheUnitedStates,mostadditionsexpectedthroughsummer2023comefromsolar,wind,naturalgas-fired,andbatterystorageresources.72AmongtheRTOs/ISOs,ERCOTexpectstoaddthemostgeneratingcapacitywith10.2GWofnewcapacityanticipatedthroughsummer2023,withsolarresourcescomprising4.6GWofthisaddition.Thelargestresourceadditionsexpectedthroughsummer2023includethenaturalgas-firedGuernseyPowerStation(1,836MW)andCPVThreeRivers(1,214MW)combinedcycleplantsinPJM,theGreatPrairieWindturbines(1,027MW)inSPP,andthenaturalgas-firedRDMorrowcombined-cycleplant(514MW)inMISO.TheVogtlenuclearpowerplant(1,114MW)inSERCisthelargestresource71Resourceavailabilityreferstoaresource’sloadcarryingcapacityandcontributionstothegrid.Netsummercapacityreferstothemaximumoutputthatgeneratingequipmentcansupplytosystemload,asdemonstratedbyamulti-hourtest,atthetimeofpeaksummerdemand.72TheFormEIA-860MdataisasofthereleasedateofMarch2023.Figure11capturesdataonOperatingandStandbyresourcesthatenteredoperationfromOctober2022throughJanuary2023andexpectedcapacityadditionsfromMarch2023throughSeptember2023.024681012OtherBatteriesOilWindSolarNaturalGasCoalNuclearISO-NENYISOSPPMISOWECCPJMSERCCAISOERCOT10.27.96.16.14.74.62.21.00.3NetSummerCapacity(GW)Figure11:PlannedandActualCapacityAdditionsbyResourceTypeacrosstheUnitedStatesfromOctober2022throughSeptember2023Source:U.S.EIA-Form860M,March2023Release.NOTE:ExpectedandactualadditionsandretirementsfromOctober2022throughSeptember2023.DataexcludeAlaskaandHawaii.WECCreferstoWECCwithoutCAISO.2023SUMMERENERGYMARKETASSESSMENTn25nFEDERALENERGYREGULATORYCOMMISSIONadditionexpectedamongthenon-RTO/ISOregions,andtheonlynewnuclearunittoenteroperationintheUnitedStatessinceJune2016.73Ofnote,entitiescouldaddover4GWofbatterystoragecapacityacrosstheUnitedStatesforthesecondyearinarow,whichcouldmakebatterystoragethefourth-largesttypeofcapacityadditionsbytheendofsummer2023.74Batterystorageadditionscouldnearlyequalnaturalgascapacityadditions,whichareexpectedtobethethird-largestcategory,behindwindandsolar.Batterystoragecapacityadditionsareanticipatedtoincreasefrom4.4GWaddedinsummer2022to7.0GWaddedinsummer2023,bringingthecumulativetotalto15GWacrosstheUnitedStates.AsFigure12shows,mostofthebatterystorageadditionsareexpectedtooccurinCAISOandERCOT;otherRTO/ISOsandnon-RTO/ISOregionsarealsoprojectedtoaddbatterystoragecapacity.AccordingtoEIAestimates,thelargest-to-smallestbatterystorageadditionsbyRTO/ISOare:CAISO(4.1GW),ERCOT(1.7GW),PJM(77MW),NYISO(76MW),ISO-NE(30MW),andMISO(5MW).SPPdoesnotexpecttoaddbatterystoragecapacityinsummer2023.RegardingcapacityretirementsbyresourcetypesacrosstheUnitedStates,thelargestshareofanticipatedretirementscomesfromcoal.Coal-firedcapacityretirementsof9.7GWareexpectedthroughsummer2023,and73TheGeorgiaPowerCo.Vogtle3nuclearpowerplantunitisthefirstnuclearunittoenteroperationinthelastsevenyears.Thein-servicedateforVogtle3isprojectedduringMayorJune2023.Vogtle4isprojectedtoenterserviceinlatefourthquarter2023orfirstquarter2024.TheTennesseeValleyAuthority’sWattsBarnuclearpowerplantwasthelastnewnuclearunittoenteroperationinJuneof2016.EIA,PreliminaryMonthlyElectricGeneratorInventory(March24,2023),https://www.eia.gov/electricity/data/eia860m/;GeorgiaPower,Vogtle3&4nuclearunitstakesignificantstepstowardoperations(April1,2023),https://www.georgiapower.com/company/news-center/2023-articles/vogtle-steps-toward-operations.html.74TheFormEIA-860MdataisasofthereleasedateofMarch2023Figure12capturesdataonOperatingandStandbybatterystoragecapacitythatenteredoperationfromOctober2022throughJanuary2023andexpectedbatterystoragecapacityadditionsfromFebruary2023throughSeptember2023.0%20%40%60%80%100%ISO-NENYISOSERCPJMMISOSPPERCOTWECCCAISO202320222021202020192018BatteryStorageNetSummerCapacity(GW)0.10.20.41.94.47.0Figure12:BatteryStorageCapacityAdditionsacrosstheUnitedStatesSource:U.S.EIA-Form860M,March2023Release.NOTE:ExpectedandactualbatterystorageadditionsfromOctober2022throughSeptember2023.DataexcludeAlaskaandHawaii.2023SUMMERENERGYMARKETASSESSMENTn26nFEDERALENERGYREGULATORYCOMMISSIONis10%lowerthansummer2022’scoal-firedcapacityretirements.75Throughsummer2023,MISOisexpectedtoretirethemostcoal-firedcapacityamongtheRTOs/ISOswith4.1GWprojectedtoretire.AmongtheRTOs/ISOs,PJMexpectstoretirethemosttotalcapacity(accountingforallresources),with6.1GWofcapacityretirementsanticipatedthroughsummer2023.76ThelargestresourceretirementssinceOctober2022include77thecoal-firedW.H.Sammis(1,490MW),PleasantsPowerStation(1,278,MW),andChesterfield(1,006MW,units5and6)conventionalsteamplantsinPJM,andthenaturalgas-firedYorktownsteamturbineinPJM(790MW).Thecoal-firedPirkey(650MW)conventionalsteamplantisexpectedtoretireinSPPandthecoal-firedTrentonChannel(495MW)conventionalsteamplantisexpectedtoretireinMISO.Theload-carryingcapacityofrenewablesduringpeakhoursisexpectedtovaryacrosstheUnitedStatesand75Calculatedfromthechangeinnetsummercapacityofcoal-firedfacilitiesfromOctober2022toSeptember2023.76TheFormEIA-860MdataisasofthereleasedateofMarch2023.Figure13capturesdataonallresourcesthatexitedoperationfromOctober2022throughJanuary2023andexpectedcapacityretirementsfromMarch2023throughSeptember2023.77Thecoal-firedHomerCity(1,915MW)plantinPJMalsohasannouncedretirementforthissummer,thisretirementisnotyetreflectedinEIAdata,andthereforenotinthefiguresthatarederivedfromEIAdata.StateImpactPennsylvania,HomerCity—Pa.’slargestcoal-firedpowerplant—willcloseinJuly(April4,2023),https://stateimpact.npr.org/pennsylvania/2023/04/04/homer-city-pa-s-largest-coal-fired-power-plan-will-close-in-july/.Source:U.S.EIAForm-860M,March2023Release.-8-6-4-20OtherBatteriesOilWindSolarNaturalGasCoalNuclearCAISOISO-NEWECCNYISOSERCSPPERCOTMISOPJM-6.1-4.6-0.9-0.8-0.6-0.5-0.3-0.20.0NetSummerCapacity(GW)Figure13:NetSummerCapacityRetirementsbyResourceTypeacrosstheUnitedStatesfromOctober2022throughSeptember2023NOTE:ExpectedandActualAdditionsandRetirementsfromOctober2022throughSeptember2023.DataexcludeAlaskaandHawaii.WECCreferstoWECCwithoutCAISOTable1:2022ExpectedAvailablePercentageofNameplateCapacity(Solar&Wind)NERCAssessmentAreasSolar(%)NERCAssessmentAreasWind(%)SPP86%ERCOT33%ERCOT78%MISO18%California/Mexico66%PJM15%PJM58%SPP14%MISO50%NewEngland13%NewYork47%NewYork12%NewEngland40%California/Mexico12%Source:PreliminaryNERC2023SummerReliabilityAssessment2023SUMMERENERGYMARKETASSESSMENTn27nFEDERALENERGYREGULATORYCOMMISSIONmeasuringtheircontributionstothegridbecomesmoreimportantasrenewableresourcesbecomealargershareofthegenerationmix.Forexample,NERCinits2023SummerReliabilityAssessmentsreportedsolarandwindresources’expectedabilitiestoserveloadduringthepeakdemandhour.78NERCcalculatedavailablecapacitythatislowerthannameplatecapacitysincetheelectricityoutputofsolarandwindresourcesdependsonweatherconditions.NERC’sassessmentsaccountforoperatinglimitationssuchasfuelavailability,transmissionlimitations,andenvironmentallimitationstocalculateavailablecapacity.Table1providesamorespecificbreakdownoftheexpectedavailablepercentagesofnameplatecapacityofsolarandwindresourcesbyNERCassessmentareas.Forinstance,basedonNERC’savailabilityvalues,althoughSPPanticipates0.4GWbeingaddedthroughthissummer,0.3GWofnewsolarisexpectedtobeavailabletoservethepeakloadhour,resultinginan86%availabilityforsolar.Likewise,inERCOTwherewindisasignificantpercentageoftotalcapacity,wind’s10.2GWavailabilitytoservethepeakloadhourmayonlybe33%ofthe30.9GWtotalwindcapacity.ELECTRICTRANSMISSIONElectrictransmissiondeliverselectricitytoloadcenterswhereitisneeded,supportsnewgenerationadditions,allowsfortheredispatchofgenerationandallowsforinterregionalflows–allessentialservicesforreliableandefficientoperationofthegrid.Forsummer2023,transmissionoperatorsinthePJMandMISOregionshavescheduled500kVand765kVpowerlineoutagestoinstallnewequipment.AccordingtoPJM,theoutagesinvolvetheRockport-to-Jefferson765kV,Rockport-to-Sullivan765kV,Juniata-to-Sunbury500kV,Elmont-to-Ladysmith500kV,andtheSurry-to-Chickahominy500kVtransmissionprojects,aswellasother500kVtransmissionprojectsinNorthernVirginia.79InMISO,theFranklin-to-RayBraswell500kVlineisscheduledforoutage.Nationwide,499BPStransmissionlinemilesareunderconstructionorsettobecompletedbyDecember2023aspartoftransmissionprojectslargerthan115kVandlongerthan10miles(seeFigure14).Somewillcomeon-linebytheendofsummer2023,helpingtorelievecongestion,optimizedispatchandlowerpricesintheirrespectiveregions.OperatorsintheCAISOandPJMregionsarebuilding500kVprojects(125milesinCAISOand65milesinPJM).Mostoftheselargerprojectssettobecompletedin2023areinthe345kVvoltage-levelcategory.Totaling272miles,those345kVprojectsareinSPP(107miles),MISO(102miles),NYISO(54miles)andISO-NE(9miles).Also,MISOplanstocomplete10milesof230kVlinewhilePJMplansfor27milesof138kVtransmission.8078PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).79PJMWebsite,DispatcherApplicationandReportingTool(eDART),https://tools.pjm.comandMISOWebsite,OpenAccessSame-TimeInformationSystem(OASIS),http://www.oasis.oati.com/MISO/index.html.80S&PCapitalIQ,TransmissionProjects(accessedMarch16,2022),https://www.capitaliq.spglobal.com/web/client?auth=inherit#industry/TransmissionProjectsPage.Figure14:TransmissionLineMilesCurrentlyUnderConstructionThatAreSettoBeCompletedIn2023200406080120100140ISO-NECAISOMISOSPPPJMNYISOMiles138kV230kV345kV500kVSource:S&PCapitalIQ,TransmissionProjects200406080120100140CAISOMISOSPPPJMMiles138kV230kV345kV500kV2023SUMMERENERGYMARKETASSESSMENTn28nFEDERALENERGYREGULATORYCOMMISSIONDuringtightsystemconditionsinthesummer,longertransmissionlineslinkingregionsorRTOs/ISOscansupportreliablegridoperationsandprovidesignificanteconomicvaluebytransmittingelectricityfromregionswithexcesselectricitytoregionswhereelectricityisneededandhighlyvalued.Forexample,emergencyassistanceenergytransfersandenhancedcoordinationamongneighboringbalancingauthorities,plusthegeographicdiversityofweatheracrosstheWest,contributedtomaintainingsystemreliabilityduringtheSeptember2022heatwave,accordingtoCAISO.81Interregionaltransfersalsogeneratedrecordquarterlyeconomicbenefitsof$500millionlastsummerintheWesternEnergyImbalanceMarketashydroconditionsandhighnaturalgaspricescoincidedwithstrongenergydemandfromextremeheat.82RecentresearchfromLawrenceBerkeleyNationalLaboratoryfindsthatthepotentialvalueofinterregionaltransmissionisgreatestduringextremeconditions,suchasextremeheatinthesummer.83Althoughsomeregionshavemovedforwardwithcoordinationeffortstoidentifypotentialnewinterregionaltransmissionfacilitiessincesummer2022,nonewinterregionaltransmissionprojectsarescheduledtocomeonlinebeforetheendofsummer2023.INVERTER-BASEDRESOURCESGenerationresourcesthatemployinverters,84suchassolar,wind,orbatterysystems,areprojectedtoincreaseinnumberoverthenextdecade.ArecentNERCreportconcludedthattherapidintegrationofIBRsis‘‘themostsignificantdriverofgridtransformation’’ontheBPS.85Figure15showsthecapacity(GW)ofthesetypesofresourcesplannedforinstallationbetween2023and2026.Solarandwindresourcesareexpectedtoplayaroleinservingelectricloadsandmeetingpeakdemandduringsummer2023.EIApredictsthatTexasalonewillinstall7.7GWofutility-scalesolarincalendaryear2023,aquarterofallprojectedU.S.installationsfortheyear.86Similartosynchronousgenerators,IBRscangenerateelectricityandprovidevoltagesupporttotheBPShowever,IBRsdonotreacttoBPSdisturbancesinthesamemannerassynchronousgenerators.ThisisbecausegeneratorssynchronizedtotheBPS,butnot81CAISO,SummerMarketPerformanceReportforSeptember2022(November2,2022)at13-14,http://www.caiso.com/Documents/SummerMarketPerformanceReportforSeptember2022.pdf.82CAISO,WEIMposts$526millioninquarterlybenefits(October2022),https://www.westerneim.com/Documents/weim-posts-526-million-in-quarterly-benefits.pdf.83DevMillsteinetal.,LawrenceBerkeleyNationalLaboratory,EmpiricalEstimatesofTransmissionValueusingLocationalMarginalPrices(August2022),https://emp.lbl.gov/publications/empirical-estimates-transmission.84Aninverterisadevicethatconvertselectricitybetweendirectcurrent(DC)electricityandalternatingcurrent(AC).85NERC,Inverter-BasedResourceStrategy:EnsuringReliabilityoftheBulkPowerSystemwithIncreasedLevelsofBPS-ConnectedIBRs(September2022),https://www.nerc.com/comm/Documents/NERC_IBR_Strategy.pdf.86EIA,MorethanhalfofnewU.S.electric-generatingcapacityin2023willbesolar(February6,2023),https://www.eia.gov/todayinenergy/detail.php?id=55419.Figure15:IBRPlannedforInstallation2023Through2026GW202320242025202610020304060507080BatteriesWindTurbineSolarGW202320242025202610020304060507080BatteriesWindTurbineSolarSource:EIA860M2023SUMMERENERGYMARKETASSESSMENTn29nFEDERALENERGYREGULATORYCOMMISSIONimpactedbyafault,willautomatically‘ridethrough’87aBPSdisturbance,meaningthegeneratorremainsconnectedtothetransmissionsystemandsynchronizedwithit.IBRs,sincetheyarenotdirectlysynchronizedtotheBPS,mustbeprogrammedtoridethroughadisturbanceandsupportoperationoftheBPS.Furthermore,theoperationalcharacteristicsofIBRs,coupledwiththeirequipmentsettings,mayreducepoweroutputby,eitherindividuallyorintheaggregate,trippinggenerationofflineorbyceasingoperationswithouttrippingoffline(knownasmomentarycessation),88inresponsetoasinglefaultonatransmissionorsub-transmissionsystem.SuchincidentsmayexacerbatesystemdisturbancesandadverselyimpacttheoperationoftheBPS.89Eventsinvolvingmomentarycessationmaycontinuetoincreaseand–impacttheBPS,asIBRsmakeupanincreasingproportionoftheresourcemix,unlessIBRsareconfiguredandprogramedtoridethroughnormallyclearedtransmissionfaults.AlthoughIBRspresentriskstotheBPS,theyalsopresentnewopportunitiestosupporttheBPSandrespondtoabnormalsystemconditions.InresponsetothecontinuedoccurrenceofthesemomentarycessationeventsandincreasingpenetrationofIBRs,NERCstatedthat“NERCReliabilityStandardsareneededtoaddresssystemicissueswithIBRs”includingwithperformance-basedrequirements,performancevalidationandmodelqualityassurance.90TheCommissiondirectedNERCinNovember2022tosubmitnewormodifiedReliabilityStandardsthataddressconcernspertainingtotheimpactsofIBRsonthereliableoperationoftheBPS.Specifically,theCommissionrequestedthatNERCdevelopnewormodifiedReliabilityStandardsaddressingfourreliabilitygapspertainingtoIBRs:(1)datasharing;(2)modelvalidation;(3)planningandoperationalstudies;and(4)performancerequirements.91DEMANDRESPONSEIncriticalperiods,demandresponseandenergyconservationprogramscanpreventanelectricityshortfallbyreducingelectricitydemand,andcouldbecalleduponinsummer2023insituationswhenelectricitysupplyisscarce.Basedon2021data,aggregatedemandresponsecapacityinRTO/ISOmarketstotaledapproximately32.4GW,largelyinMISOandPJM.92AcrossallRTOsandISOs,theavailabilityofdemandresponseresourcestomeetpeakdemandvariedwidely,from10.2%inMISOto0.3%inSPP,accordingtothe2021data(seeTable2).87SeeStandardizationofGeneratorInterconnectionAgreements&Procedures,OrderNo.2003,104FERC¶61,103(2003)atP562n.88.(definingridethroughas‘‘aGeneratingFacilitystayingconnectedtoandsynchronizedwiththeTransmissionSystemduringsystemdisturbanceswithinarangeofoverandunder-frequency[/voltage]conditions,inaccordancewithGoodUtilityPractice’’).88MomentarycessationisamodeofoperationduringwhichtheinverterremainselectricallyconnectedtotheBulk-PowerSystem,buttheinverterdoesnotinjectcurrentduringloworhighvoltageconditionsoutsidethecontinuousoperatingrange.Asaresult,thereisnocurrentinjectionfromtheinverterandthereforenoactiveorreactivecurrent(andnoactiveorreactivepower).NERC,ReliabilityGuideline:Bulk-PowerSystem-ConnectedInverter-BasedResourcePerformance(September2018),https://www.nerc.com/comm/RSTC_Reliability_Guidelines/Inverter-Based_Resource_Performance_Guideline.pdf.89Pasteventsincludethelossof1,200MWsolarresourcesinSouthernCaliforniaduringtheBlueCutFireeventonAugust16,2016;thelossof900MWsolarresourcesintheCanyon2FireeventonOctober9,2017;thelossofsolarresourcesduringtheAngelesForesteventonApril20,2018andthePalmdaleRoosteventonMay11,2018;thelossof1,000MWduringtheSanFernandoDisturbanceonJuly7,2020;thelossof730MWofsolarresourcesduringtheVictorvilleDisturbanceonJune24,2021);thelossof605MWduringtheTumbleweedDisturbanceonJuly4,2021andthelossof511MWsolarresourcesduringtheWindhubDisturbanceonJuly28,2021.90NERC,2022SummerReliabilityAssessment(May2022),https://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC_SRA_2022.pdf.91FERCNOPR,ReliabilityStandardstoAddressInverter-BasedResources,DocketNo.RM22-12-000(November17,2022),https://www.ferc.gov/media/e-2-rm22-12-000.92FERC,2022AssessmentofDemandResponseandAdvancedMeteringat24(December2022),https://www.ferc.gov/media/2022-assessment-demand-response-and-advanced-metering.RTOspecificdemandresponsefiguresrepresentthemostrecentinformationavailableatthetimeofthereport’spublication.2023SUMMERENERGYMARKETASSESSMENTn30nFEDERALENERGYREGULATORYCOMMISSIONRTOs/ISOsdeploydemandresponseresourcestocost-effectivelybalancesupplyanddemand.Belowisadiscussionofsignificantdemandresponseusageoccurrencesduringthesummerof2022.Theeventsincludedemandresponseappliedtobothlocalemergenciesandsystem-wideevents.Thedescriptionsillustratethediversepre-emergencyandemergencycircumstancesunderwhichdemandresponsecanbedeployed.Duringthreehigh-loaddaysinJune2022inPJM,demandresponseresourcesprovidedbetween62%and96%oftheexpected100MWloadreductionfromPre-EmergencyandEmergencyDemandResponsedispatch.93Heatandsubsequentseverestormsandtornadoesaffecteddozensofbulkelectricsystemfacilities,includingtransmissionandgenerationfacilities.Inresponse,PJMissuedseveralload-sheddirectives,aswellasaPre-EmergencyandEmergencyLoadManagementReductionActiontotheAmericanElectricPowertransmissionzone.94OnJuly10andJuly13,2022,intheERCOTregion,record-highelectricdemandandlower-than-expectedoutputfromwindgeneratorsledERCOTtoissueapublicappealtocustomerstovoluntarilyconserveelectricityandtodeployresourcesenrolledintheEmergencyResponseService(ERS)program.Inresponsetotheconservationrequest,Texascustomersreduceddemandbyupto950MWthroughtheERSfleetonJuly13.95InJuly2022,customersinSPPalsoexperiencedanextremeheatwavethatledtoseveralnewall-timepeakloadsintheregion,andSPPannouncedthatdemandresponsecontributed1.1MWtothefuelmixduringthisevent.96Duringtheheatwave,SPPdeclaredaConservativeOperationsAdvisory,whichtheRTOissuesinresponsetoweather,environmental,operational,terrorist,cyber,orotherevents.97CAISOdispatchedupto1,260MWofmarket-integrateddemandresponseinthereal-timemarketoverthehighest-loadhoursofaheatwavethatlastedfromSeptember5,2022,toSeptember7,2022.Ofthattotal,910MWcamefromutilityreliabilitydemandresponseresourcesand350MWwereproxydemandresourcesfromthird-party,non-utility93PJM,StateoftheMarketReportforPJMat387(March9,2023)https://www.monitoringanalytics.com/reports/PJM_State_of_the_Market/2022/2022-som-pjm-vol2.pdf.94PJM,MarketsandReliabilityCommittee,June13–June16OperationalReview(June29,2022),https://www.pjm.com/-/media/committees-groups/committees/mrc/2022/20220629/item-06---june-13-to-june-16-operational-review---presentation.ashx.SeePJM,Manual13:EmergencyOperations,29-31,https://www.pjm.com/~/media/documents/manuals/m13.ashx.95ERCOT,2022AnnualReportofDemandResponseintheERCOTRegionat14(December2022),https://www.ercot.com/misdownload/servlets/mirDownload?doclookupId=898182855.96SPP,SouthwestPowerPoolkeepsthelightsonasregionsetsnewrecordforelectricityuse(July8,2022),https://spp.org/news-list/southwest-power-pool-keeps-the-lights-on-as-region-sets-new-record-for-electricity-use/.97SPPWebsite,CurrentGridConditions,https://www.spp.org/grid-conditions.Table2:DemandResponseResourcesbyRTO/ISOin2021DemandResources(MW)PercentofPeakDemandinRTO/ISOMISO12,19710.2%PJM9,9146.8%ERCOT4,3455.9%CAISO3,9008.9%NYISO1,3464.4%ISO-NE5342.3%SPP1760.3%Total32,431n/aSource:FERC,2022AssessmentofDemandResponseandAdvanced2023SUMMERENERGYMARKETASSESSMENTn31nFEDERALENERGYREGULATORYCOMMISSIONdemandresponseprovidersduringhoursending19and20onSeptember6,2022.Utilitiesreportedtohavecurtailedabout850MW(94%performance)inhourending19and720MW(79%performance)inhourending20.Third-party,non-utilityprovidersreportedtohavecurtailedabout195MW(56%performance)inthesetwohours.98CAISO’sDepartmentofMarketMonitoringnotesthattotalmarket-integrateddemandresponseperformance,frombothutilitiesandthird-party,non-utilityproviders,averagedabout67%ofreal-timedispatchesacrosspeaknetloadhoursonhigh-loaddaysin2022.99Duringthehigh-loaddaysinAugustandSeptember2022,CAISO,theCaliforniaPublicUtilitiesCommission(CPUC)andCaliforniaGovernor’sOfficeofEmergencyServices(CalOES)alsousedavarietyofnon-marketresourcestoreducepowerdemand.100Figure16showstheestimatedtotalMWpotentialofnon-marketresourcesthatwereusedintheCAISOgrid.CalOESinducedlargeloadreductionsonSeptember6,2022,withanemergencyalertissuedintheformsofphonecallsandtextmessagestoCaliforniaresidents.CAISOestimatesthatapproximately1,510MWduringHE19onSeptember6wasattributabletoenergyconservationbroughtaboutbytheFlexAlert,101theCalOESalertandotherfactorsimpactingenergydemand.102OTHERFUELSUSEDFORELECTRICGENERATIONAlthoughnaturalgashasbecomethemarginalfuelinmostelectricitymarketsduringthesummer,coalandoilresourcescontinuetoplayanimportantroleinmaintaininggridreliabilityandmoderatinghighelectricityprices,98CAISO,DemandResponseIssuesandPerformance2022at15-17(Feb.14,2023),http://www.caiso.com/Documents/Demand-Response-Issues-and-Performance-2022-Report-Feb14-2023.pdf.99CAISO,DemandResponseIssuesandPerformance202218(Feb.14,2023),http://www.caiso.com/Documents/Demand-Response-Issues-and-Performance-2022-Report-Feb14-2023.pdf.100Non-marketdemandresponseresourcesincludeEmergencyLoadReductionProgram,StatePowerAugmentationPowerandStrategicReserve,andDemand-SideGridSupport,whichwerecreatedtoaddressextremeevents.CAISO,SummerMarketPerformanceReport:September2022,40-42(November2022),http://www.caiso.com/Documents/SummerMarketPerformanceReportforSeptember2022.pdf.101WhenaFlexAlertisissued,residentialcustomersparticipatingintheEmergencyLoadReductionProgramcanbecalleduponbytheirdistributionutilitytoreducetheirelectricitydemandduringthedesignatedeventperiod.CPUC,EmergencyLoadReductionProgram,https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/electric-costs/demand-response-dr/emergency-load-reduction-program.102CAISO,SummerMarketPerformanceReport:September2022(November2022),http://www.caiso.com/Documents/SummerMarketPerformanceReportforSeptember2022.pdf.Figure16:TotalEstimatedDemandResponse(MW)fromNon-MarketResourcesinCAISOin20220200400600800100012009-Sep8-Sep7-Sep6-Sep5-Sep4-Sep3-Sep2-Sep1-Sep31-AugMWSource:CAISOCaliforniaISO,SummerMarketPerformanceReport42(Sept.2022).2023SUMMERENERGYMARKETASSESSMENTn32nFEDERALENERGYREGULATORYCOMMISSIONparticularlyduringperiodsofhighdemand.DomesticpetroleumandliquidfuelsmarketsareheavilyinfluencedbytrendsoutsideoftheUnitedStatesbecausethefuelsaregloballytradedandeasilytransportablecommodities,andrecentglobaleventsarelikelytocontinueaffectingpricesandinventoriesthissummer.Coalstockpilesatpowerplantsremainrelativelylowcomparedtohistoricallevelsbutstockpilesareexpectedtoincreasepriortothissummer.103AccordingtoEIA’sElectricityMonthlyUpdate,totalU.S.coalstockpilesatpowerplants(bituminous,subbituminousandlignitecoal)totaled89.9millionshorttons(MMst)inDecember2022and94.1millionMMstinJanuary2023.104CoalstocksincreasedduringthemonthsofJanuaryandFebruary2023becausewarmer-than-averagetemperaturesandfallingnaturalgaspricesreducedcoalgeneration.EIAforecaststhatcoalstocksheldbythepowersectorwillrisebymorethan30%fromtheendofDecember2022throughMay2023,afterwhichtheywilldeclineaselectricpowergenerationrampsuptomeetsummerair-conditioningloads.Table3depictscoalstockpilesheldatelectricpowerplantsbyU.S.zoneandU.S.totalatthestartof2022and2023interms103U.S.coalstockpilesremainatarelativelylowhistoricallevelof90milliontonsasofDecember2022.EIA,ElectricPowerSectorCoalStocks:January2023(assessedFebruary27,2023),https://www.eia.gov/electricity/monthly/update/coal-stocks.php.104Bituminouscoalisamiddle-rankcoalbetweensubbituminousandanthracite.Bituminouscoalusuallyhasahighheating(Btu)valueandisusedinelectricitygenerationandsteelmakingintheUnitedStates.Subbituminouscoalhaslow-to-moderateheatingvaluesandismainlyusedinelectricitygeneration.USGS,Whatarethetypesofcoal?