Nuclear station sluggish to restart after earthquake

ERCOT Ancillary Services Clawback and VOLL Pricing summarize PUCT and IMM actions on load shed, real-time pricing adders, clawbacks, and settlement corrections after the 2021 winter storm in the Texas power grid market.

Key Points

Policies addressing clawbacks for unprovided AS and correcting VOLL-based price adders after load shed ended in ERCOT.

✅ PUCT ordered clawbacks for ancillary services not delivered.

✅ IMM urged price correction after firm load shed ceased.

✅ ERCOT's VOLL adder raised costs by $16B during 32 hours.

Potomac Economics, the Independent Market Monitor (IMM) for the Electric Reliability Council of Texas (ERCOT), filed a report with the Public Utility Commission of Texas (PUCT) that certain payments were made by ERCOT for Ancillary Services (AS) that were not provided, even as ERCOT later issued a winter reliability RFP to procure capacity during subsequent seasons.

According to the IMM (emphasis added):

There were a number of instances during the operating days outlined above in which AS was not provided in real time because of forced outages or derations. For market participants that are not able to meet their AS responsibility, typically the ERCOT operator marks the short amount in the software. This causes the AS responsibility to be effectively removed and the day-ahead AS payment to be clawed back in settlement. However, the ERCOT operators did not complete this task during the winter event, echoing issues like the Ontario IESO phantom demand that cost customers millions, and therefore the "failure to provide" settlements were not invoked in real time.

Removing the operator intervention step and automating the "failure to provide" settlement was contemplated in NPRR947: Clarification to Ancillary Service Supply Responsibility Definition and Improvements to Determining and Charging for Ancillary Service Failed Quantities; however, the NPRR was withdrawn in August 2020 amid ongoing market reform discussions because of the system cost, some complexities related to AS trades, and the implementation of real-time co-optimization.

Invoking the "failure to provide" settlement for all AS that market participants failed to provide during the operating days outlined above will produce market outcomes and settlements consistent with underlying market principles. In this case, the principle is that market participants should not be paid for services that they do not provide, even as a separate ruling found power plants exempt from providing electricity in emergencies under Texas law, underscoring the distinction between obligations and settlements. Whether ERCOT marked the short amount in real-time or not should not affect the settlement of these ancillary services.

On March 3, 2021, the PUCT ordered (a related press release is here) that:

ERCOT shall claw back all payments for ancillary service that were made to an entity that did not provide its required ancillary service during real time on ERCOT operating days starting February 14, 2021 and ending on February 19,2021.

On March 4, 2021, the IMM filed another report and recommended that:

the [PUCT] direct ERCOT to correct the real-time prices from 0:00 February 18,2021, to 09:00 February 19, 2021, to remove the inappropriate pricing intervention that occurred during that time period.

The IMM approvingly noted the PUCT's February 15, 2021 order, which mandated that real-time energy prices reflect firm load shed by setting prices at the value of lost load (VOLL).1

According to the IMM (emphasis added):

This is essential in an energy-only market, like ERCOT's, where the Texas power grid faces recurring crisis risks, because it provides efficient economic signals to increase the electric generation needed to restore the load and service it reliably over the long term.

Conversely, it is equally important that prices not reflect VOLL when the system is not in shortage and load is being served, and experiences in capacity markets show auction payouts can fall sharply under different conditions. The Commission recognized this principle in its Order, expressly stating it is only ERCOT's out-of-market shedding firm load that is required to be reflected in prices. Unfortunately, ERCOT exceeded the mandate of the Commission by continuing to set process at VOLL long after it ceased the firm load shed.

ERCOT recalled the last of the firm load shed instructions at 23:55 on February 17, 2021. Therefore, in order to comply with the Commission Order, the pricing intervention that raised prices to VOLL should have ended immediately at that time. However, ERCOT continued to hold prices at VOLL by inflating the Real-Time On-Line Reliability Deployment Price Adder for an additional 32 hours through the morning of February 19. This decision resulted in $16 billion in additional costs to ERCOT's market, prompting legislative bailout proposals in Austin, of which roughly $1.5 billion was uplifted to load-serving entities to provide make-whole payments to generators for energy that was not needed or produced.

