ISO-NE Insists on Vermont Yankee

Yesterday's post described how ISO-NE (the New England grid operator) required Vermont Yankee to stay in the 2013 forward electricity auction. Yankee had asked to drop out because it has neither a license renewal nor a certificate of public good past 2012. ISO-NE, however, said that Yankee had to stay in the auction because
with or without Vermont Yankee, the system in Vermont has reliability issues that must be addressed; without Vermont Yankee in service, those issues are more severe and could affect neighboring areas.

Since ISO-NE cannot actually force Vermont Yankee to operate, I found this puzzling. I decided to try to understand this incident in a broader context. Or at least, understand it at all.
The Measurement of Reliability
As I did when I was confused about the Hydro-Quebec contracts, I called David Lamont at Vermont Department of Public Service. As before, Lamont was thoughtful, clear and complete, and gave me much more information than I can put in a blog post. Here, greatly paraphrased, are my questions and his answers.
Q. I thought the ISO just dispatches electricity. How can they keep a plant in the energy auction if the plant says it doesn't want to participate, or can't participate?
A. ISO does that if the grid would have reliability issues without the plant.
Q. What do you mean by reliability issues? I mean, I'm not trying to quote the opponents or anything, but the plant does go on refueling outages and electricity continues to flow.
A. ISO judges reliability by the N minus one minus one method. Basically, when the system is running at full capacity, that is the baseline: N or Normal. It should be able to withstand a problem with a large transmission line (minus one) and still be capable of running properly. If a second major element (usually a transmission line) goes down, everything should still work as expected. That is, we plan for N minus one, and minus one again. That's the level of reliability we build into the system. That's how it's designed.
For the southern Vermont, southern New Hampshire, northern Massachusetts area, we meet that criteria now. But not with very much to spare.
Q. And without the plant?
A. ISO is concerned that the N minus one minus one criteria would not be met if the plant were permanently removed from the system.
Opinion: I didn't ask Lamont this, but I think that if the plant were to have an unexpected outage in the middle of the summer, that would be a minus one condition right there, but they would still meet the second minus one condition. But if the plant weren't there, the plant-outage condition would be baseline, and the grid couldn't take two minus-ones on top of that.
Q. But if the plant is not allowed to operate by the Senate, I don't see it helps anything to have the ISO telling it that it must "stay in the auction." Looks to me like the grid is just going to get a little riskier there, and there's not much the ISO can do about it.
A. No. If it were certain the plant was not going to be available, ISO would have to do something to keep the grid reliable. They would almost certainly have to pull in temporary resources.
Q. ISO would pull in temporary resources? What do you mean?
A. You know, things like gas turbines and diesels and other generating systems that can be moved in quickly. They would probably send out an RFP (request for proposals) for emergency generation. That's what they did in Connecticut.
Q. Connecticut?
A. In 2003, ISO-NE determined that Southern Connecticut had a lot of load growth, but not enough transmission lines. Reliability was compromised. ISO sent out an RFP called Request for Proposals For Southwest Connecticut Emergency Capability. ISO is required to keep the system reliable.
NOTE: I have attempted to summarize what Mr. Lamont said. I do not have a recording of our phone call. Any mistakes that are found in this summary are completely my own.
An RFP for Fossil
Instead of continuing to paraphrase Mr. Lamont here, I shall quote some other sources and give some opinions.
These alternatives could include interim solutions such as emergency generation brought into Vermont temporarily, more expensive generation from outside Vermont, and demand-side resources. Long-term solutions would include transmission line upgrades as well as other possible solutions, such as private development of new generation, increased energy efficiency, and new sources of imported power. All these options will come at an additional cost.
I further quote from the Connecticut RFP about the types of generation they sought (and found) for Connecticut when Southwestern Connecticut no longer met the ISO reliability standards:
Eligible Resources: Five types of resources are qualified to provide the service contemplated in this solicitation. These resources are (a) new quick-start peaking capacity, (b) incremental quick-start capability at existing resources, (c) demand response resources capable of 10- minute or 30-minute dispatch response and eligible to participate in one of the LRP programs that provides for Installed Capacity (“ICAP”) credit, (d) emergency generators capable of 10- minute or 30-minute dispatch response and eligible to participate in one of the LRP programs that provides for ICAP credit, or (e) C&LM projects that result in permanent load reduction sduring on-peak periods defined in Section 6.4. Existing capacity and C&LM projects are prohibited from providing the services contemplated in this RFP.

The Bottom Line
If ISO-NE decides that Vermont Yankee is not going to continue to be available, it would probably have to send out an RFP for Vermont similar to this RFP sent for Connecticut. ISO-NE will keep the grid going, at the cost of emergency generators of various kinds, probably diesel and gas-fired. Wind and solar do not meet the dispatch requirements described above, and coal and nuclear aren't put into place very quickly.
Of course, the dispatch requirements might be different in the Connecticut RFP and in a (theoretical) Vermont RFP in the future. However, we have one model RFP here, and it looks pretty much like "bring me your diesels."
I think that the ISO-NE kept Vermont Yankee in the auction because the alternative was issuing an emergency generation RFP. They don't want to do that until they are absolutely sure it is needed.
Emergency Generation and Renewables
Plant opponents claim that Vermont Yankee prevents renewables from happening. They claim that Vermont will be filled with solar and cow power if only Vermont Yankee didn't exist.
Actually, the future without VY is probably an RFP for emergency diesel and gas fired generation. Next time the plant opponents start to paint rosy pictures of solar panels and wind turbines, ask them about Southern Connecticut. Ask them about diesels.
Important Update
After reading this post, Mr. Lamont sent me an email which explained some other issues. I am very grateful for his review and clarification!
1) An RFP for emergency generation is one of the options that ISO has used in the past to ensure grid reliability. We cannot predict that an RFP would be the option chosen if Vermont Yankee is not available. For example, ISO would also look at transmission line upgrades, load interruption, or other fixes. These may or may not be possible.
2) Reliability improvements will cost money. Ratepayers have to pay for diesel generators, transmission upgrades, etc. Saying that "ISO will issue a request for proposal" may be misleading: ISO does not pay for this sort of improvement, but the cost is shared among ratepayers. Depending on the type, location or cause of the upgrade, it is also possible that a subset of ratepayers (Vermont) can be assessed these charges, or they can be shared by all.
3) Like most power plants, VY plans its outages for the shoulder seasons (spring and fall) when the load is lowest. However, grid reliability is assessed for more extreme weather conditions, usually defined as load equivalent to the load on the 90th percentile hottest day on record. The fact that the grid continues to operate when VY is out of service does not mean that the plant is not needed for reliability. It means that the plant was not out of service during an extreme weather event when several other pieces of load support equipment were unavailable as well.