(March13,2022),https://www.usgs.gov/faqs/what-are-types-coal.Table3:AverageNumberofDaysofBurnforCoalbyRegion(ElectricPowerSector)ZoneCoalJanuary2023DaysofBurnJanuary2022DaysofBurnYearoverYear%ChangeU.STotalBituminous13311119.8%Subbituminous1251213.3%NortheastBituminous3653494.6%Subbituminous---SouthBituminous13310033%Subbituminous866728.4%MidwestBituminous1081043.8%Subbituminous133137-2.9%WestBituminous1511389.4%Subbituminous1251204.2%Source:EIAElectricityMonthlyUpdate,ElectricPowerSectorCoalStocks,withdatafortJanuary2023,ReleaseDateMarch24,2023.2023SUMMERENERGYMARKETASSESSMENTn33nFEDERALENERGYREGULATORYCOMMISSIONoftheaveragenumberofdaysofburn.105AsshowninTable3,amongbituminouscoalunits,largelylocatedintheeasternUnitedStates,theaveragenumberofdaysofburnincreased19.8%from111daysinJanuary2022to133daysinJanuary2023.Amongsubbituminouscoalunits,largelylocatedinthewesternUnitedStates,theaveragedaysofburnincreased3.3%from121daysinJanuary2022to125daysinJanuary2023.AccordingtoEIA,U.S.coalproductionisexpectedtodeclinebyabout7%frommorethan590MMstin2022toabout550MMstin2023.Amongthedriversofthesteadydeclineistheretirementofcoal-firedgeneratingplants.EIAexpectsthataround11GWofcoal-firedcapacitywillretirefromtheendof2022totheendof2024.106Onaregionalbasis,marketforceswillaffectcoaldemandandproductiondifferentlyatindividualbasins.Forexample,demandforPowderRiverBasincoalisforecasttomovemodestlyhigherin2023to270MMstfrom265MMstin2022,althoughnaturalgasisexpectedtomoveintoamoreprice-competitivepositionthanin2022.107IntheIllinoisBasin,ontheotherhand,highcoalpricesareforecasttoresultinlowercoalconsumptionin2023,withcoalproductionfallingtoaforecastof60milliontonsfrom77milliontonsin2022.TheerosionofIllinoisBasincoaldemandisassociatedwithanaccelerationofcoalgeneratorretirementannouncementsoverthenextthreeyears.108AppalachianBasincoalproductionisexpectedtofallin2023to137milliontonsfrom158milliontonsin2022.109Moreover,railserviceissuespersist,restrictingcoalshipmentsfromthewesternUnitedStates,wherecompaniesprimarilyminecoalusedforelectricgeneration.Forexample,Wyomingcoalmines(servedbyUnionPacificandBNSFRailways)produced247milliontonsofcoallastyear,10milliontonsmorethanin2021,butlessthantheminescouldhaveproducedbecauseofalackofrailservicetodeliverthecoaltopowerplantsacrossthecountry.110Oil-firedgenerationmakesupasmallportionoftheoverallelectricgeneratingcapacityintheUnitedStatesbutplaysanimportantreliabilityroleduringcriticalperiodsinsomeregions.111Generatorsfueledbypetroleumandliquidfuels,suchasdistillateorresidualfueloil,canbeusedtoprovideenergyduringpeak-demandperiods.Inareasthatfacenaturalgaspipelineorelectricitytransmissionconstraints,oil-firedgenerationcanserveasabackstoptootherfuelsources.Additionally,manysmaller(250kWto600kW)generatorsthatprovidestationpoweratgeneratingplantsforauxiliaryloads112usedistillateoilforoperation.Furthermore,someblackstartgenerators,includingthosewithdual-fuelcapability,usedistillateoilasbackupfuel.Duringthesummer,manygeneratorsareexpectedtoreplenishliquidfuelinventoriesthathavebeendepletedduringthewinter,subjecttosupplyandpricingtrends.105EIAdefinestheaveragedaysofburnastheaveragenumberofdaysremininguntilcoalstocksreachzeroifnofurtherdeliveriesofcoalaremade.EIAcomputesaveragedaysofburnasfollows:Endofmonthstocksforthecurrentmonth,dividedbytheaverageburnperday.AverageBurnperDayistheaverageofthethreepreviousyears’consumptionasreportedonFormEIA-923.EIA,ElectricityMonthlyUpdate,MethodologyandDocumentation(March24,2023),https://www.eia.gov/electricity/monthly/update/methodology.php.106EIA,ShortTermEnergyOutlook(March2023),https://www.eia.gov/outlooks/steo/.107S&PGlobal,USexportcoalpricesfollownaturalgaslowerinJanuary(February6,2023),https://www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?Id=74158646.108Id.109Id.110CowboyStateDaily,LackofTrainsCostWyoming$100MillioninCoalRevenuein2022(January22,2023),https://cowboystatedaily.com/2023/01/22/rail-service-cost-wyoming-100-million-in-coal-revenue-in-2022(referencingestimatesoftheWyomingMiningAssociation).111ExamplesincludetheNewYorkStateReliabilityCouncil’sLocalReliabilityRuleI-R3andI-R5requiringminimumoilburntocoverthelossofgeneratorgassupply.112Auxiliaryloadreferstoelectricalpowerconsumedbyanyauxiliaryequipmentnecessarytooperatethefacility.Thisincludesequipmentsuchaspumps,blowers,fuelpreparationmachinery,exciters,etc.2023SUMMERENERGYMARKETASSESSMENTn34nFEDERALENERGYREGULATORYCOMMISSIONTheUnitedStatesremainsanetexporterofoil,andstabledomesticproductionisamoderatinginfluenceonpricesforU.S.consumers.Thebalancebetweenglobalproductionandconsumption,andglobalmarkets’expectationsofsuch,canleadtosignificantpricechanges,whichcaninturninfluencedomesticconsumers’behavior.TheaverageWestTexasIntermediate(WTI)spotpriceforsummer2023isexpectedtobearound$77.25perbarrelcomparedto$98.6perbarrelinsummer2022.EIAprojectsthatWTIpriceswillcontinuetoslowlydecreaseduringthebalanceof2023.113U.S.commercialinventoriesofdistillateandresidualfueloilinventoriesareforecasttobeupfromlastsummerbutlowerthanthefive-yearaverage.EIAforecastsdistillatefuelinventorytobe128.3millionbarrels(MMb),15%higherthantheendoflastsummerbut7%lowerthanthefive-yearaverage.Residualfuelinventoryisexpectedtobe29.6MMb,4%higherthanin2022but3%lowerthanthefive-yearaverage.Higherforecastedfueloilinventorylevelssuggesteasieravailabilityforoil-firedgeneratorstorebuildtheiron-sitestorage,butactualfuelprocurementbygeneratorsvariesandcouldbeaffectedbypricetrendsorforecasts.NaturalGasMarketFundamentalsNaturalgaspricesarecurrentlyexpectedtobesubstantiallylowerinsummer2023thantheywerein2022,asmarketfundamentalshavelargelyshiftedawayfromthetightsupply-demandbalancesandmarketpressuresoflastyear,inmostregions,toawell-suppliedmarket.AccordingtoEIA’sShortTermEnergyOutlook,domesticnaturalgasproductionisexpectedtocontinuetogrowin2023,exceeding100Bcfdduringthesummerforthefirsttime,whilenaturalgasdemandisalsoexpectedtogrowprimarilyduetoincreasedfeedgasdemandforLNGexports.Naturalgasstorageinventoriesatthebeginningofsummerareexpectedtobewellabovethehistoricaverage,andthelikelymodeststoragebuildnecessarytoenterwinterabovetheaverageiscontributingtolowersummerfuturesprices.113EIA,Short-TermEnergyOutlook(May,2023),https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf.Figure17:NaturalGasFuturesPricesatSelectTradingHubs23Average22Average21Average0$2$4$6$8$10AlgonquinTranscoZ6NYEasternGas-S.HenryChicagoWahaCIGPG&ECitygateSoCalCitygate$/MMBtu2023Average2022Average2021Average0$2$4$6$8$10AlgonquinTranscoZ6NYEasternGas-S.HenryChicagoWahaCIGPG&ECitygateSoCalCitygate$/MMBtuSource:InterContinentalExchangeNOTE:summer2022andsummer2021averagesarebasedonsettledfutures.2023SUMMERENERGYMARKETASSESSMENTn35nFEDERALENERGYREGULATORYCOMMISSIONNATURALGASPRICESNaturalgaspricesforthissummerareexpectedtobelowerateverymajortradinghubacrosstheUnitedStatescomparedtothefinalsettledfuturesprices114ofsummer2022.Inthissection,thenaturalgasfuturespricesforsummer2023,referencedbelow,aretheaverageoftheJune2023,July2023,August2023,andSeptember2023futurescontractsasofMay8,2023.115TheHenryHubfuturescontractpricegenerallyservesasthelargestcomponentofsummerfuturespricesforalltradinglocations;asofMay8,2023,thatpriceaveraged$2.41/MMBtuforJune2023throughSeptember2023,down71.3%fromlastsummer’ssettledpriceaverageof$8.37/MMBtu.Manyfactorsaffecttradednaturalgasprices,butlowerfuturespricesattheHenryHubforthissummerappearlargelydrivenbyforecastsofgreateravailabilityofsupplythanlastsummerwithareducedneedtoinjectnaturalgasintostoragegivenabove-averagestorageinventories.116HenryHubnaturalgaspricesarealsoaffectedbyregionalfactors,includingthetradinghub’slocationinLouisianaasthesurroundingGulfCoastregionisexpectedtoexperienceacombinationofweakerindustrialandelectricpowersectordemandthissummer,whichwouldputdownwardpressureonprices.117NaturalgasfuturescontractsatU.S.tradinghubsmaytradeatapremiumabove,oradiscountbelow,theeventualHenryHubsettledfuturesprice,amarketdynamicknownasbasis.Tradinghubswithbasispremiums,orfuturespricesabovetheHenryHubfuturesprice,reflectthecostofpipelinetransportationtotheregionalhubsthatmayincludepipelineconstraintsorlimitationstoreceivingnaturalgasfromlower-costproductionareas.Basisdiscounts,orpricesbelowtheHenryHub,typicallyindicatetradinghubswithmorereadilyavailablesupply,lessconcernaboutweathereventscausinghighdemandandlargepriceincreases,andattimestheamountofproductionexceedingtheavailabilityofpipelinecapacitytomovenaturalgasfromthelocation.TheHenryHubsummer2023futurespriceistradingatanaverage$2.41/MMBtu.ThemainsouthernCaliforniatradinghub,theSoCalCitygate,istradingatanaverageof$3.72/MMBtuabovetheHenryHub,abasispremiumthatishigherthanthe2022basisof$1.40/MMBtu.However,becauseofloweryear-over-yearpricesattheHenryHub,thetotalsummerpriceattheSoCalCitygateis$6.13/MMBtu–37.3%lowerthanthesummer2022priceof$9.77/MMBtu,whichwasthehighestsummeraverageseenatSoCalCitygateinthelastfiveyears.Thebasisshiftreflects,inpart,localnaturalgasstorageinventoriesthatareatalmosthalfthestoragelevelseenatthistimelastyear.118,119AttheWahatradinghub,apointthatrepresentsthePermianBasinproductionarealocatedinWestTexasandsoutheasternNewMexico,futurespricesforthissummeraretradingataverage$1.24/MMBtubelowtheHenryHub.Thisislowerthaninsummer2022whenfuturespricesatWahasettled$0.99/MMBtubelowtheHenryHub.Overthepastdecade,thePermianBasinhasfrequentlyfacedlimitedpipelinetakeawaycapacityfornaturalgasproductionassociatedwithcrudeoilproduction.Thatreducestheamountofnaturalgasthatcanbetransportedoutofthebasintomarkets,andthusresultsinsignificantpricediscountsattheWahatradinghubrelativetotheHenryHubprice.120114SettledfuturespricesatregionalhubsarecalculatedbyaddingregionalbasisfuturespricestotheHenryHubfuturesprice.115Thesecontractstrademanymonthsinadvanceandthepricesofthesecontractsaresubjecttochangepriortoexpiration.116NaturalGasIntelligence,EIASaysSummerWeather,ProductionandEconomytoDrive2023NaturalGasPrices(February9,2023),https://www.naturalgasintel.com/eia-says-summer-weather-production-and-economy-to-drive-2023-natural-gas-prices/.117NaturalGasIntelligence,EIASlashes2023HenryHubForecastasSupplyGrowthSeenOutpacingDemand(February7,2023),https://www.naturalgasintel.com/eia-slashes-2023-henry-hub-forecast-as-supply-growth-seen-outpacing-demand/.118EIA,SouthernCaliforniaDailyEnergyReport(accessedMarch30,2023),https://www.eia.gov/special/disruptions/socal/winter/.119EIA,EIAWeeklyNaturalGasStorageReport(March10,2023),https://ir.eia.gov/ngs/ngs.html#:~:text=of%20independent%20rounding.