However, at its March 5, 2021, open meeting (related discussion begins around minute 20), although the PUCT acknowledged the "good points" raised by the IMM, the PUCT was not willing to retrospectively adjust its real-time pricing for this period out of concerns that some related transactions (ICE futures and others) may have already settled and for unintended consequences of such retroactive adjustments.  

Related News

• Electricity Forum News

• Energy Policy News

IAEA OSART Cernavoda highlights strengthened operational safety at Romania’s Cernavoda NPP, citing improved maintenance practices, simulator training, and deficiency reporting, with ongoing actions on spare parts procurement, procedure updates, and chemical control for nuclear compliance.

Key Points

An IAEA follow-up mission confirming improved operational safety at Cernavoda NPP, with remaining actions tracked.

✅ Enhanced simulator training and crew performance

✅ Improved field deficiency identification and reporting

✅ Ongoing upgrades to procedures, spares, and chemical control

The International Atomic Energy Agency (IAEA) said yesterday that the operator of Romania’s Cernavoda nuclear power plant had demonstrated "strengthened operational safety" by addressing the findings of an initial IAEA review in 2016. The Operational Safety Review Team (OSART) concluded a five-day follow-up mission on 8 March to the Cernavoda plant, which is on the Danube-Black Sea Canal, about 160 km from Bucharest.

The plant's two 706 MWe CANDU pressurised heavy water reactors, reflecting Canadian nuclear projects, came online in 1996 and 2007, respectively.

The OSART team was led by Fuming Jiang, a senior nuclear safety officer at the IAEA, which recently commended China's nuclear security in separate assessments.

"We saw improvements in key areas, such as the procurement of important spare parts, the identification and reporting of some deficiencies, and some maintenance work practices, as evidenced by relevant performance indicators," Jiang said, noting milestones at nuclear projects worldwide this year.

The team observed that several findings from the 2016 review had been fully addressed, including: enhanced operator crew performance during simulator training; better identification and reporting of deficiencies in the field; and improvement in maintenance work practices.

More time is required, it said, to fully implement some actions, including: further improvements in the procurement of important spare parts with relevance to safety; further enhancement in the revision and update of some operating procedures, drawing on lessons from Pickering NGS life extensions undertaken in Ontario; and control and labelling of some plant chemicals.

Dan Bigu, site vice president of Cernavoda NPP, said the 2016 mission had "proven to be very beneficial", adding that the current follow-up mission would "provide further catalyst support to our journey to nuclear excellence".

The team provided a draft report of the mission to the plant's management and a final report will be submitted to the Romanian government, which recently moved to terminate talks with a Chinese partner on a separate nuclear project, within three months.

OSART missions aim to improve operational safety by objectively assessing safety performance, even as the agency reports mines at Ukraine's Zaporizhzhia plant amid ongoing risks, using the IAEA's safety standards and proposing recommendations and suggestions for improvement where appropriate. The follow-up missions are standard components of the OSART programme and, as the IAEA has warned of risks from attacks on Ukraine's power grids, are typically conducted within two years of the initial mission.

Related News

• Electricity Forum News

• Power Generation News

Ontario Electricity Supply Gap threatens growth as demand from EVs, heat pumps, industry, and greenhouses surges, pressuring the grid and IESO to add nuclear, renewables, storage, transmission, and imports while meeting net-zero goals.

Key Points

The mismatch as Ontario's electricity demand outpaces supply, driven by electrification, EVs, and industrial growth.

✅ Demand growth from EVs, heat pumps, and electrified industry

✅ Capacity loss from Pickering retirement and Darlington refurb

✅ Options: SMRs, renewables, storage, conservation, imports

Ontario electricity demand is forecast to soon outstrip supply as it confronts a shortage in the coming years, a problem that needs attention in the upcoming provincial election.

Forecasters say Ontario will need to double its power supply by 2050 as industries ramp up demand for low-emission clean power options and consumers switch to electric vehicles and space heating. But while the Ford government has made a flurry of recent energy announcements, including a hydrogen project at Niagara Falls and an interprovincial agreement on small nuclear reactors, it has not laid out how it intends to bulk up the province’s power supply.

“Ontario is entering a period of widening electricity shortfalls,” says the Ontario Chamber of Commerce. “Having a plan to address those shortfalls is essential to ensure businesses can continue investing and growing in Ontario with confidence.”

