Book Review: NERC 2006 Long-term Reliability Assessment
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The Outlook on Energy: A Brief Look at the 2006 NERC Long-Term Reliability Assessment

Review of: 2006 NERC Long-Term Reliability Assessment

Review by: Jason Hayes, Communications Director, American Coal Council

Originally published: American Coal Issue 1, 2007, pg. 23.

The 2006 North American Electric Reliability Corporation (NERC, Long-Term Reliability Assessment, which focuses on the reliability of the North American energy system, indicates that demand for energy generation and transmission resources will continue to increase at a rapid pace over the next several decades. It also indicates that a variety of pressing challenges will need to be addressed to ensure the electricity system remains reliable to 2015 by focusing on four main areas.

First, given the growth of energy demand, increasingly volatile fuel prices, and the mothballing of many generation assets, capacity margins across North America are declining. As those margins tighten, unplanned outages, extreme weather events, or periods of high demand could cause supply issues. The Assessment suggests that returning mothballed assets to production, signing power purchase agreements, and constructing transmission
to currently isolated assets will provide stability in this area.

Secondly, development of new transmission assets is being restricted primarily by obstacles to siting and certification of new lines. A combined lack of investment, however, and a tendency of developers to rely on short-term planning horizons is also hampering the creation of assets that will meet the needs of the regional transmission system, as opposed to simply fixing localized problems. The primary means of addressing this issue is encouraging all levels of government to work cooperatively with transmission owners and other stakeholders to remove barriers to siting and certification, as well as other regulatory barriers that are holding up new developments. Additionally, the Assessment recommends that long-term, regional planning is essential to help define suitable sites for transmission infrastructure.

Thirdly, fuel supply reliability is an essential aspect of maintaining systemwide stability and requires the cooperation and attention of producers, consumers, and transporters. While the supply disruptions experienced in the coal industry in 2005 are now being addressed, similar issues still exist in the gas industry. One primary area of potential disruption exists when high electricity generation demands collide with demands from other uses (such as home heating). The key methods of addressing this challenge are described as firming up supply and delivery contracts, as well as enhanced planning and communication measures to ensure adequate supplies (or substitute supplies) in times of high demand.

Lastly, the Assessment noted that the issue of an aging workforce will also present a challenge to overall system reliability. As noted in other articles in this magazine, the challenge to the entire energy industry will be to replace retiring employees with a well-trained workforce. This can be accomplished through the use of creative training and mentoring, retention programs, and innovative hiring methods.

Another likely influence on overall system reliability was briefly discussed in the Assessment. Greenhouse Gas (GHG) emissions were touched on, but left largely unconsidered by the Assessment due to the fact that no confirmed direction has yet been established on federal and state/provincial GHG regulations. The extent to which carbon reduction regulations are imposed and the transition periods allowed before compliance is mandated
will govern the level of impacts on overall system reliability.

The NERC 2006 Long-Term Reliability Assessment shows that there are a multitude of challenges facing the energy industry. All of them will require a substantial level of commitment and work before the North American system can be considered solidly reliable for the long-term.