Electricity and natural gas demand could be higher this winter because of lower expected temperatures than last year, and large parts of the North American electric grid face a “higher likelihood of tight supply and reliability issues during extreme winter conditions,” FERC staff said Nov. 21 while presenting the commission’s 2024-2025 Winter Energy Market and Electric Reliability Assessment.

NERC representatives also joined FERC staff for the presentation at the commission’s monthly open meeting, providing insights from the ERO’s recently released 2024-2025 Winter Reliability Assessment. (See NERC Sees ‘Reasons for Optimism’ as Winter Approaches.) Like NERC’s assessment, the FERC report covers December 2024 through February 2025.

Opening the presentation, Micah Gowen, of FERC’s Office of Energy Policy and Innovation, outlined multiple potential trouble spots during the winter months. The report highlighted the National Oceanic and Atmospheric Administration’s forecast for December through February, predicting lower overall temperatures across the U.S. compared to last winter.

Colder temperatures “could contribute to higher year-over-year natural gas and electricity demand,” the report said, though it noted that NOAA also suggested the southern and eastern parts of the country may experience higher-than-average temperatures, with as high as a 70% chance in some areas. In addition, Gowen noted that “all regions may face a higher likelihood of tight generation availability under extreme weather conditions.”

Drought, Wildfire Risks Persist

Additional weather-related influences include drought conditions and wildfire risks, both of which are expected to persist into the winter in multiple regions. NOAA’s three-month precipitation outlook shows droughts are likely to improve in the Pacific Northwest because of projected rains from La Niña but persist in the central U.S. and even increase in the Southwest and Southeast. This could limit the availability of hydroelectric generation in some parts of WECC’s territory, though the increased rain in some areas may help to balance this issue.

Wildfire risks are forecast to remain elevated into the early winter in Texas, Oklahoma and Southern California because of dry conditions and to continue through winter in Texas, where higher temperatures than the rest of the country are predicted. The persisting wildfire conditions could lead to public safety power shutoffs. On the other hand, mild temperatures could lower electric demand and “allow for greater system operator flexibility,” the report said.

With natural gas production likely to “remain relatively unchanged compared to winter 2023-2024,” Gowen said, the expected higher demand for gas for heating and electricity generation has pushed natural gas futures prices higher at several hubs. The report quoted the Energy Information Administration’s forecast average production of 104 Bcfd, down 1% from last winter’s average but still 6% above the previous five-year average.

As of Nov. 14, futures contract prices at the national benchmark Henry Hub in Louisiana averaged $2.95/MMBtu for this winter, up from last winter’s average settled futures price of $2.61. Prices at the Algonquin Citygate Hub near Boston averaged $8.86, up from $7.61 settled last winter. The report noted that an additional influence on New England natural gas prices is high global LNG prices because the region heavily relies on imports during the winter.

Prices are also lower at several hubs, including PG&E-Citygate in Northern California, with average prices for this winter down 10% from last winter at $4.74/MMBtu, and SoCal-Citygate, down 3% at $5.02. The report attributed these declines to mild forecasted winter weather, higher storage inventories and increased hydroelectric generation.

Reliability Effects

Rakesh Batra, of FERC’s Office of Electric Reliability, discussed the supply and demand forecasted for each NERC region.

Citing NERC’s assessment, Batra said that all regions “have sufficient available resources and net transfers to meet their respective operating reserves under normal winter conditions,” despite higher electricity demand compared to last winter. However, he added that extreme events may drive demand higher or damage transmission and generation facilities, making serving demand more difficult.

Batra noted that NERC and other stakeholders have taken numerous steps since the winter storms of 2021 and 2022, including the passage of the cold weather standards EOP-011-4 (Emergency operations) and EOP-012-2 (Extreme cold weather preparedness and operations), both of which became effective Oct. 1. However, he also said that grid reliability could be impacted this winter by the ongoing restoration work from Hurricanes Helene and Milton, which hit the Southeast earlier this fall.

Commissioners reacted to the report’s warnings by encouraging stakeholders to make grid reliability a priority investment, including by accelerating compliance with the new cold weather standards. Commissioner David Rosner said that, although many of the new standards’ requirements will not become effective until next year, “the best time to comply with the 2025 deadline is today.”