The supply and demand mismatch is coming because of brisk economic growth combined with increasing electrification to balance demand and emissions and meet Canada’s goal to reduce CO2 emissions by 40 per cent by 2030 and to net-zero by 2050.

Hamilton’s ArcelorMittal Dofasco and Algoma Steel in Sault Ste. Marie are leaders on this transformation. They plan to replace their blast furnaces and basic oxygen furnaces later this decade with electric arc furnaces (EAFs), reducing annual CO2 emissions by three million tonnes each.

Dofasco, which operates an EAF that is already the single largest electricity user in Ontario, plans to build a second EAF and a gas-fired ironmaking furnace, which can also be powered with zero-carbon hydrogen produced from electricity, once it becomes available.

Other new projects in the agriculture, mining and manufacturing sectors are also expected to be big power users, including the recently announced $5 billion Stellantis-LG electric vehicle battery plant in Windsor. Five new transmission lines will be built to service the plant and the burgeoning greenhouse industry in southwestern Ontario. The greenhouses alone will require enough additional electricity to power a city the size of Ottawa.

On top of these demands, growing numbers of Ontario drivers are expected to switch to electric vehicles and many homeowners and business owners are expected to convert from gas heating to heat pumps and electric heating.

Ontario is recognized as one of the cleanest electricity systems in the world, with over 90 per cent of its capacity from low-emission nuclear, hydro, wind and other renewable generation. Only nine per cent comes from CO2-emitting gas plants. But that’s about to get dirtier according to analysts.

Annual electricity demand is expected to grow from 140 terawatt hours (a terawatt hour is one trillion watts for one hour) currently to about 200 terawatt hours in 2042, according to the Independent Electricity System Operator, the agency that manages Ontario’s grid.

Demand is expected to outstrip currently contracted supply in 2026, reaching a growing supply gap of about 80 terawatt hours by 2042. A big part of this gap is due to the scheduled retirement of the Pickering nuclear station in 2025 and the current refurbishment of the Darlington nuclear station reactors. While the IESO doesn’t expect blackouts or brownouts, it forecasts the province will need to sharply increase expensive power imports and triple the amount of CO2-polluting gas-fired generation.

Without cleaner, lower-cost alternatives, this will mean “a vastly dirtier and more expensive electricity system,” York University researchers Mark Winfield and Collen Kaiser said in a recent commentary.

The party that wins the provincial election will have to make hard decisions on renewable energy, including new wind and solar projects, energy conservation, battery storage, new hydro plants, small nuclear reactors, gas generation and power imports from the U.S. and Quebec. In addition, the federal government is pressing the provinces to meet a new net-zero clean electricity standard by 2035. These decisions will have huge impact on Ontario’s future, with greening the grid costs highlighted in some reports as potentially very high.

With so much at stake, Ontario’s political parties need to tell voters during the upcoming campaign how they would address these enormous challenges.

Related News

• Electricity Forum News

• Power Generation News

UK Energy Price Cap aims to protect consumers on gas and electricity bills, tackling Big Six overcharging on default and standard variable tariffs, with Ofgem and MPs pushing urgent reforms to the broken market.

Key Points

A temporary absolute limit on default energy tariffs to shield consumers from overcharging on gas and electricity bills.

✅ Caps standard variable and default tariffs to protect loyalty.

✅ Targets Big Six pricing; oversight by Ofgem and BEIS MPs.

✅ Aims for winter protection while maintaining competition.

MPs are calling for a cap on the price of gas and electricity, with questions over the expected cost of a UK price cap amid fears consumers are being ripped off.

The Business, Energy and Industrial Strategy (BEIS) Select Committee says the Big Six energy companies have been overcharging for years.

MPs on the committee backed plans for a temporary absolute cap, noting debates over EU gas price cap strategies to fix what they called a "broken" energy market.

Labour's Rachel Reeves, who chairs the committee, said: "The energy market is broken. Energy is an essential good and yet millions of customers are ripped off for staying loyal to their energy provider.

"An energy price cap is now necessary and the Government must act urgently to ensure it is in place to protect customers next winter.

"The Big Six energy companies might whine and wail about the introduction of a price cap but they've been overcharging their customers on default and SVTs (standard variable tariffs) for years and their recent feeble efforts to move consumers off these tariffs has only served to highlight the need for this intervention."

The Committee also criticised Ofgem for failing to protect customers, especially the most vulnerable.