-,Summary,year%20average%20of%201%2C594%20Bcf.120NaturalGasIntelligence,Permian’sLimitedNaturalGasTakeaway,FewerDUCsSignalLowerOilOutput(October27,2022),https://www.naturalgasintel.com/permians-limited-natural-gas-takeaway-fewer-ducs-signal-lower-oil-output/.2023SUMMERENERGYMARKETASSESSMENTn36nFEDERALENERGYREGULATORYCOMMISSIONFuturespricesatNortheastdemandhubshavedecreasedoverlastsummerduetolowerHenryHubprices,buttheNortheasthubsaretradinghigherrelativetoHenryHubcomparedtoSummer2022.AtTranscoZ6NYinNewYorkCity,futurespricesaretradingataverage$0.46/MMBtubelowtheHenryHub,comparedto$0.78/MMBtubelowin2022–thatis,adecreaseinthebasisdiscount.However,attheAlgonquinCitygateshuboutsideofBoston,theaveragesummerbasisasofMay8was$0.94/MMBtuabovetheHenryHub,asignificantincreasecomparedtoasettledaverageof$0.37/MMBtubelowHenryHubpricesinSummer2022.ThisincreaseismainlydrivenbyJulyfuturesatthehub,whicharetradingatabasispremiumof$2.20/MMBtu.DemandfornaturalgasintheNortheastisheavilywinterpeakingduetorelianceonthefuelforresidentialandcommercialspaceheating,althoughsummerdemandfornaturalgas-firedelectricalgenerationhasincreasedoverthelastdecade.NaturalgasproductionandtransportationfromthenearbyAppalachiaregionhastypicallybeenmorethanabletomeetsummerdemandintheNortheastandNewEngland,resultinginslightlyreducedpricesascomparedtotheTexasandLouisianaGulfCoasts(SouthTexastoHenryHub),wherenaturalgasdemandisstrongyear-roundforpurposesofelectricpowergeneration,industrialprocesses,andLNGexports.NATURALGASPRODUCTIONEIAforecasts(seeTable4)summer2023totaldrynaturalgasproductiontoaverage100.1Bcfd,anincreaseof0.9%fromthesummer2022averageof99.2Bcfdandan8.3%increasefromthepreviousfive-yearsummeraverageof92.4Bcfd.121Drynaturalgasproductionhasincreasedyear-over-yeareverysummersince2018,exceptsummer2020duetotheeconomicimpactsoftheCOVID-19pandemic.Althoughsummer-over-summerdrynaturalgasproductiongrowthexceeded10%in2018and2019priortotheCOVID-19pandemic,growthlastsummerandforecastedforthissummeraveragesabout2.7%peryear,orclosetoaquarterofpre-pandemicgrowth.Thedeclineinproductiongrowthhasgenerallybeenattributedtocapitaldisciplineexercisedbyoilandgasproducers,122inconjunctionwithindustryfinancialchallengesstemmingfrominflation,servicesectorconstraints,andlowernaturalgasprices.123Theincreaseinnaturalgasproductionprimarilycomesfromshaleformations,whichaccountedforjustunder80%ofthetotalnaturalgasproductionduringthesummermonthsof2021and2022,upfrom72.7%duringsummer2018.Ofthe11majorshaleformationslistedbytheEIA,theMarcellusbasin(locatedinPennsylvania,WestVirginia,Ohio,andNewYork)representsthelargestshareofshalenaturalgasproduction,producingnearly32%ofthetotalshalenaturalgasproductionduringsummer2022.Thetwonext-largestnaturalgasproducingshalebasinsintheUnitedStateshaveexperiencedsignificantnaturalgasproductiongrowthoverthelastfiveyears.ThePermianbasin121Drynaturalgasisconsumer-gradenaturalgasthatisalmostentirelycomposedofmethane,withlittletonohydrocarbonliquids(suchaspropaneandethane)orimpurities.122Oilandgasproducerscontinuetolimitcapitalspendingandusecashflowtopaydowndebtandtoaugmentreturnstoinvestors.123S&PGlobalCommodityInsights,NorthAmericanNaturalGasShort-TermOutlook,March2023.Table4:U.S.SummerNaturalGasProductionYearAverageSummerProduction(Bcfd)201885.0201993.2202089.7202194.9202299.22023100.1Source:EIA2023SUMMERENERGYMARKETASSESSMENTn37nFEDERALENERGYREGULATORYCOMMISSIONproduced19.7%oftotalshaleU.S.naturalgasproductionduringsummer2022,upfrom12.4%duringsummer2018,andtheHaynesvillebasin(locatedinLouisianaandTexas)produced16.9%oftotalshaleU.S.naturalgasproductionduringsummer2022,upfrom11.6%duringsummer2018.Pipelineinfrastructuredevelopmentinthesethreeregionsoverthelastfiveyearshasfacilitatedtheseincreasesinnaturalgasproduction.Crudeoilpricesareexpectedtobesignificantlylowerduringsummer2023thansummer2022,whichcouldleadtoaslowdownindrillinginoil-richbasins,suchasthePermianbasin,thatproduceassociatednaturalgasasabyproductofcrude-oilfocusedproduction.CrudeoilpricesforWTI124attheCushingInterchange125inOklahoma,theU.S.crudeoilbenchmarkindex,areexpectedtoaverage$72.25perbarrelthissummer,26.7%lowerthansummer2022prices.ThelowercrudeoilpricescoulddiscouragedrillinginthePermianbasinandpotentiallycontributetoadecreaseinthegrowthrateofnaturalgasproductionintheSouthwestregion.AdditionaldetailsonpetroleumandliquidfuelswerediscussedaboveintheOtherFuelsUsedforElectricGenerationsectionofthisassessment.NATURALGASDEMANDIntheUnitedStates,totalnaturalgasdemand,includingresidential/commercial,industrial,naturalgasconsumedforelectricitygeneration(powerburn),andnetexports,isforecasttoaverage94.1Bcfdinsummer2023,4.4%morethansummer2022levelsand14%morethanthepreviousfive-yearaverage,asseeninFigure19.Consistentwithprevioussummers,theincreaseinnaturalgasdemandforsummer2023isexpectedtoprimarilycomefromnaturalgasnetexports(includingLNGandpipelinenetexports),whichisexpectedtoaverage13.9Bcfdinsummer2023,up36.9%fromsummer2022levelsandup104%fromthepreviousfive-yearaverage.TotalU.S.domesticnaturalgasconsumption,whichexcludesnetexports,isexpectedtoaverage80.2Bcfdin2022,a0.3%decreasefromsummer2022levelsanda5.9%increasefromthepreviousfive-yearaverage.124WestTexasIntermediateisalight,sweet(lowsulfurcontent)crudeandtheU.S.standardforcrudeoil.125CushingInterchangeisoneofthelargestcrudeoilmarkethubsintheUnitedStates.Figure18:2018-2022AverageSummerU.SShaleBasinsNaturalGasProduction0204060801002022202120202019201885.0Bcfd93.2Bcfd89.7Bcfd94.9Bcfd99.2BcfdRemainingShaleBasinsHaynesvillePermianMarcellusTotalNaturalGasProductionBcfdSource:EIA24.6Bcfd13.3Bcfd15.7Bcfd25.1Bcfd0204060801002022202120202019201885.0Bcfd93.2Bcfd89.7Bcfd94.9Bcfd99.2BcfdRemainingShaleBasinsHaynesvillePermianMarcellusTotalNaturalGasProductionBcfd2023SUMMERENERGYMARKETASSESSMENTn38nFEDERALENERGYREGULATORYCOMMISSIONThegrowthinU.S.naturalgasnetexportshasrecentlybeendrivenbyLNGexportsasfurtherexplainedbelowinthe“ExportsandImports”section.Domestically,thebiggestincreaseinnaturalgasdemandinsummer2023isexpectedtocomefromtheresidential/commercialsector,whichisexpectedtoaverage10.0Bcfd,anincreaseof18.1%fromsummer2022andanincreaseof19.0%fromthepreviousfive-yearaverage.Naturalgasdemandintheindustrial/othersector,whichisprimarilyconcentratedontheGulfCoastduetoexpansionsofpetrochemicalandotherindustrialfacilitiesintheregion,isforecasttoaverage29.6Bcfdinsummer2023,down1.5%fromsummer2022levelsandup2.0%fromthepreviousfive-yearaverage.Powerburnisexpectedtoaverage40.5Bcfdinsummer2023,down2.0%fromsummer2022levelsandup6.1%fromthefive-yearaverage.Consistentwithpastsummers,andasseeninFigure20,powerburnisforecasttopeakduringthehottestmonthsofJulyandAugust,ataround44Bcfd,whileJuneandSeptemberwillseelessdemandforelectricityandaverage37Bcfd.Thedemandforpowerburnisdeterminedbyoverallelectricityconsumption,whichisdriveninsummerbyhighdemandforspacecooling,andtheshareofelectricitygenerationthatnaturalgas-firedgeneratorsarecalledupontoprovide.Duringsummer2023,theshareofU.S.naturalgas-firedelectricitygenerationoutputrelativetototalU.S.electricitygenerationoutputisforecasttoaverage42.4%,downslightlyfrom43.4%insummer2022,butupfromthepreviousfive-yearaverageof40.8%.Combined,naturalgas-andcoal-firedgenerationareforecasttoprovidethemajorityofelectricitygeneratedintheUnitedStatesthissummer,at61%,butthisshareislowerthanlastsummer’s63.6%JuneJulyAugustSeptember0102030405020232022202120202019Figure20:SummerNaturalGasPowerBurnbyMonthSource:EIAEIAFORECASTFigure19:SummerNaturalGasDemandbySector020406080100120NetExportsNetExportsElectricPowerIndustrial/OtherProductionResidential/Commercial201820192020202120222023Source:EIA13.9Bcfd100.1Bcfd40.5Bcfd29.6Bcfd10Bcfd020406080100120NetExportsNetExportsElectricPowerIndustrial/OtherProductionResidential/Commercial201820192020202120222023FORECASTTotalDemand:94.1Bcfd2023SUMMERENERGYMARKETASSESSMENTn39nFEDERALENERGYREGULATORYCOMMISSIONshare.Thisreductioninnaturalgasandcoal-firedelectricitygenerationshareinsummer2023isforecasttobepartlyoffsetbyincreasesintheshareofgenerationfromnuclearpowerandrenewableenergyresources,producinganetdecreaseintotalU.S.generationcomparedtosummer2022.Regionally,theshareofnaturalgas-firedpowergenerationinsummer2023varies,withsixofthetenregionsshowninFigure21havinghighersharesofnaturalgas-firedpowergenerationthantheU.S.average.Ofthetenregions,ISO-NE,NYISO,ERCOT,CAISO,SERC,andSPPexpecttodecreasetheiraveragesharesofnaturalgas-firedelectricgeneration,whiletheSouthwestexpecttoincreaseitsshareofnaturalgas-firedelectricgeneration.Inthesummerof2023,ISO-NEisexpectedtohavethelargestshareofnaturalgas-firedelectricgenerationat57%,whilethehydropower-heavyNorthwestandRockiesregionisexpectedtohavethesmallestshareat23%.Notably,CAISOisforecasttodecreaseitsshareofnaturalgas-firedelectricgenerationfrom45%insummer2022to39%insummer2023,ERCOTisforecasttodecreaseitsshareofnaturalgas-firedelectricgenerationfrom51%insummer2022to48%insummer2023,andtheSouthwestisforecasttoincreaseitsshareofnaturalgas-firedelectricgenerationfrom42%insummer2022to48%insummer2023.Aseachmarkethasadifferentleveloftotalgeneration,similarsharesofgenerationdonotnecessarilymeanthesamelevelofdemandforpowerburn.BecausePJM’stotalgenerationismuchlargerthanISO-NE’s,forexample,PJMisexpectedtoburnmorenaturalgasforpowerproductioneventhoughgas-firedgenerationisasmallershareofoverallgenerationinPJMthaninISO-NE.NATURALGASEXPORTSANDIMPORTSNaturalgasexportsareexpectedtoincreasethissummer,dueprimarilytoheightenedinternationalLNGdemandandtheFreeportLNGexportterminal’sreturntoservice.126InternationalLNGdemandisexpectedtobelargelydrivenbyEuropeanmarketsastheycontinuetoreplacepipelinenaturalgasexportsfromRussiawithincreasedimportedLNG.127126EIA,LiquefiedNaturalGasWillContinuetoLeadGrowthinU.S.NaturalGasExports(March8,2023),https://www.eia.gov/todayinenergy/detail.php?id=55741.127Historically,U.S.LNGcargoshaveprimarilyservedAsianmarkets.However,highEuropeannaturalgaspriceshaverecentlyincentivizedmoreLNGexportstothecontinent,withshipmentstoEuropeoutpacingexportstoAsiasinceDecember2021.Figure21:ShareofNaturalGasGenerationbyRegion0102030405060CAISOSouthwestNWandRockiesERCOTSPPMISOSERCPJMNYISOISO-NEU.S.Total20232022PreviousFive-YearAverageSource:EIA0102030405060CAISOSouthwestNWandRockiesERCOTSPPMISOSERCPJMNYISOISO-NEU.S.Total20232022PreviousFive-YearAverage43%57%54%45%43%35%27%48%23%48%39%2023SUMMERENERGYMARKETASSESSMENTn40nFEDERALENERGYREGULATORYCOMMISSIONInaddition,reducedLNGpricesin2023duetoamildwinterandfuller-than-averagenaturalgasstorageinventoriescouldincentivizeprice-sensitivecountries,particularlyinSoutheastAsia,toimportmoreLNG.128EIAforecastsgrossLNGexportstoaverage12.3BcfdinJune,July,August,andSeptember2023,upfrom9.8Bcfdinsummer2022.Altogether,theUnitedStatesisforecasttobeanetexporterofnaturalgasthissummer,withnetnaturalgasexports,includingLNGandviapipeline,averaging13.9Bcfdcomparedto10.1Bcfdinsummer2022.TheUnitedStatesisexpectedtoremaintheworld’slargestLNGexporterinsummer2023–theUnitedStatesbecametheworld’slargestLNGexporterduringthefirsthalfof2022.129AsofMarch15,2023,theFERC-authorizedexportliquefactioncapacityintheUnitedStateswas13.5BcfdacrosssevenLNGexportfacilities,allofwhichareexpectedtobeinservicethissummer.130,131U.S.liquefactioncapacityinsummer2023isexpectedtobehigherthanitwasinsummer2022asanexpansionoftheCalcasieuPassterminalisanticipatedtocomeonlineandFreeportLNGreturnstoservice.AnunplannedoutageattheFreeportLNGnaturalgasliquefactionplantontheGulfCoastinSouthTexasonJune8,2022,reducedLNGexportcapacityintheUnitedStatesby2.1Bcfd(approximately15%oftheU.S.LNGexportcapacityatthetimeoftheoutage)formostofsummer2022.TheCommissionauthorizedFreeportLNGtoresumeserviceonitsthirdliquefactiontrainonMarch8,2023,allowingforthefullutilizationofitsliquefactioncapacity.AddingtoU.S.liquefactioncapacityinsummer2023,thepotentialstartupoftheCalcasieuPassterminal’sthreeremainingblocks(outofnineblocks),approvedbytheCommissioninDecember2021,wouldadd0.55Bcfdofliquefactioncapacity.132Continuedincreasedinternationaldemandshouldincentivizehighutilizationratesof,andexportsfrom,U.S.LNGexportterminalsthroughoutsummer2023.InadditiontoLNGexports,grosspipelineexportsareforecasttoincreaseby0.6Bcfdfromsummer2022andaverage8.7Bcfdthissummer.Forcontext,grosspipelineexportsaveraged5.9BcfdtoMexicoand2.2BcfdtoCanadainsummer2022.MexicohasexpandeditsnaturalgaspipelineinfrastructureoverthepastfewyearstoallowittoincreasinglyrelyonimportednaturalgasfromU.S.pipelines.TheBajaXpressProjectwillfurtherincreasepipelineexportcapacitytoMexicobyapproximately0.5Bcfdwhenitgoesintoservicethisyear,asdescribedinfurtherdetail128EIA,LiquefiedNaturalGasWillContinuetoLeadGrowthinU.S.NaturalGasExports(March8,2023),https://www.eia.gov/todayinenergy/detail.php?id=55741.129EIA,TheUnitedStatesBecametheWorld’sLargestLNGExporterintheFirstHalfof2022(July25,2022),https://www.eia.gov/todayinenergy/detail.php?id=53159.130FERC,NorthAmericanLNGExportTerminals–Existing,ApprovednotYetBuilt,andProposed(March15,2023),https://www.ferc.gov/natural-gas/lng.131TheKenaiLNGexportterminalinAlaska,ownedbyMarathonPetroleumCorp’sTrans-ForelandPipelineCo,isnotincludedinthetotalliquefactioncapacity.TheKenaiLNGexportterminalhasnotexportedLNGsince2015.TheterminalreceivedCommissionauthorizationtobuildanimportfacilityinDecember2020.SeeReuters,“MarathongetsmoretimetobuildLNGimportprojectinAlaska”(August16,2022),https://www.reuters.com/business/energy/marathon-gets-more-time-build-lng-import-project-alaska-2022-08-16/.132FERC,NorthAmericanLNGExportTerminals–Existing,ApprovednotYetBuilt,andProposed(March15,2023),https://www.ferc.gov/natural-gas/lng.Figure22:U.S.SummerNaturalGasExportsandImportsLNGImportsLNGExportsPipelineImportsNetExportsPipelineExports20192020202120232022-4Bcfd-8-40812162024LNGImportsLNGExportsPipelineImportsNetExportsPipelineExports20192020202120232022-4Bcfd-8-40812162024Source:EIA12.3Bcfd8.7Bcfd7Bcfd0.4Bcfd2023SUMMERENERGYMARKETASSESSMENTn41nFEDERALENERGYREGULATORYCOMMISSIONintheNotableIssuesforSummer2023sectionbelow.Incontrast,EIAexpectsgrosspipelineimports,primarilyfromCanada,toaverage7Bcfdinsummer2023,a0.8Bcfdyear-over-yeardecrease.NATURALGASSTORAGENaturalgasstorageinventorieshelptobalancenaturalgasdemandandsupplyandarefundamentaltopriceformation.Mildwinterweatherresultedinnaturalgasstorageinventoriesendingthe2022-2023withdrawalseasonat1,830Bcf,133whichis32%(448Bcf)morethanatthestartofthe2022injectionseasonand22%(329Bcf)morethantheaverageatthestartofthelastfiveinjectionseasons.AccordingtoEIA,naturalgasstorageinventoriesareforecasttogrowby1,932Bcfduringthe2023injectionseason.Afterthoseinjectionsareaddedtovolumesinstorageatthestartofthe2023injectionseason,naturalgasstorageinventoriesareprojectedtostartthe2023-2024winterstoragewithdrawalseasonat3,762Bcf,3%(118Bcf)abovestartofthe2022-2023winterwithdrawalseasonand3%(117Bcf)abovethefive-yearaveragestartofthelastfivewinterstoragewithdrawalseasons.NATURALGASINFRASTRUCTURESinceSeptember2022,severalpipelineprojectshaveincreasedinterstatenaturalgastransmissioncapacity,accordingtoEIA’spipelineprojectdatabase.134ThemostnotablearetwoprojectsprimarilyontheANRpipeline,whichrunsfromTexasandLouisianatotheGreatLakesregion:theAlbertaXpressupgradeproject,whichadded0.17BcfdincapacityfromtheCanadianbordertotheGulfCoastregion,135andtheWisconsinAccessProject,whichincreasedcapacityby0.05BcfdfromIllinoistoWisconsin.136,137Otherprojectshaveincreasedtheroutesavailabletointerstateshippersbyaddingcapacitywithinstates.Thelargestoftheseisthe1.65Bcfd,135-mile-longGulfRunpipelineinLouisiana,whichprovidesconnectivityfromnaturalgas-producingareas,includingtheHaynesvilleShaleregion,totheGulfCoast.138Someprojectsmayenterserviceduringthissummer,includingNorthBajaXpress,whichisdescribedinadditionaldetailinthe“NotableIssuesforSummer2023”sectionbelow.133ThenaturalgasstorageinjectionseasontypicallystartsduringthefirstweekofAprilandendsthelastweekofOctober.Inanygivenyear,thestartoftheinjectionseasonisdeterminedbythelowestnaturalgasstorageleveloftheyearandthewinterwithdrawalseasonbythehighestnaturalgasstorageleveloftheyear.In2023,theinjectionseasonbeganthefirstweekofApril.134EIA,NaturalGasPipelineProjectTracker(AccessedApril2,2023),https://www.eia.gov/naturalgas/pipelines/EIA-NaturalGasPipelineProjects.xlsx.135TheAlbertaXpressprojectutilizesexistingcapacityontheGreatLakesGasTransmissionsystemandANRpipelinesystembundledwith0.17BcfdinnewincrementalcapacityfromacompressorstationaddedtotheANRSoutheastMainlineinLouisiana.136TCEnergy,AlbertaXpress(AXP)Project(AccessedMarch29,2023),https://www.tcenergy.com/siteassets/pdfs/natural-gas/alberta-xpress-project/tc-alberta-xpress-project-fact-sheet.pdf.137TCEnergy,WisconsinAccessProject(AccessedMarch29,2023),https://www.tcenergy.com/siteassets/pdfs/natural-gas/wisconsin-access-project/tc-wisconsin-access-project-fact-sheet.pdf.138EnergyTransferLP,EnergyTransferAnnouncesGulfRunTransmissionisinService(December15,2022),https://www.businesswire.com/news/home/20221215005982/en/.Figure23:NaturalGasStorageInventoriesSource:U.S.EIA2023SUMMERENERGYMARKETASSESSMENTn42nFEDERALENERGYREGULATORYCOMMISSIONNOTABLEISSUESFORSUMMER2023ThissectionofthereporthighlightsconcernsuniquetothisupcomingsummersuchasnaturalgassupplyissuesinCalifornia,droughtandwaterconditions,andelectricreliabilityrisksandtrends.CaliforniaNaturalGasSupplyCaliforniaentersthesummerwithlowlevelsofnaturalgasinstorageandcouldseeshiftingpatternsofsupplyasanewcross-borderpipelineandanLNGprojectinMexicoenterservice.Asofthetimeofwriting,therearenosignificantplannedoutagesontheSouthernCaliforniaGas(SoCalGas)system.SouthernCaliforniaandtheDesertSouthwestmayseeincreasednaturalgaspipelineflowsthissummercomparedtolastsummer.ElPasoNaturalGas(EPNG),oneofthetwolargestinterstatenaturalgaspipelinesbetweenthePermianBasinandCalifornia,wasunderaforcemajeureafteranexplosiononLine2000occurredonAugust15,2021,nearCoolidge,Ariz.,roughly60milessoutheastofPhoenix.EPNGreturnedLine2000toserviceonFebruary15,2023.139Thismayimproveflowsthissummer,causinglowerpricesandlessrelianceonstoragetomeetdemandinSouthernCaliforniaandtheSouthwest.AnotherpotentialimpacttonaturalgassupplyinCaliforniacomesfromTCEnergy’sBajaXpressProject,whichcouldreduceCalifornia’saccesstonaturalgasfromthePermianBasininTexasbyredirectingsometoMexico.Theprojectwilladdapproximately0.5BcfdofnaturalgasdeliverycapacitytotheEnergiaCostaAzulLNGexportterminalprojectalongMexico’sPacificcoastandtheCommissionauthorizedapartialin-serviceofprojectfacilitiesonMay3,2023.140However,theCostaAzulLNGfacilityisnotexpectedtobeginserviceuntilthesummerof2025,andnaturalgasflowswilllikelynotbererouteduntiltheprojectisinservice.141California’sstruggletomaintainadequatenaturalgasinstoragethispastwintermayresultinatightersupply-demandbalanceandhigherpricesthissummerasmoresupplywillneedtoberoutedintostoragetorefillinventoriesthaninausualsummer.Naturalgasstoragelevelsfelltoatotalinventoryof74Bcf,57.5%belowthefive-yearaverage,intheEIA’sPacificRegionattheendofthewinterseason.142PacificRegionalstoragelevelspeakedinlateJuly2022beforedecliningduetoalatesummerheatwavethatreducedinventories;thesubsequentfallinventorybuildwasnotlargeenoughtore-stockinventoriestothesamelevel.Thereclassificationof51BcfofworkinggastobasegasinPacificGasandElectric(PG&E)inJuneof2021furtherloweredstoragelevelsinthePacificregion.143139ElPasoNaturalGasCompany,LLCWebsite,InformationalPostings(accessedMarch22,2023),https://pipeline2.kindermorgan.com/Notices/NoticeDetail.aspx?code=EPNG&notc_nbr=617376&date=3/22/2023&subject=&notc_type=-1&notc_sub_type=-1&notc_ind=C.140NorthBajaPipeline,LLC,179FERC¶61,039(2022),https://elibrary.ferc.gov/eLibrary/docinfo?accession_number=20220421-3088andhttps://elibrary.ferc.gov/eLibrary/docinfo?accession_number=20230503-3068.141NaturalGasIntelligence,SempraTargetingMid-2025In-ServiceforMexicoLNGExportProject(November7,2022),https://www.naturalgasintel.com/sempra-targeting-mid-2025-in-service-for-mexico-lng-export-project/.142NaturalGasIntelligence,PacificNaturalGasStorageDropstoLowestLevelin13Years,SetsStageforHighSummerPrices(April19,2023),https://www.naturalgasintel.com/pacific-natural-gas-storage-drops-to-lowest-level-in-13-years-sets-stage-for-high-summer-prices/.143PacificGasandElectric,CaliforniaGasTransmissionPipeRanger(accessedMarch22,2023),https://www.pge.com/pipeline/news/newsdetails/index.page?title=20210610_2445_news.2023SUMMERENERGYMARKETASSESSMENTn43nFEDERALENERGYREGULATORYCOMMISSIONDroughtandWaterConditionsPrecipitationsincelastsummerhasgreatlyreducedtheseverityofdroughtinCaliforniaandpartsoftheWest.However,partsofTexas,themid-Continent,andareasofthePacificNorthwestareexpectedtoremainindroughtthroughJuly31.144GreateravailabilityofsnowmeltandwaterinCaliforniareservoirssuggestsstrongavailabilityofhydroelectricpowerthissummer.Improveddroughtconditionsinsomeareashavealsodecreasedtheprevalenceofwildfireriskinthoseareascomparedtolastsummerand,accordingtotheNationalInteragencyFireCenter,haveeliminatedtheriskofsignificantwildfiresinJune,althoughrisklevelsremainuncertainlaterinthesummer.DROUGHTINWEST,CENTRAL,ANDSOUTHEASTUNITEDSTATESIntheWest,largepartsofCalifornia,theDesertSouthwest,andtheMountainWestreceivedsignificantprecipitationduringwinter2022-2023,alleviatingmuchofthedroughtthroughoutCaliforniaandsomeotherareasinthewesternUnitedStates,althoughsomeareasremainindrought.Figure24showsacomparisonofdroughtconditionsbetweenApril12,2022,andApril11,2023,toshowtheextentofdroughtalleviationandwheredroughtconditionsremain.TheClimatePredictionCenter,aunitofNOAAthatprovidesdroughtoutlooks,projectsthatfromApril20toJuly31,2023,significantareasofArizona,California,Colorado,andWyomingwillnolongerbeinastateofdrought,unlikethesameperiodin2022,thoughdroughtconditionscontinuetoaffectthePacificNorthwestandareasintheColoradoRiverBasin.145Inaddition,unlikeCaliforniaandtheMountainWest,partsofTexas,themid-Continent,andareasofthePacificNorthwest,especiallyOregon,areexpectedtoremainindroughtfromApril20throughJuly31,2023.TheseconditionscontinuetoaffecthydrooperationsatGlenCanyonandHooverDamsintheColoradoRiverBasinduetoreleaserestrictionsaffectingthefacilitiesasaresultofcontinuedlowreservoirlevels.146HydroresourcesareakeysourceofenergyandcapacityinsomeareasincludingtheWECC-NWandtheWECC-SW.147InCalifornia,historicallyhighlevelsofsnowfallandrainduringwinter2022-2023alleviateddroughtthroughoutmostofthestateandrefilledreservoirs,althoughthelong-termeffectsonstatewaterlevelsfromthe2022-2023winterweatherpatternsremainunclear.Inpart,potentialchallengesanduncertaintyremainsbecauseofimmediatewaterneeds,limitedwaterretentioncapacity148toprepareforlongtermneeds,andongoingenergyandwaterinfrastructureimpactsduetodepletedgroundwaterthroughouttheWest.149144NOAA,USSeasonalDroughtOutlook,(April30,2023),https://www.cpc.ncep.noaa.gov/products/expert_assessment/sdo_summary.php.145NOAAClimatePredictionCenter,U.S.SeasonalDroughtOutlook(March16,2023),https://www.cpc.ncep.noaa.gov/index.php.146BureauofReclamation,March202324-MonthStudyProjections:LakePowellandLakeMead,EndofMonthElevationCharts(March15,2023),https://www.usbr.gov/uc/water/crsp/studies/images/PowellElevations.pdf.147PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).148TheNewYorkTimes,AVeryWetWinterHasEasedCalifornia’sDrought,butWaterWoesRemain(March17,2023),https://www.nytimes.com/interactive/2023/climate/california-drought.html.149NOAA,NationalIntegratedDroughtInformationSystem,2023WesternDroughtWebinar(May9,2023),https://www.drought.gov/events/2023-western-drought-webinar-2023-05-09#:~:text=NOAA’s%20National%20Integrated%20Drought%20Information,information%20on%20current%20drought%20conditions.2023SUMMERENERGYMARKETASSESSMENTn44nFEDERALENERGYREGULATORYCOMMISSIONIssued:April11,2023Figure24:U.S.DroughtConditionsonApril12,2022,andApril11,2023(cont.)Source:U.S.DroughtMonitorNoneD0AbnormallyDryD1ModerateDroughtD2SevereDroughtD3ExtremeDroughtD4ExceptionalDroughtTheDroughtMonitorFocusesonbroad-scaleconditions.Localconditionsmayvary.FormoreinformationontheDroughtMonitor,gotohttps://droughtmonitor.unl.edu/About.aspxIntensityIssued:April12,2022Source:U.S.DroughtMonitorNoneD0AbnormallyDryD1ModerateDroughtD2SevereDroughtD3ExtremeDroughtD4ExceptionalDroughtTheDroughtMonitorFocusesonbroad-scaleconditions.Localconditionsmayvary.FormoreinformationontheDroughtMonitor,gotohttps://droughtmonitor.unl.edu/About.aspxIntensity2023SUMMERENERGYMARKETASSESSMENTn45nFEDERALENERGYREGULATORYCOMMISSIONHYDROSEASONINTHEWESTIncreasedprecipitation,highersnowpack,andsomewhatreplenishedreservoirsindicatehigherhydropowerinpartsoftheWest,particularlyCalifornia,thissummerincomparisontolastyear.Associatedhighhydropowercould,inturn,reducenaturalgasdemandforpowerburn.Afterdecreasingtoa20-yearlowinthe2020-2021wateryear,waterlevelsintheregionincreased13%duringthemostrecentwateryear.150Throughoutthewintermonths,aseriesofatmosphericrivers,151thelargestfreshwatertransportmechanismsonEarth,drenchedpartsoftheWestwithsnowandrain.ConsiderablerainfallinCaliforniareplenishedreservoirsinthestateafteryearsofdrought.ReplenishedsnowpackinCaliforniaprovidesmorewaterforreservoir-fedorrun-of-riverhydrogeneratorsduringthe150Themostrecentwateryeardataavailableis2021–2022.Awateryearcoversa12-monthperiodfromOct.1–Sep30.Precipitationinthefallandwintermonthsdoesnotaffectstreamandriverflowsuntilthefollowingspringandsummer.Forexample,wateryear2021–2022willaffectstreamandriverflowsforthespringandsummerof2023.U.S.GeologicalSurvey,ExplanationsfortheNationalWaterConditions(February10,2016),https://water.usgs.gov/nwc/explain_data.html.151Atmosphericriversarerelativelylong,narrowregionsintheatmosphere–likeriversinthesky–thattransportmostofthewatervaporoutsideofthetropics.Whileatmosphericriverscanvarygreatlyinsizeandstrength,theaverageatmosphericrivercarriesanamountofwatervaporroughlyequivalenttotheaverageflowofwateratthemouthoftheMississippiRiver.Exceptionallystrongatmosphericriverscantransportupto15timesthatamount.Whenatmosphericriversmakelandfall,theyoftenreleasethiswatervaporintheformofrainorsnow.NOAA,Whatareatmosphericrivers?(March31,2023),https://www.noaa.gov/stories/what-are-atmospheric-rivers#:~:text=Atmospheric%20rivers%20are%20relatively%20long,vapor%20outside%20of%20the%20tropics.Figure25:WesternSnowpackLevelsSource:NaturalResourceConservationServiceU.S.DepartmentofAgriculture,April20,20232023SUMMERENERGYMARKETASSESSMENTn46nFEDERALENERGYREGULATORYCOMMISSIONspringandsummer.California,Oregon,andWashington,whichprovide82%oftheWest’shydropower,drovethemostrecentincreaseinwesternhydropower.Washington’sGrandCouleeDam,thelargesthydropowerplantinthecountry,generated19%moreelectricityduringthe2020-2021wateryearthaninthepreviouswateryear.Bycontrast,theHooverDam,thelargesthydropowerplantintheLowerColoradoRiverBasin,generated10%lesselectricityin2021-2022wateryearthanitdidinthepreviouswateryearduetothecontinuedhistoricdrought.152HydropowerinOregonincreased19%duringthe2021-2022wateryear,thoughthePacificNorthwestcurrentlyfacespotentialhydroconstraintsduetolackofsnowinthearea.153LakePowell,anotherlargereservoirservingtheWest,couldgainupto35feetofwaterasthehighersnowpackmeltsandfillsthereservoir,butthewaterreservoirwouldstillonlybeone-thirdfull.Thus,theGlenCanyonDam,whichcreatedLakePowell,willnotbeabletooperatenormally,asthewaterelevationremainstoolow.154InthePacificNorthwest,conditionsvary.Winterstormshavebroughtsnowpacklevelsinpartsoftheregionabovenormal,butseriousdroughtconcernsremaininpartsofthePacificNorthwestduetolackofsnow.155InCalifornia,snowpacklevelswere172%ofmedianasofApril20,2023.156Thisisamajorincreasefromlastyear,whensnowpacklevelswere22%ofmedian.TheGreatBasin,whichstretchesfromtheSierraNevadatotheWasatchMountainsinUtah,hasalsorecordedmoresnowthispastwinterthanthetwopreviouswinterscombined.IntheColoradoRiverBasin,hydroconditionsremainconstrainedasLakePowellisforecasttoremaininMid-ElevationReleaseTier,157evenwithhighersnowpacklevels,andLakeMeadisforecasttoremaininLevel2ShortageConditionunderprobableconditions.158LakeMeadisatriskoffallingtoLevel3ShortageConditionifconditionsaredrierthanexpectedthissummer.Thesethresholdsaffectreleasesfromthedamsandtheavailabilityofthegeneratorsasenergyandcapacityresourcesfortheareaandwiderregion.This,inturn,couldexacerbatereliabilityrisksduringcriticalperiodssuchasduringperiodsofhighdemandintheWECC-SWorinneighboringareassuchasCaliforniawhenimportsplayakeyrole.159Inresponsetotheseongoingwatershortages,theDepartmentofInteriorissuedadraftSupplementalEnvironmentalImpactStatement(SEIS)160whichproposestwoactionalternativesforwaterrights,usageandoperationoftheHooverandGlenCanyondams,whichwillhaveprofoundimpactsonresidential,commercialandindustrialactivitiesintheregion.Thiswill,inturn,impactwaterandenergydemandpatternsandpotentiallyoperationsofthermalgenerationthatdependonthesesourcesforcoolingwater.ThefinalSEISisanticipatedtobeissuedwithaRecordofDecisioninsummer2023.152EIA,TodayinEnergy(February22,2023),https://www.eia.gov/todayinenergy/detail.php?id=55599.153NOAAWebsite,SnowDroughtCurrentConditionsandImpactsintheWest(April6,2023),https://www.drought.gov/drought-status-updates/snow-drought-current-conditions-and-impacts-west-2023-04-06.154TheAssociatedPress,DroughtOver?SpringOutlookFindsRelief–andFloodRisk(March16,2023),https://apnews.com/article/drought-western-states-storms-83ee04b6fefb455f0dee03a9ee32aae2andTheColoradoSun,ColoradoRiverBasinReservoirsStillFaceGrimOutlookDespiteHealthySnowpack(April4,2023),https://coloradosun.com/2023/04/04/colorado-river-basin-march-reservoir-outlook-healthy-snowpack/.155NOAA,SnowDroughtCurrentConditionsandImpactsintheWest(April6,2023),https://www.drought.gov/drought-status-updates/snow-drought-current-conditions-and-impacts-west-2023-04-06.156Note:Mediancalculatedfrom1991-2020.CaliforniaDepartmentofWaterResources,SnowWaterEquivalents(April20,2023),https://wcc.sc.egov.usda.gov/reports/UpdateReport.html.157TheBureauofReclamationusesoperatingguidelinesbasedonwaterelevationtomanagewateravailabilityandoperationsatLakePowellandLakeMead.Therearefiveoperatingtiers.Mid-ElevationReleaseTierprovidesdirectionwhenLakePowell’sJanuary1elevationisprojectedtobebelow3575-feet-above-sea-levelbutabove3525-feet-above-sea-level.158U.S.BureauofReclamation,March202324-MonthStudyProjections:LakePowellandLakeMead,EndofMonthElevationCharts,https://www.usbr.gov/uc/water/crsp/studies/images/PowellElevations.pdf.159PreliminaryNERC,2023SummerReliabilityAssessment(releaseanticipatedMay2023).160InteriorDepartment,InteriorDepartmentAnnouncesNextStepstoProtecttheStabilityandSustainabilityofColoradoRiverBasin(April11,2023),https://www.doi.gov/pressreleases/interior-department-announces-next-steps-protect-stability-and-sustainability-colorado.2023SUMMERENERGYMARKETASSESSMENTn47nFEDERALENERGYREGULATORYCOMMISSIONU.S.WILDFIRERISKASSESSMENTDryconditionsandincreasesinthelikelihoodofwildfiresmaythreatentointerruptordamageelectrictransmissionlines,orconversely,transmissionlinesmayposeariskofexacerbatingwildfires.Nationally,therewerealmost69,000wildfiresreportedin2022,comparedtoalmost59,000wildfiresreportedin2021.Reportedwildfiresburned7.5millionacresnationally,comparedto7.1millionacresin2021.161In2022,thereportednumberofwildfiresnationwidewasnoticeablyhigherthanthe10-yearaverage,whiletotalacresburnednationwidevariedlittlefromthe10-yearaverage.162Afterlongandintensewildfireseasonsin2020and2021,the2022Californiawildfireseasonwasslightlybelowthe5-yearaveragefornumberoffires,andthetotalacreageburnedwaswellbelowthe5-yearaverage.Despitethe“quiet”yearasmeasuredinacreageaffected,anumberofsignificantwildfiresburnedin2022.163AsofApril1,2023,accordingtotheNationalInteragencyFireCenter,below-normalfirepotentialinJunewillextendfromnorthwestArizonathroughthecentralUtahmountainsandthroughouttheentireSierraintonorthwestCalifornia.Below-normalfirepotentialwillcontinueintheSierras,northeastMontanaandintosoutheastNorthDakotathroughJuly.Someabove-normalwildfirepotentialisforecastincentralWashingtonandOregonthroughsoutheastOregonandsouthwestIdahoduetoexpectedwarmeranddrierconditions.164TheAprilFirePotentialOutlooknotesAprilfireactivityintheSoutheastandUpperMidwest,whichisexpectedtobecomemoreactiveinMayandJuneinCaliforniaandtheSouthwest.InJuly,theexpectednormalfireactivitywillincreaseintheinteriorWestandNorthwestasfireactivitydiminishesintheSoutheastandEast.165AmildwildfireseasonandreduceddroughtinthewesternUnitedStateswouldbothmitigatetheriskofwildfirescompromisingtransmissionlinesandreducethepossibilityoftransmissionlinescausingwildfires,ashappenedinnorthernCaliforniain2021.166TheNationalInteragencyCoordinationCenterforecasts167variedrisksacrossthecountryforthe2023fireseasonwithmostareasseeingtypicallevelsofriskandelevatedrisksforecastinthePacificNorthwestlaterinthesummer.168Whileregionalvariancesoccur,wildfireseasonactivitygenerallyincreasesthroughthesummerastheweatherishotteranddrierconditionsprevail,withthepeakofwildfireactivityanticipatedfromlateJulyintoSeptemberformostareas.TheforecastindicatesthattheentiretyoftheWestdidnotbenefitfromthedrought-bustingCaliforniawinterstorms.TheSeasonalOutlookfromtheGreatBasinCoordinationCenterobservesthatincreasedprecipitation,asrecentlyreceivedinCalifornia,typicallyleadstointensevegetationgrowthduringthespringandfirstpartofthesummer,161NationalInteragencyCoordinationCenterWildlandFireSummaryandStatisticsAnnualReport2022(undated),https://www.predictiveservices.nifc.gov/intelligence/2022_statssumm/annual_report_2022.pdf.162Id.163CaliforniaDepartmentofForestryandFireProtection(CALFIRE)Website,2022FireSeasonIncidentArchive,https://www.fire.ca.gov/incidents/2022/.164NationalInteragencyFireCenter,SignificantWildlandFirePotentialOutlookAprilthroughJuly2023(April1,2023),https://www.predictiveservices.nifc.gov/outlooks/monthly_seasonal_outlook.pdf.165Id.166CALFIRE,CALFIREInvestigatorsDetermineCauseoftheDixieFire(January4,2022),https://34c031f8-c9fd-4018-8c5a-4159cdff6b0d-cdn-endpoint.azureedge.net/-/media/calfirewebsite/about/communications/dixie_fire_release.pdf.167NationalInteragencyCoordinationCenterWebsite,MonthlySeasonalOutlookhttps://www.predictiveservices.nifc.gov/outlooks/outlooks.htm.168Accuweather,AccuWeather