Draft legislation for an absolute cap on energy tariffs was published by the Government last year, and later developments like the Energy Security Bill have kept reform on the agenda.

But Business Secretary Greg Clark refused to guarantee that the flagship plans would be in place by next winter, despite warnings about high winter energy costs for households.

Committee members said there was a "clear lack of will" on the part of the Big Six to do what was necessary, including exploring decoupling gas and electricity prices, to deal with pricing problems.

A report from the committee found that customers are paying £1.4bn a year more than they should be under the current system.

Around 12 million households are stuck on poor-value tariffs, according to the report.

National assistance charity Citizens Advice said "loyal and vulnerable" customers had been "ripped off" for too long.

Chief executive Gillian Guy said: "An absolute cap, as recommended by the committee, is crucial to securing protection for the largest number of customers while continuing to provide competition in the market. This should apply to all default tariffs."

Related News

• Electricity Forum News

• Energy Policy News

US Summer Electricity Outlook 2022 projects rising renewable energy generation as utility-scale solar and wind capacity additions surge, while coal declines and natural gas shifts amid higher fuel prices and regional supply constraints.

Key Points

An EIA forecast of summer 2022 power: more solar and wind, less coal, and shifting gas use amid higher fuel prices.

✅ Solar +10 million MWh; wind +8 million MWh vs last summer

✅ Coal generation -20 million MWh amid supply constraints, retirements

✅ Gas prices near $9/MMBtu; slight national gen decline

In our Summer Electricity Outlook, a supplement to our May 2022 Short-Term Energy Outlook, we expect the largest increases in U.S. electric power sector generation this summer will come from renewable energy sources such as wind and solar generation. These increases are the result of new capacity additions. We forecast utility-scale solar generation between June and August 2022 will grow by 10 million megawatthours (MWh) compared with the same period last summer, and wind generation will grow by 8 million MWh. Forecast generation from coal and natural gas declines by 26 million MWh this summer, although natural gas generation could increase in some electricity markets where coal supplies are constrained.

For recent context, overall U.S. power generation in January rose 9.3% year over year, the EIA reports.

Wind and solar power electric-generating capacity has been growing steadily in recent years. By the start of June, we estimate the U.S. electric power sector will have 65 gigawatts (GW) of utility-scale solar-generating capacity, a 31% increase in solar capacity since June 2021. Almost one-third of this new solar capacity will be built in the Texas electricity market. The electric power sector will also have an estimated 138 GW of wind capacity online this June, which is a 12% increase from last June.

Along with growth in renewables capacity, we expect that an additional 6 GW of new natural gas combined-cycle generating capacity will come online by June 2022, an increase of 2% from last summer. Despite this increase in capacity, we expect natural gas-fired electricity generation at the national level will be slightly (1.3%) lower than last summer.

We forecast the price of natural gas delivered to electric generators will average nearly $9 per million British thermal units between June and August 2022, which would be more than double the average price last summer. The higher expected natural gas prices and growth in renewable generation will likely lead to less natural gas-fired generation in some regions of the country.

In contrast to renewables and natural gas, the electricity industry has been steadily retiring coal-fired power plants over the past decade. Between June 2021 and June 2022, the electric power sector will have retired 6 GW (2%) of U.S. coal-fired generating capacity.

In previous years, higher natural gas prices would have resulted in more coal-fired electricity generation across the fleet. However, coal-fired power plants have been limited in their ability to replenish their historically low inventories in recent months as a result of mine closures, rail capacity constraints, and labor market tightness. These coal supply constraints, along with continued retirement of generating capacity, contribute to our forecast that U.S. coal-fired generation will decline by 20 million MWh (7%) this summer. In some regions of the country, these coal supply constraints may lead to increased natural gas-fired electricity generation despite higher natural gas prices.
 

Related News

• Electricity Forum News

• Power Generation News

Canada Economic Crossroads highlights bank earnings trends, interest rates, loan delinquencies, EV tariffs on Chinese imports, domestic manufacturing, Algoma Steel decarbonization, sustainability, and housing market risks shaping growth, investment, consumer prices, and climate policy.

Key Points

An overview of how bank earnings, EV tariffs, and Algoma Steel's transition shape Canada's economy.

✅ Higher rates lift margins but raise delinquencies and housing risks

✅ EV tariffs aid domestic makers but pressure consumer prices

✅ Algoma invests to decarbonize, boosting efficiency and compliance

In a complex economic landscape, recent developments have brought attention to several pivotal issues affecting Canada's business sector. The Globe and Mail’s latest report delves into three major topics: the latest bank earnings, the implications of new tariffs on Chinese electric vehicles (EVs), and Algoma Steel’s strategic maneuvers. These factors collectively paint a picture of the challenges and opportunities facing Canada's economy.

Bank Earnings Reflect Economic Uncertainty

The recent financial reports from major Canadian banks have revealed a mixed picture of the nation’s economic health. As the Globe and Mail reports, earnings results show robust performances in some areas while highlighting growing concerns in others. Banks have generally posted strong quarterly results, buoyed by higher interest rates which have improved their net interest margins. This uptick is largely attributed to the central bank's monetary policies aimed at combating inflation and stabilizing the economy.

However, the positive earnings are tempered by underlying economic uncertainties. Rising loan delinquencies and a slowing housing market are areas of concern. Increased interest rates, while beneficial for banks’ margins, have also led to higher borrowing costs for consumers and businesses. This dynamic has the potential to impact overall economic growth and consumer confidence.

Tariffs on Chinese EVs: A Strategic Shift

Another significant development is the imposition of new tariffs on Chinese electric vehicles. This move is part of a broader strategy to protect domestic automotive industries and address trade imbalances, aligning with public support for tariffs in key sectors. The tariffs are expected to increase the cost of Chinese EVs in Canada, which could have several implications for the market.

On one hand, the tariffs might provide a temporary boost to Canadian and North American manufacturers by reducing competition from lower-priced Chinese imports. This protectionist measure could encourage investments in local production and innovation, mirroring tariff threats boosting support for energy projects in other sectors. However, the increased cost of Chinese EVs may also lead to higher prices for consumers, potentially slowing the adoption of electric vehicles—a critical goal in Canada’s climate strategy.

The tariffs come at a time when the Canadian government is keen on accelerating the transition to electric mobility to meet its environmental targets, even as a critical crunch in electrical supply raises questions about grid readiness. Balancing the protection of domestic industries with the broader goal of reducing emissions will be a significant challenge moving forward.

Algoma Steel’s Strategic Evolution

In the steel industry, Algoma Steel has been making headlines with its strategic initiatives aimed at transforming its operations, in a broader shift toward clean grids and industrial decarbonization. The Globe and Mail highlights Algoma Steel's efforts to modernize its production processes and shift towards more sustainable practices. This includes significant investments in technology and infrastructure to enhance production efficiency and reduce environmental impact.

Algoma's focus on reducing carbon emissions aligns with broader industry trends towards sustainability. The company’s efforts are part of a larger push within the steel sector to address climate change and meet regulatory requirements. As one of Canada’s leading steel producers, Algoma’s actions could set a precedent for the industry, showcasing how traditional manufacturing sectors can adapt to evolving environmental standards.

Implications and Future Outlook

The interplay of these developments reflects a period of significant transition for Canada's economy, shaped in part by U.S. policy where Biden is seen as better for Canada's energy sector by some analysts. For banks, the challenge will be to navigate the balance between profitability and potential risks from a changing economic environment. The new tariffs on Chinese EVs represent a strategic shift with mixed implications for the automotive market, potentially influencing both domestic production and consumer prices. Meanwhile, Algoma Steel’s push towards sustainability could serve as a model for other industries seeking to align with environmental goals.

As these issues unfold, stakeholders across sectors will need to stay informed and adaptable. For policymakers, the challenge will be to support domestic industries while fostering innovation and sustainability, including the dilemma over electricity rates and innovation they must weigh. For businesses, the focus will be on navigating financial pressures and leveraging opportunities for growth. Consumers, in turn, will face the impact of these developments in their daily lives, from the cost of borrowing to the price of electric vehicles.

In summary, Canada’s current economic landscape is characterized by a blend of financial resilience, strategic adjustments, and evolving industry practices, amid policy volatility such as a tariff threat delaying Quebec's green energy bill earlier this year. As the country navigates these crossroads, the outcomes of these developments will play a crucial role in shaping the future economic environment.

Related News

• Electricity Forum News

• Energy Policy News