’s2023USwildfireforecast(April12,2023),https://www.accuweather.com/en/weather-forecasts/accuweathers-2023-us-wildfire-forecast/1510132.2023SUMMERENERGYMARKETASSESSMENTn48nFEDERALENERGYREGULATORYCOMMISSIONresultinginmorefuelforfiresthatcanignitelaterinthesummerandintoautumn.169Additionally,winterstormsblewdownbranches,limbsandentiretrees,whichwilladdtotheavailabilityoffuelacrossmanylandscapes.170DroughtalleviationinpartsoftheWestmaylowerwildfirerisksduringsummer2023,buttheinteriorNorthwestandthenorthernRockies171faceahighriskofwildfiresthisyearfollowingawinterthatwasdrierthanthehistoricalaverage,creatingsignificantuncertaintyforsomewesternareasthissummer.Intheeventthatwildfiresthreatentransmissionlinesorthattransmissionlinesposeariskofexacerbatingwildfires,thethreemajorinvestor-ownedutilitiesinCalifornia–PG&E,SouthernCaliforniaEdison(SCE),andSanDiegoGasandElectric–haveprogramsinplace,knownasPublicSafetyPowerShutoffs(PSPS),totemporarilyde-energizetheirtransmissionlines.BothPG&EandSCEimplementedPSPSprotocolsin2022followingwildfirethreatindications,andwhileafeweventsdidinterruptcustomers,otherPSPSeventsdidnotrequirethecompaniestode-energizetheirtransmissionlines.172ElectricRisksThissectiondescribescurrentelectricreliabilityrisksthathavedevelopedsincesummer2022andpresentsbothtopicsofgeneralawarenessandspecificexamplesthatmayimpactthissummer.Recentpolicyandregulatoryactivitiesmayinfluencegeneratoravailabilityandcosts.IntheWECC-CAMXregion,DiabloCanyonnuclearpowerplantreceivedanextensiontocontinueoperating,whilevariousotherpoliciescreateuncertaintiesforthefutureofrenewableandfossilfuelplants.Thesepoliciesincludesolarpanelimportrestrictions,questionssurroundingfinancingforrenewableprojectsandmultiplerecentandexpectedEPAregulationsaffectingprimarilycoal-firedpowerplants.Increasingloadgrowthandcongestioncontributestolocalorregionalreliabilityrisks.Theelectricgridisalsofacinganincreaseinphysicalattacksonthegrid,whichhighlightsthepotentialincreasedneedforspareequipmentsuchastransformers.LingeringeffectsfromtheCOVID-19pandemic,aswellasRussia’sinvasionofUkraine,maydisruptsupplychainsofcriticalmaterials.FERCstaff,aswellasindustry,continuestomonitortheseissuesandhowtheymightaffectreliabilityandenergymarkets.PG&EDIABLOCANYONPOWERPLANTLICENSEEXTENSIONDiabloCanyonpowerplantisa2.2GWnuclearpowerplant,locatedinSanLuisObispoCounty,andsuppliesabout9percentofCalifornia’selectricityneeds.PG&E,whichownsandoperatesDiabloCanyon,initiallyplannedtoretirethefacility’stworeactorsin2024and2025.However,aCaliforniaEnergyCommission(CEC)staffanalysisrecommendedpursuingextendedoperationofthefacilitytomitigatetherisksimposedbydelaysinresourcebuildouttomeetorderedprocurementandincreasingrisksofclimate-relatedthreatstogridreliability,aswellasshortfallsifthestateexperiencesextremeheateventssuchasitexperiencedin2020and2022.173OnMarch2,2023,theU.S.Nuclear169GreatBasinCoordinationCenter,SeasonalOutlookMay-August2023,https://gacc.nifc.gov/gbcc/predictive/docs/monthly_seasonal.pdf.170Accuweather,AccuWeather’s2023U.S.wildfireforecast(April12,2023),https://www.accuweather.com/en/weather-forecasts/accuweathers-2023-us-wildfire-forecast/1510132.171TheregionincludesportionsofWashington,Oregon,Idaho,Montana,NorthernCaliforniaandnorthernNevada.172CPUCWebsite,UtilityCompanyPSPSReports(accessedMarch20,2023),https://www.cpuc.ca.gov/consumer-support/psps/utility-company-psps-reports-post-event-and-post-season.173CEC,DiabloCanyonPowerPlantExtension(February24,2023),https://efiling.energy.ca.gov/GetDocument.aspx?tn=248971.2023SUMMERENERGYMARKETASSESSMENTn49nFEDERALENERGYREGULATORYCOMMISSIONRegulatoryCommissionissuedaruleexemptionallowingPG&EtocontinuerunningDiabloCanyonPowerPlantUnits1and2whilethecompanypursueslicenserenewalsforbothreactors.174FACTORSAFFECTINGSOLARDEVELOPMENTThedecisiontoextendoperationofDiabloCanyonstemmedpartlyfromconcernabouttheschedulesforplannednewsolarinstallations.Severalfactorscouldaffectplannedsolardeploymentinsummer2023andbeyondandthusreducecapacityadditionsbelowexpectations.Creditliquidityissuesmayleadtofinancingproblemsforsolarprojects.Inparticular,thefailureofSiliconValleyBank(SVB)earlierthisyearhasledtoquestionsaboutthefinancialfutureoftherenewablesstartupsandprojectsthebankfinanced–particularlyresidentialandcommunitysolarinstallations.AccordingtotheCEOofArcadia–thelargestdomesticmanagerofcommunitysolar–thebankcollapsewillhaveanimpactonthebroadersolarindustrysinceSVBwasatrustedpartnerandprovidedconstruction,long-term,andshort-termdebttonearly60%ofthecommunitysolarindustry.Althoughotherfinancerslikelywillfillthegap,fundingwillremaininfluxasthosenewrelationshipsareestablished.175Anevenmoresubstantiveissueforprojectdevelopersinrecentmonthshasbeenthecostofcapital,whichhasrisenalongwithhigherbenchmarkinterestrates.Finally,availabilityofcomponentsisanotherconcernforsolarprojectdevelopers.AnongoingtradeinquirybytheU.S.DepartmentofCommerce(Commerce)couldaffecttheavailabilityofsomesolarcomponentsimportedintotheUnitedStatesaswellasU.S.relianceonChinesesuppliersofsolarcomponents.CommerceiscurrentlyscheduledtoissueafinaldeterminationonMay1,whichhassincebeenextendedtoAugust17,2023,onwhethertoimposetariffsoncertainsolarcomponentsimportedfromfourSoutheastAsiannations.176Solarinstallationsdeclined16%in2022;analystsexpectareboundin2023butnotethatitwilldependonseveralunpredictablefactorsasdiscussedabove.177EPAACTIONANDREGULATIONSEPAisexpectedtoissuemultipleenvironmentalregulationsinearly2023,whichcouldinfluenceoperatingandcapacitydecisionsfortheelectricgrid.Inparticular,affectedentitiesmaydecidetoaccelerateunitretirementsratherthancomplywiththenewrequirements.First,theEPAiscurrentlyworkingtoissuefinaldecisionsonextensionrequestsfortheCoalCombustionResiduals178(CCR)ruleregulatingcoalashpondsatcoalplants,whichwouldgiveapplyingcoalplantoperatorsmoretimetoeliminateusageofunlinedcoalashponds.Thirtyplants,representingapproximately36GWofcoalcapacity,havependingextensionrequeststhatcouldbefinalizedpriortothestartofthesummerseasonandmayaffectoperationsattheaffectedplants.Nearlyhalfofthecapacity,17GW,islocatedinPJM.WECCandMISOeachcontain5GWofaffectedcapacity.Operatorsof174FederalRegister,ExemptionIssuance:PacificGasandElectricCompany;DiabloCanyonPowerPlants,Units1and2(March8,2023),https://www.federalregister.gov/documents/2023/03/08/2023-04750/pacific-gas-and-electric-company-diablo-canyon-power-plant-units-1-and-2.175UtilityDive,SolarcompaniesofferreassuranceafterrenewablesfinanciersSiliconValleyBankcollapses,(March14,2023),https://www.utilitydive.com/news/silicon-valley-bank-collapse-solar-renewables-investments/644910/.176UtilityDive,CommerceDepartmentdelaysfinaldecisiononsolarpaneltariffsuntilAugustasCongressvotestoendpause(May4,2023),https://www.utilitydive.com/news/commerce-tariff-determination-delay-solar-panels-circumvention/649260/.177WoodMackenzie,USsolarmarketreadyforreboundaftertumultuousfirsthalfof2022(September8,2022),https://www.woodmac.com/press-releases/u.s.-solar-market-ready-for-rebound-after-tumultuous-first-half-of-2022/.178EPA,HazardousandSolidWasteManagementSystem:DisposalofCCR;AHolisticApproachtoClosurePartB:AlternateDemonstrationforUnlinedSurfaceImpoundments(November12,2020),https://www.federalregister.gov/documents/2020/11/12/2020-23327/hazardous-and-solid-waste-management-system-disposal-of-ccr-a-holistic-approach-to-closure-part-b.2023SUMMERENERGYMARKETASSESSMENTn50nFEDERALENERGYREGULATORYCOMMISSIONmanyaffectedplantshavepreviouslyannouncedplanstoretiretheunits,whichareincorporatedintoregionalcapacityanalysisefforts,althoughEPAdeterminationsmaychangetheexpectedtimingofdecisionsfortheseplants.Whilemanynewandupcomingregulationsareexpectedtobefinalizedandimplementedoverawidertimeframe,thecombinationofregulationsmaypromptchangesinmaintenanceschedules,operationpracticesorlong-termplansfortheexistingandplannedgenerationmix.InadditiontotheCCRrule,theEPA’sGoodNeighborPlan,179whichwasfinalizedonMarch15,2023,180willalsotakeeffectthissummer.Thisruleisintendedtoregulateemissionstolimitdownwindimpactsofground-levelozoneandimplementsatradingprogramandemissionsrequirementsforgeneratorsandotheremissionsourceswithatransitionperiodforimplementationthrough2030.TherulelimitsNOxemissionsfromsourcessuchaspowerplantsandindustrialprocesses,withthemostsignificantimpactstohigh-emittingsourcessuchascoal-firedpowerplants,whichcouldaffectplantoperationsandavailabilitythissummerinregions,whichareatriskfortightconditionsintheeventofheatwavesorotherextremeweather.Assomethermalresourcesfaceincreasinglychallengingeconomicconditions,includingcompetitionfromnewresourcesandstorage,changestoresourceavailabilityareapotentialreliabilitychallenge.Whilethemajorityoftheproposedandfinalrequirementswilltakeeffectinthefuture,typicallynear2030,allcomplementtheongoinggridtransition,aprocessthatisbeingcarefullymonitoredandplannedforbyallstakeholdersandisexpectedtorequireahigherlevelofvigilanceinthenearterm,includingthissummer,asgridplannersandoperatorsadjusttochangingpatterns,resources,andconditions.Also,asdiscussedbelow,regionalsurgesindemandandphysicalorcybergridattacksmayposereliabilityrisksthissummer.PJMNOVALOADPOCKETISSUEThelargestdatacenterhubintheworld—knownasDataCenterAlley—islocatedintheDominionTransmissionZoneofPJMinNorthernVirginia(NOVA).181Dominion’sTransmissionZoneisexperiencingunprecedentedelectricityloadgrowthdrivenbyincreasesindatacenterdemandthatstartedin2018andareexpectedtocontinuegrowingbeyond2027.182The2022PJMloadforecastreflectedtheloadgrowthwithintheDominionNOVAarea,includingapproximately4,000MWofadditionalloadbetween2020-2021and2026-2027.183PJMidentifiedtheneedforadditionaltransmissionreinforcementsintheareaforreliability,marketefficiency,operationalperformance,orpublicpolicyneeds.Operationally,theareahasexperiencedcongestionduringtheoutagesrequiredtoimplement179OnMarch15,2023,theEPAissueditsfinalGoodNeighborPlan,whichsecuressignificantreductionsinozone-formingemissionsofNOXfrompowerplantsandindustrialfacilitiesin23states.ItcreatesaNOxallowancetradingprogramforfossilfuel-firedpowerplantsthatbeginswiththeJune1,2023ozoneseason.https://www.epa.gov/system/files/documents/2023-03/FRL%208670-02-OAR_Good%20Neighbor_Final_20230314_Signature_ADMIN%20%281%29.pdf.180EnvironmentalProtectionAgency,EPAAnnouncesFinal“GoodNeighbor”PlantoCutHarmfulSmog,ProtectingHealthofMillionsfromPowerPlant,IndustrialAirPollution(March15,2023),https://www.epa.gov/newsreleases/epa-announces-final-good-neighbor-plan-cut-harmful-smog-protecting-health-millions.181DataCenterFrontier,NorthernVirginiaDataCenterMarket(May30,2022),https://www.datacenterfrontier.com/data-center-markets/whitepaper/11431609/digital-realty-northern-virginia-data-center-market.182PJM,DominionNorthernVirginiaAreaViolationsImmediateNeed(July1,2022),https://www.pjm.com/-/media/committees-groups/committees/teac/2022/20220712/item-08---dominion-northern-virginia-area-violations---need-statement.ashx.183PJMTransmissionExpansionAdvisoryCommittee,DataCenterPlanning&NeedAssessmentUpdate(January10,2023),https://www.pjm.com/-/media/committees-groups/committees/teac/2023/20230110/item-04---data-center-load-planning.ashx.2023SUMMERENERGYMARKETASSESSMENTn51nFEDERALENERGYREGULATORYCOMMISSIONthesupplementalandbaselinetransmissionreinforcementsthatareplannedtobeinservicebefore2025.Theseconditionsareexpectedtobeaparticularconcernduringperiodsofoverallhighdemand,suchasduringthesummerpeak.Becausetheregionistransmissionconstrained,multiplecoincidingoutageswillbechallengingtoimplementandcouldproducereliabilityissues.Theareaisconstrainedonall230kVinlettransmissionsegmentstoservethecurrentloadsize,andbecausethedatacenterloadhasaflatprofilethroughouttheday,powerflowcontrolornon-wiressolutionsarenotapplicabletosolvetheidentifiedtransmissionneedsinthisarea.PJMhasdesignatedDominionresponsibleforbuildingthenewtransmissionbecauseofconcernsthatacompetitiveprocess—evenunderacompressedschedule—couldtakemonthslonger.PJMhassaiditiscriticaltomovequicklybecauseofthepaceandmagnitudeofloadincreaseintheDataCenterAlleyareaandcurrentconstraintsontheregionaltransmissionsystem.184INCREASEINPHYSICALATTACKSONTHEGRIDElectricdisturbancereportsutilitiesprovidetotheU.S.DepartmentofEnergy(DOE)indicatethathuman-relatedincidents,includingvandalism,suspiciousactivity,andcybereventsareontheriseandwerethehighestin2022sincethereportsstartedcapturingsuchactivitiesin2011.Theseincidentscouldpresentincreasedriskstogridreliabilityespeciallyduringperiodsofhighgridstresssuchasduringsummer2023.Sinceregionswouldbeoperatingatpeakloadswithlimitedoperationalmargins,riskspresentedbytheseincidentsduringthesummercouldadverselyimpactgridreliabilityand,asaresult,businesses,andpeople.AsshowninFigure26,172human-relatedincidentsonthegridwerereportedin2022,comparedto99in2021.Reportsindicatethatvandalism185increasedfrom60occurrencesin2021to106(76.7%)in2022,cybereventsincreasedfrom7in2021to9(28.6%)in2022,andsuspiciousactivitiesincreasedfrom32in2021to57(78.1%)in2022,asshowninFigure27.186Regionswiththemosthuman-relatedincidentsonthegridin2022wereWECC(75incidents),SERC(27incidents),andReliabilityFirst(23incidents).Someutilitieshavetakenstepstomitigatethepossibilityofhuman-relatedincidents,includinginstallingsensorsonfencestodetectcuttingorclimbing,andthermalcamerasthatdetectintrudersindarknessorbadweather.187Somehavealsodeployedanti-dronetechnologiescapableofpinpointingaterroristdronepilot’slocation,determiningthedrone’sdirection,andprovidingdataonthedevicetypeanditsIPaddress.Furthermore,utilitiescoordinatewithlocal,184PJMInsideLines,2023Long-TermLoadForecastPredictsGrowthFueledbyDataCenters(January23,2023),https://insidelines.pjm.com/2023-long-term-load-forecast-predicts-growth-fueled-by-data-centers/.185Vandalismeventsincludeactsofsabotageandphysicalattacksontheelectricgrid.186DOE,OfficeofCybersecurity,EnergySecurity&EmergencyResponse,ElectricEmergencyIncidentandDisturbanceReports(FormDOE-417),https://www.oe.netl.doe.gov/oe417.aspx.187SecurityToday,TheftandVandalismMakeEnticingTargetsforUtilities(December3,2020),https://securitytoday.com/Articles/2020/12/03/Protecting-Utilities.aspx.Figure26:2011through2022Human-relateddisturbancesincidentsSource:DepartmentofEnergyOE-417s2023SUMMERENERGYMARKETASSESSMENTn52nFEDERALENERGYREGULATORYCOMMISSIONstate,andfederallawenforcementtoprotectcriticalfacilities.Despiteallthesesteps,thethreatfromhuman-relatedincidentsremains.SUPPLYCHAINISSUESAwell-managedsupplychainforequipmentandfuelsisnecessaryforthepowersystemtoachieveasustainablelevelofreliabilityandsecurity,andtoensuringphysicalandcybersecuritysystems,fuelassuranceschedules,andresourceadequacyperformance.Supplychaindisruptionsduringsummer2023couldcreatenegativeconsequencestotheelectricindustry’sworkonconstruction,operations,reliability,andsecurity.FollowingtheCOVID-19pandemicandotherdisruptionsinrecentyears,supplychainandeconomicchallengespersistin2023.188Industrycommentaryreflectsthatsupplychainissuesareamajorconcerntomaintainingreliability.Significantsupplychaindisruptionsarealreadyaffectingthecommissioningofnewresources,schedulingofelectricsystemmaintenance,andconnectionofnewcustomers.189Manyexamplesofseveral-foldincreasesinbothcostsandtimingdelayshavebeensharedbytheindustry,includingthosecausedbyshortagesofsolarequipment,shortagesofnewandrefurbishedtransformers,aswellascablesandconductors.Supplychainproblemsalsoareaffectingrebuildingorexpansionofexistingtransmissionlines,buildingofnewlines,andupdatingofcomponents.190Entitiesalsonotethatthecurrenttightenedlabormarketandincreasingcostsarecontributingtocontinuity,construction,andreliabilityworries.191Additionally,arecentglobaleconomicoutlookreportnotesglobaldisruptionstosupplychainoperationscouldpersistin2023,duetoexistingornewgeopoliticalconflicts,inflationarypressuresandtherecessionaryenvironment,orclimatechange-relatedweatherevents.192Thisaffectsaccesstogoods,includingbyreducingtheavailabilityoftransportation,creatingportholdups,andreducingcontainerandoceanfreightavailability.Theseproblemscouldputupwardpressureonthepricesofcriticalequipmentandothergoodsandmayultimatelydelayrecoveryandrestorationoftheelectricgridduringextremesummerevents.Someofthemostimpactfulsupplychaindisruptionsare:188UtilityDive,Supplychainandeconomicchallengespersistwhilegridreliabilityandsecurityconcernsaregrowing(Jan.13,2023),https://www.utilitydive.com/news/2023-us-power-sector-trends-renewables-reliability-FERC-cybersecurity-hydrogen-nuclear-storage-EVs/640307/.189NationalRuralElectricCooperativeAssociation,TigerTeam:ElectricCo-opLeadersJoinEfforttoEaseSupplyChainProblems(July8,2022),https://www.electric.coop/tiger-team-electric-co-op-leaders-join-effort-to-ease-supply-chain-problems.190EdisonElectricInstitute,EEICommentsonEERE-2019-BT-STD-0018(March27,2023),https://www.regulations.gov/comment/EERE-2019-BT-STD-0018-0135.191Theelectricindustryisadaptingtothisnewsituationwherelongleadtimesanddelayedprojectschedulesmakeitimpracticalforsomeequipmentsupplierstosubmitbids,resultinginlesscompetitioninthebiddingprocessandhigherprices.Therehasalsobeenrenegotiationofexistingcontracts,andnewbusinessprojectsaremoredifficulttoimplement.NERC,Preliminary2023SummerReliabilityAssessment(releaseanticipatedMay2023).192KPMG,KPMGInsights:TheSupplyChainTrendsShakingUp2023(undated),https://kpmg.com/xx/en/home/insights/2022/12/the-supply-chain-trends-shaking-up-2023.html.Figure27:2021vs2022Human-relateddisturbancesincidentsbyeventtypeSource:DepartmentofEnergyOE-417s20212022VandalismCyberEventSuspiciousActivity-820608010012040Incidents2023SUMMERENERGYMARKETASSESSMENTn53nFEDERALENERGYREGULATORYCOMMISSION(1)Geo-politicalissues–TheconflictbetweenRussiaandUkrainehasrestrictedsupplyofkeymetalsimportedfromRussia.Forexample,30%ofplatinumgroupelements,13%oftitanium,and11%ofnickelimportedintotheUnitedStateswerepreviouslysourcedfromRussiaandarenolongeravailable.193Foreignconcentrationofothermaterialssuchaspolysilicon,usedinsolarpanels,posesarisktofurtherdevelopmentofkeyelectricalcomponents.Generaldisruptionstokeymetalsandcriticalelementsusedinmanufacturingelectricalequipmentmaycreateadditionalcostsorriskstoelectricreliability,andpotentiallydelaytheenergytransition.(2)Sparetransformeravailability–AnotherissueisdecreasedavailabilityofspareBPStransformers194duetomanufacturinganddeliverydelaysandoutagereplacements.195Thisequipmentiscriticaltodeliveringelectricitytocustomers.Theaverageageoftoday’slargetransformersis40years,closetotheendoftheirusefullife.196Aginginfrastructure,combinedwithprotractedsupplychaindeliverytimes,rangingfrom38weeksto38monthsforlargertransformers,couldcreatedelaysthroughthesummerof2023asmanyelectricutilitiesdrawdowntheirtransformerinventories.197TheAmericanPublicPowerAssociationsurveyedmembersatthebeginningof2022fordeliverytimesofnewdistribution-leveltransformers,andtheaveragewasaboutayear,comparedwithanaveragethree-monthwaitin2018.Bylatesummer2022,deliverydateswereextendedtobetween18monthsandtwoyears.(3)Climatechange–Hurricanes,floods,wildfires,andotherformsofincreasinglyextremeweatherareknowntocausesupplychaindisruptionsthathindertheglobaleconomy.Climatechange-drivensealevelrisemayexacerbateeffectsofstormsoncoastalinfrastructureandfurthercomplicateshipping.(4)Cybersecurity–Similartootherelectricsystemequipment,thecomputingandnetworkingequipmentusedintheelectricindustryreliesonelectricalcomponentsthatmaybeaffectedbysupplychaindisruptions.Supplychainissuescouldimpacttheproductionanddeliveryofsophisticatedsemi-conductorchipsusedincybersystems,metersandcommunicationsequipmentandBPScontrolcenters.198Inaddition,theNationalCybersecurityStrategyof2023states,“Thedependencyoncriticalforeignproductsandservicesfromuntrustedsuppliersintroducesmultiplesourcesofsystemicrisktoourdigitalecosystem.”199Long-termcollaborationisrequiredbyboththepublicandprivatesectors,suchastorestoreproductionofcriticalgoodstotheUnitedStatesanditsclosepartners,torebalancetheglobalsupplychainstoaddresscybersecurityvulnerabilitiesthatmaybeexploitedbyadversarialgovernments.193Deloitte,DeloitteInsights:SupplychainimplicationsoftheRussia-Ukraineconflict(March25,2022),https://www2.deloitte.com/xe/en/insights/focus/supply-chain/supply-chain-war-russia-ukraine.html.194Transformersareinductiveelectricaldevicesforchangingthevoltageofalternatingcurrent.Atransformerconsistsoftwomagneticallycoupledcoils.Alternatingcurrentinone(calledthe“primary”coil)createsachangingmagneticfieldthatinducesacurrentinthesecond(the“secondary”coil).195T&DWorld,TransformativeTimes:UpdateontheU.S.TransformerSupplyChain(July12,2022),https://www.tdworld.com/utility-business/article/21243198/transformative-times-update-on-the-us-transformer-supply-chain.196DOE,ElectricGridSupplyChainReview:LargePowerTransformersandHighVoltageDirectCurrentSystemsSupplyChain-DeepDiveAssessment(February2022),https://www.energy.gov/sites/default/files/2022-02/Electric%20Grid%20Supply%20Chain%20Report%20-%20Final.pdf.197T&DWorld,TransformativeTimes:UpdateontheU.S.TransformerSupplyChain(July12,2022),https://www.tdworld.com/utility-business/article/21243198/transformative-times-update-on-the-us-transformer-supply-chain.198Time,TheChipsThatMakeTaiwantheCenteroftheWorld(October2022),https://time.com/6219318/tsmc-taiwan-the-center-of-the-world/.199TheWhiteHouse,NationalCybersecurityStrategy(March2023),https://www.whitehouse.gov/wp-content/uploads/2023/03/National-Cybersecurity-Strategy-2023.pdf.2023SUMMERENERGYMARKETASSESSMENTn54nFEDERALENERGYREGULATORYCOMMISSIONCONCLUSIONForecastsforsummer2023indicatethatmuchofthecountrymayseelowerenergypricesandsomewhatreducedreliabilityriskcomparedtolastsummer,asaresultofseveralfactors.Forecastedwarmer-than-averagetemperaturesacrossmuchoftheUnitedStatescouldincreaseelectricitydemand.However,higherwaterandsnowpacklevelsinpartsoftheWestthissummershouldenablemorehydropowerthissummercomparedtolastsummer,whileotherareasofthecountryarestillfacingdroughtrelatedchallenges.Increasedpowergenerationcapacityfromsolarandwindshouldfurtherbolsteravailablepowergenerationcapacityforthissummer’speakcoolingseason.RegionaldatasubmittedtoNERCprojectsthatmostregionswillhavesufficientgeneratingresourcestomeetsummerdemand,however,regionssuchasERCOT,MISO,NewEngland,SERC-Central,SPPandWECC-CAMX,WECC-NWandWECC-SWmayfacearesourceshortfallundermoreextremecircumstances.Lowernaturalgaspricesshouldplacedownwardpressureonelectricitypricesandimprovegridreliabilityrelativetolastsummer.Increasedsupplyrelativetodemandandhigherstorageinventoriesinthedomesticnaturalgasmarketshouldincreaseavailabilitythissummer,despitefurthergrowthinLNGexports.Nevertheless,regionsofconcernremain,includingpartsoftheWestwhereseveredroughtconditionspersist,andspecificriskstoreliabilityandmarketoperationsremain.Supplychainissues,human-relatedgriddisturbances,andIBR-relatedgriddisturbancescouldoffsetthehigheravailablecapacityforthissummer.

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